[House Report 118-484]
[From the U.S. Government Publishing Office]


118th Congress  }                                        {  Rept. 118-484
                        HOUSE OF REPRESENTATIVES
 2d Session     }                                        {        Part 2

======================================================================



 
      FINANCIAL INNOVATION AND TECHNOLOGY FOR THE 21ST CENTURY ACT

                                _______
                                

  May 6, 2024.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. McHenry, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 4763]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 4763) to provide for a system of regulation of 
digital assets by the Commodity Futures Trading Commission and 
the Securities and Exchange Commission, and for other purposes, 
having considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................    56
Background and Need for Legislation..............................    56
Related Hearings.................................................    72
Committee Consideration..........................................    73
Committee Votes..................................................    73
Committee Oversight Findings.....................................    77
Performance Goals and Objectives.................................    77
Congressional Budget Office Estimates............................    77
New Budget Authority, Entitlement Authority, and Tax Expenditures    77
Federal Mandates Statement.......................................    77
Advisory Committee Statement.....................................    77
Applicability to Legislative Branch..............................    78
Earmark Identification...........................................    78
Duplication of Federal Programs..................................    78
Section-by-Section Analysis of the Legislation...................    78
Changes in Existing Law Made by the Bill, as Reported............    85
Minority Views...................................................   332

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

Sec. 1. Short title; table of contents.

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

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

             TITLE II-- OFFERS AND SALES OF DIGITAL ASSETS

Sec. 201. Exempted transactions in digital assets.
Sec. 202. Requirements for offers and sales of certain digital assets.
Sec. 203. Enhanced disclosure requirements.
Sec. 204. Certification of certain digital assets.
Sec. 205. Effective date.

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

Sec. 301. Treatment of digital commodities and other digital assets.
Sec. 302. Anti-fraud authority over permitted payment stablecoins.
Sec. 303. Registration of digital asset trading systems.
Sec. 304. Requirements for digital asset trading systems.
Sec. 305. Registration of digital asset brokers and digital asset 
dealers.
Sec. 306. Requirements of digital asset brokers and digital asset 
dealers.
Sec. 307. Rules related to conflicts of interest.
Sec. 308. Treatment of certain digital assets in connection with 
federally regulated intermediaries.
Sec. 309. Exclusion for ancillary activities.
Sec. 310. Registration and requirements for notice-registered digital 
asset clearing agencies.
Sec. 311. Treatment of custody activities by banking institutions.
Sec. 312. Effective date; administration.

    TITLE IV--REGISTRATION FOR DIGITAL ASSET 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 commodity custodians.
Sec. 403. Trading certification and approval for digital commodities.
Sec. 404. Registration of digital commodity exchanges.
Sec. 405. Qualified digital commodity 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 ancillary activities.
Sec. 410. Effective date.

            TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS

Sec. 501. Codification of the SEC Strategic Hub for Innovation and 
Financial Technology.
Sec. 502. Codification of LabCFTC.
Sec. 503. CFTC-SEC Joint Advisory Committee on Digital Assets.
Sec. 504. Study on decentralized finance.
Sec. 505. Study on non-fungible digital assets.
Sec. 506. Study on expanding financial literacy amongst digital asset 
holders.
Sec. 507. Study on financial market infrastructure improvements.

                        TITLE VI--MISCELLANEOUS

Sec. 601. Findings; sense of Congress.

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

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

  Section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)) is 
amended by adding at the end the following:
          ``(20) Affiliated person.--The term `affiliated person' means 
        a person (including a related person) that--
                  ``(A) with respect to a digital asset issuer--
                          ``(i) directly, or indirectly through one or 
                        more intermediaries, controls, or is controlled 
                        by, or is under common control with, such 
                        digital asset issuer; and
                          ``(ii) was described under clause (i) at any 
                        point in the previous 3-month period; or
                  ``(B) with respect to any digital asset--
                          ``(i) beneficially owns 5 percent or more of 
                        the units of such digital asset that are then 
                        outstanding; and
                          ``(ii) was described under clause (i) at any 
                        point in the previous 3-month period.
          ``(21) Blockchain.--The term `blockchain' means any 
        technology--
                  ``(A) where data is--
                          ``(i) shared across a network to create a 
                        public ledger of verified transactions or 
                        information among network participants;
                          ``(ii) linked using cryptography to maintain 
                        the integrity of the public ledger and to 
                        execute other functions; and
                          ``(iii) distributed among network 
                        participants in an automated fashion to 
                        concurrently update network participants on the 
                        state of the public ledger and any other 
                        functions; and
                  ``(B) composed of source code that is publicly 
                available.
          ``(22) Blockchain protocol.--The term `blockchain protocol' 
        means any executable software deployed to a blockchain composed 
        of source code that is publicly available and accessible, 
        including a smart contract or any network of smart contracts.
          ``(23) Blockchain system.--The term `blockchain system' means 
        any blockchain or blockchain protocol.
          ``(24) Decentralized network.--With respect to a blockchain 
        system to which a digital asset relates, the term 
        `decentralized network' means the following conditions are met:
                  ``(A) During the previous 12-month period, no 
                person--
                          ``(i) had the unilateral authority, directly 
                        or indirectly, through any contract, 
                        arrangement, understanding, relationship, or 
                        otherwise, to control or materially alter the 
                        functionality or operation of the blockchain 
                        system; or
                          ``(ii) had the unilateral authority to 
                        restrict or prohibit any person who is not a 
                        digital asset issuer, related person, or an 
                        affiliated person from--
                                  ``(I) using, earning, or transmitting 
                                the digital asset;
                                  ``(II) deploying software that uses 
                                or integrates with the blockchain 
                                system;
                                  ``(III) participating in a 
                                decentralized governance system with 
                                respect to the blockchain system; or
                                  ``(IV) operating a node, validator, 
                                or other form of computational 
                                infrastructure with respect to the 
                                blockchain system.
                  ``(B) During the previous 12-month period--
                          ``(i) no digital asset issuer or affiliated 
                        person beneficially owned, in the aggregate, 20 
                        percent or more of the total amount of units of 
                        such digital asset that--
                                  ``(I) can be created, issued, or 
                                distributed in such blockchain system; 
                                and
                                  ``(II) were freely transferrable or 
                                otherwise used or available to be used 
                                for the purposes of such blockchain 
                                system;
                          ``(ii) no digital asset issuer or affiliated 
                        person had the unilateral authority to direct 
                        the voting, in the aggregate, of 20 percent or 
                        more of the outstanding voting power of such 
                        digital asset or related decentralized 
                        governance system; or
                          ``(iii) the digital asset did not include 
                        voting power with respect to any decentralized 
                        governance system of the blockchain system.
                  ``(C) During the previous 3-month period, the digital 
                asset issuer, any affiliated person, or any related 
                person has not implemented or contributed any 
                intellectual property to the source code of the 
                blockchain system that materially alters the 
                functionality or operation of the blockchain system, 
                unless such implementation or contribution to the 
                source code--
                          ``(i) addressed vulnerabilities, errors, 
                        regular maintenance, cybersecurity risks, or 
                        other technical changes to the blockchain 
                        system; or
                          ``(ii) were adopted through the consensus or 
                        agreement of a decentralized governance system.
                  ``(D) During the previous 3-month period, neither any 
                digital asset issuer nor any affiliated person 
                described under paragraph (20)(A) has marketed to the 
                public the digital assets as an investment.
                  ``(E) During the previous 12-month period, all 
                issuances of units of such digital asset through the 
                programmatic functioning of the blockchain system were 
                end user distributions.
          ``(25) Decentralized governance system.--
                  ``(A) In general.--The term `decentralized governance 
                system' means, with respect to a blockchain system, any 
                rules-based system permitting persons using the 
                blockchain system or the digital assets related to such 
                blockchain system to form consensus or reach agreement 
                in the development, provision, publication, management, 
                or administration of such blockchain system.
                  ``(B) Relationship of persons to decentralized 
                governance systems.--Persons acting through a 
                decentralized governance system shall be treated as 
                separate persons unless such persons are under common 
                control.
                  ``(C) Exclusion.--The term `decentralized governance 
                system' does not include a system in which--
                          ``(i) a person or group of persons under 
                        common control have the ability to--
                                  ``(I) unilaterally alter the rules of 
                                consensus or agreement for the 
                                blockchain system; or
                                  ``(II) determine the final outcome of 
                                decisions related to the development, 
                                provision, publication, management, or 
                                administration of such blockchain 
                                system;
                          ``(ii) a person or group of persons is 
                        directly engaging in an activity that requires 
                        registration with the Commission or the 
                        Commodity Futures Trading Commission other 
                        than--
                                  ``(I) developing, providing, 
                                publishing, managing, or administering 
                                a blockchain system; or
                                  ``(II) an activity with respect to 
                                which the organization is exempt from 
                                such registration; or
                          ``(iii) a person or group of persons seeking 
                        to knowingly evade the requirements imposed on 
                        a digital asset issuer, a related person, an 
                        affiliated person, or any other person 
                        registered (or required to be registered) under 
                        the securities laws, the Financial Innovation 
                        and Technology for the 21st Century Act, or the 
                        Commodity Exchange Act.
          ``(26) Digital asset.--
                  ``(A) In general.--The term `digital asset' means any 
                fungible digital representation of value that can be 
                exclusively possessed and transferred, person to 
                person, without necessary reliance on an intermediary, 
                and is recorded on a cryptographically secured public 
                distributed ledger.
                  ``(B) Exclusions.--The term `digital asset' does not 
                include--
                          ``(i) any note, stock, treasury stock, 
                        security future, security-based swap, bond, 
                        debenture, evidence of indebtedness, 
                        certificate of interest or participation in any 
                        profit-sharing agreement, collateral-trust 
                        certificate, preorganization certificate or 
                        subscription, or transferable share; or
                          ``(ii) any asset, which based on its terms 
                        and other characteristics, is, represents, or 
                        is functionally equivalent to an agreement, 
                        contract, or transaction that is--
                                  ``(I) a contract of sale of a 
                                commodity (as defined under section 1a 
                                of the Commodity Exchange Act) for 
                                future delivery or an option thereon;
                                  ``(II) a security futures product;
                                  ``(III) a swap;
                                  ``(IV) an agreement, contract, or 
                                transaction described in section 
                                2(c)(2)(C)(i) or 2(c)(2)(D)(i) of the 
                                Commodity Exchange Act;
                                  ``(V) a commodity option authorized 
                                under section 4c of the Commodity 
                                Exchange Act; or
                                  ``(VI) a leverage transaction 
                                authorized under section 19 of the 
                                Commodity Exchange Act.
                  ``(C) Rule of construction.--Nothing in this 
                paragraph shall be construed to create a presumption 
                that a digital asset is a representation of any type of 
                security not excluded from the definition of digital 
                asset.
                  ``(D) Relationship to a blockchain system.--A digital 
                asset is considered to relate to a blockchain system if 
                the digital asset is intrinsically linked to the 
                blockchain system, including--
                          ``(i) where the digital asset's value is 
                        reasonably expected to be generated by the 
                        programmatic functioning of the blockchain 
                        system;
                          ``(ii) where the digital asset has voting 
                        rights with respect to the decentralized 
                        governance system of the blockchain system; or
                          ``(iii) where the digital asset is issued 
                        through the programmatic functioning of the 
                        blockchain system.
                  ``(E) Treatment of certain digital assets sold 
                pursuant to an investment contract.--A digital asset 
                offered or sold or intended to be offered or sold 
                pursuant to an investment contract is not and does not 
                become a security as a result of being sold or 
                otherwise transferred pursuant to that investment 
                contract.
          ``(27) Digital asset issuer.--
                  ``(A) In general.--With respect to a digital asset, 
                the term `digital asset issuer' means any person that, 
                in exchange for any consideration--
                          ``(i) issues or causes to be issued a unit of 
                        such digital asset to a person; or
                          ``(ii) offers or sells a right to a future 
                        issuance of a unit of such digital asset to a 
                        person.
                  ``(B) Exclusion.--The term `digital asset issuer' 
                does not include any person solely because such person 
                deploys source code that creates or issues units of a 
                digital asset that are only distributed in end user 
                distributions.
                  ``(C) Prohibition on evasion.--It shall be unlawful 
                for any person to knowingly evade classification as a 
                `digital asset issuer' and facilitate an arrangement 
                for the primary purpose of effecting a sale, 
                distribution, or other issuance of a digital asset.
          ``(28) Digital asset maturity date.--The term `digital asset 
        maturity date' means, with respect to any digital asset, the 
        first date on which 20 percent or more of the total units of 
        such digital asset that are then outstanding as of such date 
        are--
                  ``(A) digital commodities; or
                  ``(B) digital assets that have been registered with 
                the Commission.
          ``(29) Digital commodity.--The term `digital commodity' has 
        the meaning given that term under section 1a of the Commodity 
        Exchange Act (7 U.S.C. 1a).
          ``(30) End user distribution.--
                  ``(A) In general.--The term `end user distribution' 
                means an issuance of a unit of a digital asset that--
                          ``(i) does not involve an exchange of more 
                        than a nominal value of cash, property, or 
                        other assets; and
                          ``(ii) is distributed in a broad, equitable, 
                        and non-discretionary manner based on 
                        conditions capable of being satisfied by any 
                        participant in the blockchain system, including 
                        as incentive-based rewards--
                                  ``(I) to users of the digital asset 
                                or any blockchain system to which the 
                                digital asset relates;
                                  ``(II) for activities directly 
                                related to the operation of the 
                                blockchain system, such as mining, 
                                validating, staking, or other activity 
                                directly tied to the operation of the 
                                blockchain system; or
                                  ``(III) to the existing holders of 
                                another digital asset, in proportion to 
                                the total units of such other digital 
                                asset as are held by each person.
                  ``(B) Prohibition on evasion.--It shall be unlawful 
                for any person to facilitate an end user distribution 
                to knowingly evade classification as a digital asset 
                issuer, related person, or an affiliated person, or the 
                requirements related to a digital asset issuance.
          ``(31) Functional network.--With respect to a blockchain 
        system to which a digital asset relates, the term `functional 
        network' means the network allows network participants to use 
        such digital asset for--
                  ``(A) the transmission and storage of value on the 
                blockchain system;
                  ``(B) the participation in services provided by or an 
                application running on the blockchain system; or
                  ``(C) the participation in the decentralized 
                governance system of the blockchain system.
          ``(32) Permitted payment stablecoin.--The term `permitted 
        payment stablecoin'--
                  ``(A) means a digital asset--
                          ``(i) that is or is designed to be used as a 
                        means of payment or settlement;
                          ``(ii) the issuer of which--
                                  ``(I) is obligated to convert, 
                                redeem, or repurchase for a fixed 
                                amount of monetary value; or
                                  ``(II) represents will maintain or 
                                creates the reasonable expectation that 
                                it will maintain a stable value 
                                relative to the value of a fixed amount 
                                of monetary value; and
                          ``(iii) that is subject to regulation by a 
                        Federal or State regulator with authority over 
                        entities that issue payment stablecoins; and
                  ``(B) that is not--
                          ``(i) a national currency; or
                          ``(ii) a security issued by an investment 
                        company registered under section 8(a) of the 
                        Investment Company Act of 1940 (15 U.S.C. 80a-
                        8(a)).
          ``(33) Related person.--With respect to a digital asset 
        issuer, the term `related person' means--
                  ``(A) a founder, promoter, employee, consultant, 
                advisor, or person serving in a similar capacity;
                  ``(B) any person that is or was in the previous 6-
                month period an executive officer, director, trustee, 
                general partner, advisory board member, or person 
                serving in a similar capacity;
                  ``(C) any equity holder or other security holder; or
                  ``(D) any other person that received a unit of 
                digital asset from such digital asset issuer through--
                          ``(i) an exempt offering, other than an 
                        offering made in reliance on section 4(a)(8); 
                        or
                          ``(ii) a distribution that is not an end user 
                        distribution described under section 42(d)(1) 
                        of the Securities Exchange Act of 1934.
          ``(34) Restricted digital asset.--
                  ``(A) In general.--The term `restricted digital 
                asset' means--
                          ``(i) any unit of a digital asset held by a 
                        person, other than the digital asset issuer, a 
                        related person, or an affiliated person, prior 
                        to the first date on which each blockchain 
                        system to which the digital asset relates is a 
                        functional network and certified to be a 
                        decentralized network under section 44 of the 
                        Securities Exchange Act of 1934, that was--
                                  ``(I) issued to such person through a 
                                distribution, other than an end user 
                                distribution described under section 
                                42(d)(1) of the Securities Exchange Act 
                                of 1934; or
                                  ``(II) acquired by such person in a 
                                transaction that was not executed on a 
                                digital commodity exchange;
                          ``(ii) any digital asset held by a related 
                        person or an affiliated person during any 
                        period when any blockchain system to which the 
                        digital asset relates is not a functional 
                        network or not certified to be a decentralized 
                        network under section 44 of the Securities 
                        Exchange Act of 1934; or
                          ``(iii) any unit of a digital asset held by 
                        the digital asset issuer.
                  ``(B) Exclusion.--The term `restricted digital asset' 
                does not include a permitted payment stablecoin.
          ``(35) Securities laws.--The term `securities laws' has the 
        meaning given that term under section 3(a) of the Securities 
        Exchange Act of 1934 (15 U.S.C. 78c(a)).
          ``(36) Source code.--With respect to a blockchain system, the 
        term `source code' means a listing of commands to be compiled 
        or assembled into an executable computer program.''.

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

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

SEC. 103. DEFINITIONS UNDER THE COMMODITY EXCHANGE ACT.

  Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended--
          (1) in paragraph (10)(A)--
                  (A) by redesignating clauses (iii) and (iv) as 
                clauses (iv) and (v), respectively; and
                  (B) by inserting after clause (ii) the following:
                          ``(iii) digital commodity;'';
          (2) in paragraph (11)--
                  (A) in subparagraph (A)(i)--
                          (i) by redesignating subclauses (III) and 
                        (IV) as subclauses (IV) and (V), respectively; 
                        and
                          (ii) by inserting after subclause (II) the 
                        following:
                                  ``(III) digital commodity;''; and
                  (B) by redesignating subparagraph (B) as subparagraph 
                (C) and inserting after subparagraph (A) the following:
                  ``(B) Exclusion.--The term `commodity pool operator' 
                does not include--
                          ``(i) a decentralized governance system; or
                          ``(ii) ancillary activities, as defined in 
                        section 4v.'';
          (3) in paragraph (12)(A)(i)--
                  (A) in subclause (II), by adding at the end a 
                semicolon;
                  (B) by redesignating subclauses (III) and (IV) as 
                subclauses (IV) and (V), respectively; and
                  (C) by inserting after subclause (II) the following:
                                  ``(III) a digital commodity;'';
          (4) in paragraph (40)--
                  (A) by striking ``and'' at the end of subparagraph 
                (E);
                  (B) by striking the period at the end of subparagraph 
                (F) and inserting ``; and''; and
                  (C) by adding at the end the following:
                  ``(G) a digital commodity exchange registered under 
                section 5i.''; and
          (5) by adding at the end the following:
          ``(52) Associated person of a digital commodity broker.--
                  ``(A) In general.--Except as provided in subparagraph 
                (B), the term `associated person of a digital commodity 
                broker' means a person who is associated with a digital 
                commodity broker as a partner, officer, employee, or 
                agent (or any person occupying a similar status or 
                performing similar functions) in any capacity that 
                involves--
                          ``(i) the solicitation or acceptance of a 
                        contract for sale of a digital commodity; or
                          ``(ii) the supervision of any person engaged 
                        in the solicitation or acceptance of a contract 
                        for sale of a digital commodity.
                  ``(B) Exclusion.--The term `associated person of a 
                digital commodity broker' does not include any person 
                associated with a digital commodity broker the 
                functions of which are solely clerical or ministerial.
          ``(53) Associated person of a digital commodity dealer.--
                  ``(A) In general.--Except as provided in subparagraph 
                (B), the term `associated person of a digital commodity 
                dealer' means a person who is associated with a digital 
                commodity dealer as a partner, officer, employee, or 
                agent (or any person occupying a similar status or 
                performing similar functions) in any capacity that 
                involves--
                          ``(i) the solicitation or acceptance of a 
                        contract for sale of a digital commodity; or
                          ``(ii) the supervision of any person engaged 
                        in the solicitation or acceptance of a contract 
                        for sale of a digital commodity.
                  ``(B) Exclusion.--The term `associated person of a 
                digital commodity dealer' does not include any person 
                associated with a digital commodity dealer the 
                functions of which are solely clerical or ministerial.
          ``(54) Bank secrecy act.--The term `Bank Secrecy Act' means--
                  ``(A) section 21 of the Federal Deposit Insurance Act 
                (12 U.S.C. 1829b);
                  ``(B) chapter 2 of title I of Public Law 91-508 (12 
                U.S.C. 1951 et seq.); and
                  ``(C) subchapter II of chapter 53 of title 31, United 
                States Code.
          ``(55) Digital commodity.--
                  ``(A) In general.--The term `digital commodity' 
                means--
                          ``(i) any unit of a digital asset held by a 
                        person, other than a digital asset issuer, a 
                        related person, or an affiliated person, before 
                        the first date on which each blockchain system 
                        to which the digital asset relates is a 
                        functional network and certified to be a 
                        decentralized network under section 44 of the 
                        Securities Exchange Act of 1934, that was--
                                  ``(I) issued to the person through an 
                                end user distribution described under 
                                section 42(d)(1) of the Securities 
                                Exchange Act of 1934; or
                                  ``(II) acquired by such person in a 
                                transaction that was executed on a 
                                digital commodity exchange; or
                          ``(ii) any unit of a digital asset held by a 
                        person, other than a digital asset issuer, a 
                        related person, or an affiliated person, after 
                        the first date on which each blockchain system 
                        to which the digital asset relates is a 
                        functional network and certified to be a 
                        decentralized network under section 44 of the 
                        Securities Exchange Act of 1934; and
                          ``(iii) any unit of a digital asset held by a 
                        related person or an affiliated person during 
                        any period when any blockchain system to which 
                        the digital asset relates is a functional 
                        network and certified to be a decentralized 
                        network under section 44 of the Securities 
                        Exchange Act of 1934.
                  ``(B) Exclusion.--The term `digital commodity' does 
                not include a permitted payment stablecoin.
          ``(56) Digital commodity broker.--
                  ``(A) In general.--The term `digital commodity 
                broker' means any person who, in a digital commodity 
                cash or spot market, is--
                          ``(i) engaged in soliciting or accepting 
                        orders for the purchase or sale of a unit of a 
                        digital commodity from a customer that is not 
                        an eligible contract participant;
                          ``(ii) engaged in soliciting or accepting 
                        orders for the purchase or sale of a unit of a 
                        digital commodity from a customer on or subject 
                        to the rules of a registered entity; or
                          ``(iii) registered with the Commission as a 
                        digital commodity broker.
                  ``(B) Exceptions.--The term `digital commodity 
                broker' does not include a person solely because the 
                person--
                          ``(i) enters into a digital commodity 
                        transaction the primary purpose of which is to 
                        make, send, receive, or facilitate payments, 
                        whether involving a payment service provider or 
                        on a peer-to-peer basis; or
                          ``(ii) validates a digital commodity 
                        transaction, operates a node, or engages in 
                        similar activity to participate in 
                        facilitating, operating, or securing a 
                        blockchain system.
          ``(57) Digital commodity custodian.--The term `digital 
        commodity custodian' means a bank or trust company in the 
        business of holding, maintaining, or safeguarding digital 
        commodities.
          ``(58) Digital commodity dealer.--
                  ``(A) In general.--The term `digital commodity 
                dealer' means any person who--
                          ``(i) in digital commodity cash or spot 
                        markets--
                                  ``(I) holds itself out as a dealer in 
                                a digital commodity;
                                  ``(II) makes a market in a digital 
                                commodity;
                                  ``(III) regularly enters into digital 
                                commodity transactions with 
                                counterparties as an ordinary course of 
                                business for its own account; or
                                  ``(IV) engages in any activity 
                                causing the person to be commonly known 
                                in the trade as a dealer or market 
                                maker in a digital commodity;
                          ``(ii) regularly enters into any agreement, 
                        contract, or transaction described in 
                        subsection (c)(2)(D)(i) involving a digital 
                        commodity; or
                          ``(iii) is registered with the Commission as 
                        a digital commodity dealer.
                  ``(B) Exception.--The term `digital commodity dealer' 
                does not include a person solely because the person--
                          ``(i) enters into a digital commodity 
                        transaction with an eligible contract 
                        participant;
                          ``(ii) enters into a digital commodity 
                        transaction on or through a registered digital 
                        commodity exchange;
                          ``(iii) enters into a digital commodity 
                        transaction for the person's own account, 
                        either individually or in a fiduciary capacity, 
                        but not as a part of a regular business;
                          ``(iv) enters into a digital commodity 
                        transaction the primary purpose of which is to 
                        make, send, receive, or facilitate payments, 
                        whether involving a payment service provider or 
                        on a peer-to-peer basis; or
                          ``(v) validates a digital commodity 
                        transaction, operates a node, or engages in 
                        similar activity to participate in 
                        facilitating, operating, or securing a 
                        blockchain system.
          ``(59) Digital commodity exchange.--The term `digital 
        commodity exchange' means a trading facility that offers or 
        seeks to offer a cash or spot market in at least 1 digital 
        commodity.
          ``(60) Digital asset-related definitions.--
                  ``(A) Securities act of 1933.--The terms `affiliated 
                person', `blockchain system', `decentralized governance 
                system', `decentralized network', `digital asset', 
                `digital asset issuer', `end user distribution', 
                `functional network', `permitted payment stablecoin', 
                `related person', and `restricted digital asset' have 
                the meaning given the terms, respectively, under 
                section 2(a) of the Securities Act of 1933 (15 U.S.C. 
                77b(a)).
                  ``(B) Securities exchange act of 1934.--The terms 
                `digital asset broker' and `digital asset dealer' have 
                the meaning given those terms, respectively, under 
                section 3(a) of the Securities Exchange Act of 1934 (15 
                U.S.C. 78c(a)).
          ``(61) Mixed digital asset transaction.--The term `mixed 
        digital asset transaction' has the meaning given that term 
        under section 3(a) of the Securities Exchange Act of 1934 (15 
        U.S.C. 78c(a)).''.

SEC. 104. DEFINITIONS UNDER THIS ACT.

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

  (a) Definitions.--The Commodity Futures Trading Commission and the 
Securities and Exchange Commission shall jointly issue rules to further 
define the following terms:
          (1) The terms ``affiliated person'', ``blockchain'', 
        ``blockchain system'', ``blockchain protocol'', ``decentralized 
        network'', ``decentralized governance system'', ``digital 
        asset'', ``digital asset issuer'', ``digital asset maturity 
        date'', ``end user distribution'', ``functional network'', 
        ``related person'', ``restricted digital asset'', and ``source 
        code'', as defined under section 2(a) of the Securities Act of 
        1933.
          (2) The term ``mixed digital asset transaction'', as defined 
        under section 3(a) of the Securities Exchange Act of 1934.
          (3) The term ``digital commodity'', as defined under section 
        1a of the Commodity Exchange Act.
  (b) Joint Rulemaking for Exchanges.--The Commodity Futures Trading 
Commission and the Securities and Exchange Commission shall jointly 
issue rules to exempt persons dually registered with the Commodity 
Futures Trading Commission as a digital commodity exchange and with the 
Securities and Exchange Commission as a digital asset trading system 
from duplicative, conflicting, or unduly burdensome provisions of this 
Act, the securities laws, and the Commodity Exchange Act and the rules 
thereunder, to the extent such exemption would foster the development 
of fair and orderly markets in digital assets, be necessary or 
appropriate in the public interest, and be consistent with the 
protection of investors.
  (c) Joint Rulemaking for Mixed Digital Asset Transactions.--The 
Commodity Futures Trading Commission and the Securities and Exchange 
Commission shall jointly issue rules applicable to mixed digital asset 
transactions under this Act and the amendments made by this Act.
  (d) Protection of Self-custody.--
          (1) In general.--The Financial Crimes Enforcement Network may 
        not issue any rule or order that would prohibit a U.S. 
        individual from--
                  (A) maintaining a hardware wallet, software wallet, 
                or other means to facilitate such individual's own 
                custody of digital assets; or
                  (B) conducting transactions and self-custody digital 
                assets for any lawful purpose.
          (2) Rule of construction.--Paragraph (1) may not be construed 
        to limit the ability of Financial Crimes Enforcement Network to 
        carry out any enforcement authority.
  (e) Joint Rulemaking, Procedures, or Guidance for Delisting.--Not 
later than 30 days after the date of the enactment of this Act, the 
Commodity Futures Trading Commission and the Securities and Exchange 
Commission shall jointly issue rules, procedures, or guidance (as 
determined appropriate by the Commissions) regarding the process to 
delist an asset for trading under sections 106 and 107 of this Act if 
the Commissions determine that the listing is inconsistent with the 
Commodity Exchange Act, the securities laws (including regulations 
under those laws), or this Act.

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

  (a) In General.--
          (1) Notice of intent to register.--Any person may file a 
        notice of intent to register with the Commodity Futures Trading 
        Commission (in this subsection referred to as the 
        ``Commission'') as a--
                  (A) digital commodity exchange, for a person 
                intending to register as a digital commodity exchange 
                under section 5i of the Commodity Exchange Act;
                  (B) digital commodity broker, for a person intending 
                to register as a digital commodity broker under section 
                4u of such Act; or
                  (C) digital commodity dealer, for a person intending 
                to register as a digital commodity dealer under section 
                4u of such Act.
          (2) Filing.--A person desiring to file a notice of intent to 
        register under paragraph (1) shall be in compliance with this 
        section if the person submits to the Commission--
                  (A) a statement of the nature of the registrations 
                the filer intends to pursue;
                  (B) the information required by subsections (b) and 
                (c).
  (b) Disclosure of General Information.--A person filing a notice of 
intent to register under subsection (a) shall disclose to the 
Commission the following:
          (1) Information concerning the management of the person, 
        including information describing--
                  (A) the ownership and management of the person;
                  (B) the financial condition of the person;
                  (C) affiliated entities; and
                  (D) potential conflicts of interest.
          (2) Information concerning the operations of the person, 
        including--
                  (A) any rulebook or other customer order fulfilment 
                rules;
                  (B) risk management procedures; and
                  (C) a description of the product listing process.
  (c) Listing Information.--A person filing a notice of intent to 
register under subsection (a) shall provide to the Commission and the 
Securities and Exchange Commission a detailed description of the 
product listing determination made by the person for each asset listed 
or offered for trading by the person.
  (d) Requirements.--A person filing a notice of intent to register 
under subsection (a) shall comply with the following requirements:
          (1) Books and records.--The person shall keep their books and 
        records open to inspection and examination by the Commission.
          (2) Customer disclosures.--The person shall disclose to 
        consumers--
                  (A) information about the material risks and 
                characteristics of the assets listed for trading on the 
                person; and
                  (B) information about the material risks and 
                characteristics of the transactions facilitated by the 
                person.
          (3) Customer assets.--
                  (A) In general.--The person shall--
                          (i) hold customer money, assets, and property 
                        in a manner to minimize the risk of loss to the 
                        customer or unreasonable delay in customer 
                        access to money, assets, and property of the 
                        customer;
                          (ii) treat and deal with all money, assets, 
                        and property, including any rights associated 
                        with any such money, assets, or property, of 
                        any customer received as belonging to the 
                        customer;
                          (iii) segregate all money, assets, and 
                        property received from any customer of the 
                        person from the funds of the person, except 
                        that--
                                  (I) the money, assets, and property 
                                of any customer may be commingled with 
                                that of any other customer, if 
                                separately accounted for; and
                                  (II) the share of the money, assets, 
                                and property, as in the normal course 
                                of business are necessary to margin, 
                                guarantee, secure, transfer, adjust, or 
                                settle a contract of sale of a 
                                commodity asset, may be withdrawn and 
                                applied to do so, including the payment 
                                of commissions, brokerage, interest, 
                                taxes, storage, and other charges 
                                lawfully accruing in connection with 
                                the contract of sale of a digital 
                                commodity.
                  (B) Additional resources.--
                          (i) In general.--This section shall not 
                        prevent or be construed to prevent the person 
                        from adding to the customer money, assets, and 
                        property required to be segregated under 
                        subparagraph (A), additional amounts of money, 
                        assets, or property from the account of the 
                        person as the person determines necessary to 
                        prevent the account of a customer from becoming 
                        under-segregated.
                          (ii) Treatment as customer funds.--Any money, 
                        assets, or property deposited pursuant to 
                        clause (i) shall be considered customer 
                        property within the meaning of this subsection.
  (e) Compliance and Enforcement.--
          (1) In general.--A person who has filed a notice of intent to 
        register under this section and is in compliance with this 
        section shall not be subject to an enforcement action by the 
        Securities and Exchange Commission for--
                  (A) listing or offering a digital asset deemed a 
                security; or
                  (B) failing to register as a national securities 
                exchange, broker, dealer, or clearing agency, for 
                activities related to digital assets deemed a security.
          (2) Noncompliance.--Paragraph (1) shall not apply if, after 
        notice from the Commission and a reasonable opportunity to 
        correct the deficiency, a person who has submitted a notice of 
        intent to register is not in compliance with this section.
          (3) Anti-fraud and anti-manipulation.--Paragraph (1) shall 
        not be construed to limit any anti-manipulation, anti-fraud, or 
        false reporting enforcement authority of the Commission or the 
        Securities and Exchange Commission.
          (4) Delisting.--Paragraph (1) shall not be construed to limit 
        the authority of the Commission or the Securities and Exchange 
        Commission to require a person to delist an asset for trading 
        if the Commission or the Securities and Exchange Commission 
        determines that the listing is inconsistent with the Commodity 
        Exchange Act, the securities laws (including regulations under 
        those laws), or this Act.
  (f) Final Registration.--
          (1) In general.--A person may not file a notice of intent to 
        register with the Commission after the Commission has finalized 
        its rules for the registration of digital commodity exchanges, 
        digital commodity brokers, or digital commodity dealers, as 
        appropriate.
          (2) Transition to final registration.--
                  (A) Ongoing deferral for entities registered with the 
                commission.--Subsection (e)(1) shall continue to apply 
                to a person who has submitted a notice of intent to 
                register while the person is registered with the 
                Commission as a digital commodity exchange, a digital 
                commodity broker, or a digital commodity dealer, as 
                appropriate.
                  (B) End of deferral.--Subsection (e)(1) shall not 
                apply to a person who has submitted a notice of intent 
                to register if--
                          (i) the Commission--
                                  (I) determines that the person has 
                                failed to comply with the requirements 
                                of this section; or
                                  (II) denies the application of the 
                                person to register; or
                          (ii) the digital commodity exchange, digital 
                        commodity broker, or digital commodity dealer 
                        that filed a notice of intent to register 
                        failed to register as such with the Commission 
                        within 180 days after the Commission finalized 
                        the rules of the Commission for the 
                        registration of digital commodity exchanges, 
                        digital commodity brokers, or digital commodity 
                        dealers, as appropriate.
  (g) Liability of the Filer.--It shall be unlawful for any person to 
provide false information in support of a filing under this section if 
the person knowingly or reasonably should have known that the 
information was false.

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

  (a) In General.--
          (1) Notice of intent to register.--Any person may file a 
        notice of intent to register with the Securities and Exchange 
        Commission (in this section referred to as the ``Commission'') 
        as--
                  (A) a digital asset trading system, for a person 
                intending to register as a digital asset trading system 
                under section 6(m) of the Securities Exchange Act of 
                1934;
                  (B) a digital asset broker, for a person intending to 
                register as a digital asset broker under section 15H of 
                the Securities Exchange Act of 1934; or
                  (C) a digital asset dealer, for a person intending to 
                register as a digital asset dealer under section 15H of 
                the Securities Exchange Act of 1934.
          (2) Filing.--A person desiring to file a notice of intent to 
        register under paragraph (1) shall be in compliance with this 
        section if the person submits to the Commission--
                  (A) a statement of the nature of the registrations 
                the filer intends to pursue; and
                  (B) the information required by subsections (b) and 
                (c).
  (b) Disclosure of General Information.--A person filing a notice of 
intent to register under subsection (a) shall disclose to the 
Commission the following:
          (1) Information concerning the management of the person, 
        including information describing--
                  (A) the ownership and management of the person;
                  (B) the financial condition of the person;
                  (C) affiliated entities; and
                  (D) potential conflicts of interest.
          (2) Information concerning the operations of the person, 
        including--
                  (A) any rulebook or other customer order fulfilment 
                rules;
                  (B) risk management procedures; and
                  (C) a description of the product listing process.
  (c) Listing Information.--A person filing a notice of intent to 
register under subsection (a) shall provide to the Commission and the 
Commodity Futures Trading Commission a detailed description of the 
product listing determination made by the person for each asset listed 
or offered for trading by the person.
  (d) Requirements.--A person filing a notice of intent to register 
under subsection (a) shall comply with the following requirements:
          (1) National securities association.--The person shall 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), and shall comply with the rules of the association, 
        including the rules of the association pertaining to customer 
        disclosures and protection of customer assets.
          (2) Books and records.--The person shall keep their books and 
        records open to inspection and examination by the Commission.
          (3) Customer disclosures.--The person shall disclose to 
        customers--
                  (A) information about the material risks and 
                characteristics of the assets listed for trading on the 
                person;
                  (B) information about the material risks and 
                characteristics of the transactions facilitated by the 
                person; and
                  (C) in their disclosure documents, offering 
                documents, and promotional material, in a prominent 
                manner, that they are not registered with or regulated 
                by the Commission.
          (4) Customer assets.--
                  (A) In general.--The person shall--
                          (i) hold customer money, assets, and property 
                        in a manner to minimize the risk of loss to the 
                        customer or unreasonable delay in customer 
                        access to money, assets, and property of the 
                        customer;
                          (ii) treat and deal with all money, assets, 
                        and property, including any rights associated 
                        with any such money, assets, or property, of 
                        any customer received as belonging to the 
                        customer;
                          (iii) segregate all money, assets, and 
                        property received from any customer of the 
                        person from the funds of the person, except 
                        that--
                                  (I) the money, assets, and property 
                                of any customer may be commingled with 
                                that of any other customer, if 
                                separately accounted for; and
                                  (II) the share of the money, assets, 
                                and property, as in the normal course 
                                of business are necessary to margin, 
                                guarantee, secure, transfer, adjust, or 
                                settle a contract of sale of a digital 
                                asset, may be withdrawn and applied to 
                                do so, including the payment of 
                                commissions, brokerage, interest, 
                                taxes, storage, and other charges 
                                lawfully accruing in connection with 
                                the contract of sale of a digital 
                                asset.
                  (B) Additional resources.--
                          (i) In general.--This section shall not 
                        prevent or be construed to prevent the person 
                        from adding to the customer money, assets, and 
                        property required to be segregated under 
                        subparagraph (A) additional amounts of money, 
                        assets, or property from the account of the 
                        person as the person determines necessary to 
                        hold money, assets, or property equal to or in 
                        excess of the total digital asset obligation of 
                        the person.
                          (ii) Treatment as customer funds.--Any money, 
                        assets, or property deposited pursuant to 
                        clause (i) shall be considered customer 
                        property within the meaning of this subsection.
  (e) Compliance.--
          (1) In general.--A person who has filed a notice of intent to 
        register under this section and is in compliance with this 
        section shall be exempt from Commission rules and regulations 
        pertaining to registering as a national securities exchange, 
        broker, dealer, or clearing agency, for activities related to a 
        digital asset deemed a security.
          (2) Noncompliance.--Paragraph (1) shall not apply if, after 
        notice from the Commission and a reasonable opportunity to 
        correct the deficiency, a person who has submitted a notice of 
        intent to register is not in compliance with this section.
          (3) Anti-fraud and anti-manipulation.--Paragraph (1) shall 
        not be construed to limit any fraud, anti-manipulation, or 
        false reporting enforcement authority of the Commission or the 
        Commodity Futures Trading Commission.
          (4) Delisting.--Paragraph (1) shall not be construed to limit 
        the authority of the Commission and the Commodity Futures 
        Trading Commission to jointly require a person to delist an 
        asset for trading if the Commission and the Commodity Futures 
        Trading Commission determines that the listing is inconsistent 
        with the Commodity Exchange Act, the securities laws (including 
        regulations under those laws), or this Act.
  (f) Final Registration.--
          (1) In general.--A person may not file a notice of intent to 
        register with the Commission after the Commission has finalized 
        its rules for the registration of digital asset brokers, 
        digital asset dealers, digital asset trading systems, and 
        notice-registered clearing agencies, as appropriate.
          (2) Transition to final registration.--Subsection (e)(1) 
        shall not apply to a person who has submitted a notice of 
        intent to register if--
                  (A) the Commission--
                          (i) determines that the person has failed to 
                        comply with the requirements of this section; 
                        or
                          (ii) denies the application of the person to 
                        register; or
                  (B) the digital asset broker, digital asset dealer, 
                or digital asset trading system that filed a notice of 
                intent to register failed to apply for registration as 
                such with the Commission within 180 days after the 
                effective date of the Commission's final rules for the 
                registration of digital asset brokers, digital asset 
                dealers, and digital asset trading systems, as 
                appropriate.
  (g) Liability of the Filer.--It shall be unlawful for any person to 
provide false information in support of a filing under this section if 
the person knew or reasonably should have known that the information 
was false.
  (h) National Securities Association.--A national securities 
association shall adopt rules for membership with such association for 
persons required to be members of such association under subsection 
(d)(1) within 180 days after the date of enactment of this Act.

SEC. 108. COMMODITY EXCHANGE ACT SAVINGS PROVISIONS.

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

SEC. 109. INTERNATIONAL HARMONIZATION.

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

SEC. 110. 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 ASSETS

SEC. 201. EXEMPTED TRANSACTIONS IN DIGITAL ASSETS.

  (a) In General.--The Securities Act of 1933 (15 U.S.C. 77a et seq.) 
is amended--
          (1) in section 4(a), by adding at the end the following:
          ``(8) transactions involving the offer or sale of units of a 
        digital asset by a digital asset issuer, if--
                  ``(A) the aggregate amount of units of the digital 
                asset sold by the digital asset issuer in reliance on 
                the exemption provided under this paragraph, during the 
                12-month period preceding the date of such transaction, 
                including the amount sold in such transaction, is not 
                more than $75,000,000 (as such amount is annually 
                adjusted by the Commission to reflect the change in the 
                Consumer Price Index for All Urban Consumers published 
                by the Bureau of Labor Statistics of the Department of 
                Labor);
                  ``(B) with respect to a transaction involving the 
                purchase of units of a digital asset by a person who is 
                not an accredited investor, the aggregate amount of all 
                units of digital assets purchased by such person during 
                the 12-month period preceding the date of such 
                transaction, including the unit of a digital asset 
                purchased in such transaction, does not exceed the 
                greater of--
                          ``(i) 10 percent of the person's annual 
                        income or joint income with that person's 
                        spouse or spousal equivalent; or
                          ``(ii) 10 percent of the person's net worth 
                        or joint net worth with the person's spouse or 
                        spousal equivalent;
                  ``(C) after the completion of the transaction, the 
                purchaser does not own more than 10 percent of the 
                total amount of the units of the digital asset sold in 
                reliance on the exemption under this paragraph;
                  ``(D) the transaction does not involve the offer or 
                sale of any digital asset not offered as part of an 
                investment contract;
                  ``(E) the transaction does not involve the offer or 
                sale of a unit of a digital asset by a digital asset 
                issuer that--
                          ``(i) is not organized under the laws of a 
                        State, a territory of the United States, or the 
                        District of Columbia;
                          ``(ii) is a development stage company that 
                        either--
                                  ``(I) has no specific business plan 
                                or purpose; or
                                  ``(II) has indicated that the 
                                business plan of the company is to 
                                merge with or acquire an unidentified 
                                company;
                          ``(iii) is an investment company, as defined 
                        in section 3 of the Investment Company Act of 
                        1940 (15 U.S.C. 80a-3), or is excluded from the 
                        definition of investment company by section 
                        3(b) or section 3(c) of that Act (15 U.S.C. 
                        80a-3(b) or 80a-3(c));
                          ``(iv) is issuing fractional undivided 
                        interests in oil or gas rights, or a similar 
                        interest in other mineral rights;
                          ``(v) is, or has been, subject to any order 
                        of the Commission entered pursuant to section 
                        12(j) of the Securities Exchange Act of 1934 
                        during the 5-year period before the filing of 
                        the offering statement; or
                          ``(vi) is disqualified pursuant to section 
                        230.262 of title 17, Code of Federal 
                        Regulations; and
                  ``(F) the issuer meets the requirements of section 
                4B(a).''; and
          (2) by inserting after section 4A the following:

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

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

SEC. 202. REQUIREMENTS FOR OFFERS AND SALES OF CERTAIN DIGITAL ASSETS.

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

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

  ``(a) Offers and Sales of Certain Restricted Digital Assets.--
          ``(1) In general.--Notwithstanding any other provision of 
        law, subject to paragraph (2), a restricted digital asset may 
        be offered and sold on a digital asset trading system by any 
        person other than a digital asset issuer if, at the time of 
        such offer or sale, any blockchain system to which the 
        restricted digital asset relates is a functional network and 
        the information described in section 43 has been certified and 
        made publicly available for any blockchain system to which the 
        restricted digital asset relates.
          ``(2) Additional rules for related persons and affiliated 
        persons.--Except as provided under subsection (c), a restricted 
        digital asset owned by a related person or an affiliated person 
        may only be offered or sold after 12 months after the later 
        of--
                  ``(A) the date on which such restricted digital asset 
                was acquired; or
                  ``(B) the digital asset maturity date.
  ``(b) Offers and Sales of Certain Digital Commodities.--
          ``(1) In general.--Subject to paragraph (2), a digital 
        commodity may be offered and sold by any person.
          ``(2) Rules for related and affiliated persons.--Except as 
        provided under subsection (c), a digital commodity may only be 
        offered or sold by a related person or an affiliated person 
        if--
                  ``(A) the holder of the digital commodity owned the 
                digital commodity while it was a restricted digital 
                asset for 12 months after the later of--
                          ``(i) the date on which such restricted 
                        digital asset was acquired; or
                          ``(ii) the digital asset maturity date;
                  ``(B) any blockchain system to which the digital 
                commodity relates is certified to be a decentralized 
                network under section 44; and
                  ``(C) the digital commodity is offered or sold on or 
                subject to the rules of a digital commodity exchange 
                registered under section 5i of the Commodity Exchange 
                Act.
          ``(3) Not an investment contract.--For purposes of the 
        securities laws, an offer or sale of a digital commodity that 
        does not violate paragraph (2) shall not be a transaction in an 
        investment contract.
  ``(c) Sales Restrictions for Affiliated Persons.--A digital asset may 
be offered and sold by an affiliated person under subsection (a) or (b) 
if--
          ``(1) the aggregate amount of such digital assets sold in any 
        3-month period by the affiliated person is not greater than one 
        percent of the digital assets then outstanding; or
          ``(2) the affiliated person promptly, following the placement 
        of an order to sell one percent or more of the digital assets 
        then outstanding during any 3-month period, reports the sale 
        to--
                  ``(A) the Commodity Futures Trading Commission, in 
                the case of an order to sell a digital commodity on or 
                subject to the rules of a digital commodity exchange; 
                or
                  ``(B) the Securities and Exchange Commission, in the 
                case of a sell order for a restricted digital asset 
                placed with a digital asset trading system.
  ``(d) Treatment of Certain End User Distributions Under the 
Securities Laws.--
          ``(1) In general.--With respect to a digital asset, an end 
        user distribution is described under this paragraph if--
                  ``(A) each blockchain system to which such digital 
                asset relates is a functional network; and
                  ``(B) with respect to the digital asset and each 
                blockchain system to which such digital asset relates, 
                the information described in section 43 has been 
                certified and made publicly available.
          ``(2) Not an investment contract.--For purposes of the 
        securities laws, an end user distribution described under 
        paragraph (1) shall not be a transaction in an investment 
        contract.
          ``(3) Exemption.--Section 5 of the Securities Act of 1933 (15 
        U.S.C. 77e) shall not apply to an end user distribution 
        described under paragraph (1) or a transaction in a unit of 
        digital asset issued in such a distribution.''.

SEC. 203. ENHANCED DISCLOSURE REQUIREMENTS.

  Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
seq.), as amended by section 202, is further amended by adding at the 
end the following:

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

  ``(a) Disclosure Information.--With respect to a digital asset and 
any blockchain system to which the digital asset relates, the 
information described under this section is as follows:
          ``(1) Source code.--The source code for any blockchain system 
        to which the digital asset relates.
          ``(2) Transaction history.--A description of the steps 
        necessary to independently access, search, and verify the 
        transaction history of any blockchain system to which the 
        digital asset relates.
          ``(3) Digital asset economics.--A description of the purpose 
        of any blockchain system to which the digital asset relates and 
        the operation of any such blockchain system, including--
                  ``(A) information explaining the launch and supply 
                process, including the number of digital assets to be 
                issued in an initial allocation, the total number of 
                digital assets to be created, the release schedule for 
                the digital assets, and the total number of digital 
                assets then outstanding;
                  ``(B) information on any applicable consensus 
                mechanism or process for validating transactions, 
                method of generating or mining digital assets, and any 
                process for burning or destroying digital assets on the 
                blockchain system;
                  ``(C) an explanation of governance mechanisms for 
                implementing changes to the blockchain system or 
                forming consensus among holders of such digital assets; 
                and
                  ``(D) sufficient information for a third party to 
                create a tool for verifying the transaction history of 
                the digital asset.
          ``(4) Plan of development.--The current state and timeline 
        for the development of any blockchain system to which the 
        digital asset relates, showing how and when the blockchain 
        system intends or intended to be considered a functional 
        network and decentralized network.
          ``(5) Development disclosures.--A list of all persons who are 
        related persons or affiliated persons who have been issued a 
        unit of a digital asset by a digital asset issuer or have a 
        right to a unit of a digital asset from a digital asset issuer.
          ``(6) Risk factor disclosures.--Where appropriate, provide 
        under the caption `Risk Factors' a description of the material 
        risks surrounding ownership of a unit of a digital asset. This 
        discussion shall be organized logically with relevant headings 
        and each risk factor shall be set forth under a subcaption that 
        adequately describes the risk.
  ``(b) Certification.--With respect to a digital asset and any 
blockchain system to which the digital asset relates, the information 
required to be made available under this section has been certified if 
the digital asset issuer, an affiliated person, a decentralized 
governance system, or a digital commodity exchange certifies on a 
quarterly basis to the Commodity Futures Trading Commission and the 
Securities and Exchange Commission that the information is true and 
correct.''.

SEC. 204. CERTIFICATION OF CERTAIN DIGITAL ASSETS.

  Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
seq.), as amended by section 203, is further amended by adding at the 
end the following:

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

  ``(a) Certification.--Any person may certify to the Securities and 
Exchange Commission that the blockchain system to which a digital asset 
relates is a decentralized network.
  ``(b) Filing Requirements.--A certification described under 
subsection (a) shall be filed with the Commission, and include--
          ``(1) information regarding the person making the 
        certification;
          ``(2) a description of the blockchain system and the digital 
        asset which relates to such blockchain system, including--
                  ``(A) the operation of the blockchain system;
                  ``(B) the functionality of the related digital asset;
                  ``(C) any decentralized governance system which 
                relates to the blockchain system; and
                  ``(D) the process to develop consensus or agreement 
                within such decentralized governance system;
          ``(3) a description of the development of the blockchain 
        system and the digital asset which relates to the blockchain 
        system, including--
                  ``(A) a history of the development of the blockchain 
                system and the digital asset which relates to such 
                blockchain system;
                  ``(B) a description of the issuance process for the 
                digital asset which relates to the blockchain system;
                  ``(C) information identifying the digital asset 
                issuer of the digital asset which relates to the 
                blockchain system; and
                  ``(D) a list of any affiliated person related to the 
                digital asset issuer;
          ``(4) an analysis of the factors on which such person based 
        the certification that the blockchain system is a decentralized 
        network, including--
                  ``(A) an explanation of the protections and 
                prohibitions available during the previous 12 months 
                against any one person being able to--
                          ``(i) control or materially alter the 
                        blockchain system;
                          ``(ii) exclude any other person from using or 
                        participating on the blockchain system; and
                          ``(iii) exclude any other person from 
                        participating in a decentralized governance 
                        system;
                  ``(B) information regarding the beneficial ownership 
                of the digital asset which relates to such blockchain 
                system and the distribution of voting power in any 
                decentralized governance system during the previous 12 
                months;
                  ``(C) information regarding the history of upgrades 
                to the source code for such blockchain system during 
                the previous 3 months, including--
                          ``(i) a description of any consensus or 
                        agreement process utilized to process or 
                        approve changes to the source code;
                          ``(ii) a list of any material changes to the 
                        source code, the purpose and effect of the 
                        changes, and the contributor of the changes, if 
                        known; and
                          ``(iii) any changes to the source code made 
                        by the digital asset issuer, a related person, 
                        or an affiliated person;
                  ``(D) information regarding any activities conducted 
                to market the digital asset which relates to the 
                blockchain system during the previous 3 months by the 
                digital asset issuer or an affiliated person of the 
                digital asset issuer; and
                  ``(E) information regarding any issuance of a unit of 
                the digital asset which relates to such blockchain 
                system during the previous 12 months; and
          ``(5) with respect to a blockchain system for which a 
        certification has previously been rebutted under this section 
        or withdrawn under section 5i(m) of the Commodity Exchange Act, 
        specific information relating to the analysis provided in 
        subsection (f)(2) in connection with such rebuttal or such 
        section 5i(m)(1)(C) in connection with such withdrawal.
  ``(c) Rebuttable Presumption.--The Commission may rebut a 
certification described under subsection (a) with respect to a 
blockchain system if the Commission, within 60 days of receiving such 
certification, determines that the blockchain system is not a 
decentralized network.
  ``(d) Certification Review.--
          ``(1) In general.--Any blockchain system that relates to a 
        digital asset for which a certification has been made under 
        subsection (a) shall be considered a decentralized network 60 
        days after the date on which the Commission receives a 
        certification under subsection (a), unless the Commission 
        notifies the person who made the certification within such time 
        that the Commission is staying the certification due to--
                  ``(A) an inadequate explanation by the person making 
                the certification; or
                  ``(B) any novel or complex issues which require 
                additional time to consider.
          ``(2) Public notice.--The Commission shall make the following 
        available to the public and provide a copy to the Commodity 
        Futures Trading Commission:
                  ``(A) Each certification received under subsection 
                (a).
                  ``(B) Each stay of the Commission under this section, 
                and the reasons therefore.
                  ``(C) Any response from a person making a 
                certification under subsection (a) to a stay of the 
                certification by the Commission.
          ``(3) Consolidation.--The Commission may consolidate and 
        treat as one submission multiple certifications made under 
        subsection (a) for the same blockchain system which relates to 
        a digital asset which are received during the review period 
        provided under this subsection.
  ``(e) Stay of Certification.--
          ``(1) In general.--A notification by the Commission pursuant 
        to subsection (d)(1) shall stay the certification once for up 
        to an additional 120 days from the date of the notification.
          ``(2) Public comment period.--Before the end of the 60-day 
        period described under subsection (d)(1), the Commission may 
        begin a public comment period of at least 30 days in 
        conjunction with a stay under this section.
  ``(f) Disposition of Certification.--
          ``(1) In general.--A certification made under subsection (a) 
        shall--
                  ``(A) become effective--
                          ``(i) upon the publication of a notification 
                        from the Commission to the person who made the 
                        certification that the Commission does not 
                        object to the certification; or
                          ``(ii) at the expiration of the certification 
                        review period; and
                  ``(B) not become effective upon the publication of a 
                notification from the Commission to the person who made 
                the certification that the Commission has rebutted the 
                certification.
          ``(2) Detailed analysis included with rebuttal.--The 
        Commission shall include, with each publication of a 
        notification of rebuttal described under paragraph (1)(B), a 
        detailed analysis of the factors on which the decision was 
        based.
  ``(g) Recertification.--With respect to a blockchain system for which 
a certification has been rebutted under this section, no person may 
make a certification under subsection (a) with respect to such 
blockchain system during the 90-day period beginning on the date of 
such rebuttal.
  ``(h) Appeal of Rebuttal.--
          ``(1) In general.--If a certification is rebutted under this 
        section, the person making such certification may appeal the 
        decision to the United States Court of Appeals for the District 
        of Columbia, not later than 60 days after the notice of 
        rebuttal is made.
          ``(2) Review.--In an appeal under paragraph (1), the court 
        shall have de novo review of the determination to rebut the 
        certification.
  ``(i) Liability for Providing False Information.--It shall be 
unlawful for any person to provide false information in support of a 
certification under this section if such person knew or reasonably 
should have known such information was false.''.

SEC. 205. 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 DIGITAL ASSET INTERMEDIARIES AT THE 
                   SECURITIES AND EXCHANGE COMMISSION

SEC. 301. TREATMENT OF DIGITAL COMMODITIES AND OTHER DIGITAL ASSETS.

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

SEC. 302. ANTI-FRAUD AUTHORITY OVER PERMITTED PAYMENT STABLECOINS.

  (a) In General.--Section 10 of the Securities Exchange Act of 1934 
(15 U.S.C. 78j) is amended--
          (1) by moving subsection (c) so as to appear after subsection 
        (b);
          (2) by designating the undesignated matter at the end of that 
        section as subsection (d); and
          (3) by adding at the end the following:
  ``(e)(1) Rules promulgated under subsection (b) that prohibit fraud, 
manipulation, or insider trading (but not rules imposing or specifying 
reporting or recordkeeping requirements, procedures, or standards as 
prophylactic measures against fraud, manipulation, or insider trading), 
and judicial precedents decided under subsection (b) and rules 
promulgated thereunder that prohibit fraud, manipulation, or insider 
trading, shall apply to permitted payment stablecoins with respect to 
those circumstances in which the permitted payment stablecoins are 
brokered, traded, or custodied by a broker, dealer, digital asset 
broker, or digital asset dealer or through an alternative trading 
system or digital asset trading platform to the same extent as they 
apply to securities.
  ``(2) Judicial precedents decided under section 17(a) of the 
Securities Act of 1933 and sections 9, 15, 16, 20, and 21A of this 
title, and judicial precedents decided under applicable rules 
promulgated under such sections, shall apply to permitted payment 
stablecoins with respect to those circumstances in which the permitted 
payment stablecoins are brokered, traded, or custodied by a digital 
asset broker, digital asset dealer, or digital asset trading system to 
the same extent as they apply to securities.
  ``(3) Nothing in this subsection may be construed to provide the 
Commission authority to make any rule, regulation, requirement, or 
obligation on a permitted payment stablecoin issuer regarding the 
operations of a permitted payment stablecoin issuer or a permitted 
payment stablecoin, including any aspect of the operation of a 
permitted payment stablecoin issuer or permitted payment stablecoin.''.
  (b) Treatment of Permitted Payment Stablecoins.--Title I of the 
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), as amended by 
section 304, is amended by inserting after section 6B the following

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

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

SEC. 303. REGISTRATION OF DIGITAL ASSET TRADING SYSTEMS.

  Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) is 
amended by adding at the end the following:
  ``(m) Digital Asset Trading System.--
          ``(1) In general.--It shall be unlawful for any digital asset 
        trading system to make use of the mails or any means or 
        instrumentality of interstate commerce within or subject to the 
        jurisdiction of the United States to effect any transaction in 
        a restricted digital asset, unless such digital asset trading 
        system is registered with the Commission.
          ``(2) Application.--A person desiring to register as a 
        digital asset trading system shall submit to the Commission an 
        application in such form and containing such information as the 
        Commission may require for the purpose of making the 
        determinations required for approval.
          ``(3) Exemptions.--A digital asset trading system that offers 
        or seeks to offer at least one restricted digital asset shall 
        not be required to register under this section (and 
        subparagraph (A) shall not apply to such digital asset trading 
        system) if the trading system satisfies any exemption contained 
        on a list of exemptions prepared by the Commission to be as 
        close as practicable to those exemptions set forth in section 
        240.3b-16(b) of title 17, Code of Federal Regulations, 
        applicable to the definition of an exchange.
          ``(4) Additional registrations.--
                  ``(A) With the commission.--
                          ``(i) In general.--A registered digital asset 
                        trading system shall be permitted to maintain 
                        any other registration with the Commission 
                        relating to the other activities of the 
                        registered digital asset trading system, 
                        including as a--
                                  ``(I) national securities exchange;
                                  ``(II) broker;
                                  ``(III) dealer;
                                  ``(IV) alternative trading system, 
                                pursuant to part 242 of title 17, Code 
                                of Federal Regulations, as in effect on 
                                the date of enactment of this 
                                subsection;
                                  ``(V) digital asset broker; or
                                  ``(VI) digital asset dealer.
                          ``(ii) Rulemaking.--The Commission shall 
                        prescribe rules for an entity with multiple 
                        registrations described under subparagraph (A) 
                        to exempt the entity from duplicative, 
                        conflicting, or unduly burdensome provisions of 
                        this Act and the rules under this Act, to the 
                        extent such an exemption would protect 
                        investors, maintain fair, orderly, and 
                        efficient markets, and facilitate capital 
                        formation.
                  ``(B) With the commodity futures trading 
                commission.--A registered digital asset trading system 
                shall be permitted to maintain a registration with the 
                Commodity Futures Trading Commission as a digital 
                commodity exchange to offer contracts of sale for 
                digital commodities.''.

SEC. 304. REQUIREMENTS FOR DIGITAL ASSET TRADING SYSTEMS.

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

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

  ``(a) Holding of Customer Assets.--
          ``(1) In general.--A digital asset trading system shall hold 
        customer money, assets, and property in a manner to minimize 
        the risk of loss to the customer or unreasonable delay in the 
        access to the money, assets, and property of the customer.
          ``(2) Qualified digital asset custodian required.--A digital 
        asset trading system shall hold customer restricted digital 
        assets described in paragraph (1) with a qualified digital 
        asset custodian described under section 6B.
          ``(3) Custody prohibited.--A digital asset trading system, in 
        its capacity as such, may not hold custody of customer money, 
        assets, or property.
  ``(b) Rulemaking.--The Commission shall prescribe rules for digital 
asset trading systems relating to the following:
          ``(1) Notice.--Notice to the Commission of the initial 
        operation of a digital asset trading system or any material 
        change to the operation of the digital asset trading system.
          ``(2) Order display.--The thresholds at which a digital asset 
        trading system is required to display the orders of the digital 
        asset trading system, and the manner of such display.
          ``(3) Fair access.--The thresholds at which a digital asset 
        trading system is required to have policies regarding providing 
        fair access to the digital asset trading system.
          ``(4) Capacity, integrity, and security of automated 
        systems.--Policies and procedures reasonably designed to ensure 
        the capacity, integrity, and security of the digital asset 
        trading system, taking into account the particular nature of 
        digital asset trading systems.
          ``(5) Examinations, inspections, and investigations.--The 
        examination and inspection of the premises, systems, and 
        records of the digital asset trading system by the Commission 
        or by a self-regulatory organization of which such digital 
        asset trading system is a member.
          ``(6) Recordkeeping.--The making, keeping current, and 
        preservation of records related to trading activity on the 
        digital asset trading system.
          ``(7) Reporting.--The reporting of transactions in digital 
        assets that occur through the digital asset trading system.
          ``(8) Procedures.--The establishment of adequate written 
        safeguards and written procedures to protect confidential 
        trading information.
  ``(c) Name Requirement.--A digital asset trading system may not use 
the word `exchange' in the name of the digital asset trading system, 
unless the digital asset trading system--
          ``(1) is operated by a registered national securities 
        exchange; and
          ``(2) is clearly indicated as being provided outside of the 
        system's capacity as a national securities exchange.
  ``(d) Treatment Under the Bank Secrecy Act.--A digital asset trading 
system shall be treated as a financial institution for purposes of the 
Bank Secrecy Act.

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

  ``(a) In General.--A digital asset custodian is a qualified digital 
asset custodian if the digital asset custodian complies with the 
requirements of this section.
  ``(b) Supervision Requirement.--
          ``(1) In general.--A digital asset custodian shall--
                  ``(A) be subject to adequate supervision and 
                appropriate regulation by--
                          ``(i) the Board of Governors of the Federal 
                        Reserve System;
                          ``(ii) the Comptroller of the Currency;
                          ``(iii) the Federal Deposit Insurance 
                        Corporation;
                          ``(iv) the Commodity Futures Trading 
                        Commission;
                          ``(v) the Securities and Exchange Commission;
                          ``(vi) a State bank supervisor (within the 
                        meaning of section 3 of the Federal Deposit 
                        Insurance Act); or
                          ``(vii) an appropriate foreign governmental 
                        authority in the home country of the digital 
                        asset custodian; and
                  ``(B) not be prohibited by the applicable supervisor 
                from engaging in an activity with respect to the 
                custody and safekeeping of digital assets.
          ``(2) Adequate supervision and appropriate regulation.--For 
        purposes of paragraph (1), the terms `adequate supervision' and 
        `appropriate regulation' mean such minimum standards for 
        supervision and regulation as are reasonably necessary to 
        protect the digital assets of customers of an entity registered 
        with the Commission, including minimum standards relating to--
                  ``(A) accessibility of customer assets;
                  ``(B) financial resources;
                  ``(C) risk management requirements;
                  ``(D) governance arrangements;
                  ``(E) fitness standards for officers and directors;
                  ``(F) recordkeeping;
                  ``(G) information sharing; and
                  ``(H) conflicts of interest.
          ``(3) Deemed compliance.--A digital asset custodian shall be 
        deemed to be subject to adequate supervision and appropriate 
        regulation, if--
                  ``(A) it is supervised by an agency described under 
                any of clauses (i) through (v) of paragraph (1)(A); or
                  ``(B) it is a bank supervised by a State bank 
                supervisor (within the meaning of section 3 of the 
                Federal Deposit Insurance Act).
          ``(4) Rulemaking with respect to definitions.--For purposes 
        of this subsection, the Commission may, by rule, further define 
        the terms `adequate supervision' and `appropriate regulation' 
        as necessary in the public interest, as appropriate for the 
        protection of investors, and consistent with the purposes of 
        this Act.
  ``(c) Information Sharing.--Each digital asset custodian shall 
periodically share of information with the Commission, as the 
Commission determines by rule to be reasonably necessary to effectuate 
any of the provisions, or to accomplish any of the purposes, of this 
Act.''.

SEC. 305. REGISTRATION OF DIGITAL ASSET BROKERS AND DIGITAL ASSET 
                    DEALERS.

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

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

  ``(a) Registration.--
          ``(1) In general.--It shall be unlawful for any digital asset 
        broker or digital asset dealer (other than a natural person 
        associated with a digital asset broker or digital asset dealer, 
        and other than such a digital asset broker or digital asset 
        dealer whose business is exclusively intrastate and who does 
        not make use of any facility of a digital asset trading 
        platform) to make use of the mails or any means or 
        instrumentality of interstate commerce to effect any 
        transactions in, or to induce or attempt to induce the purchase 
        or sale of, any restricted digital asset unless such digital 
        asset broker or digital asset dealer is registered in 
        accordance with this section.
          ``(2) Application.--A person desiring to register as a 
        digital asset broker or digital asset dealer shall submit to 
        the Commission an application in such form and containing such 
        information as the Commission may require for the purpose of 
        making the determinations required for approval.
  ``(b) National Securities Association Membership.--
          ``(1) In general.--A digital asset broker or digital asset 
        dealer may not register or maintain registration under this 
        section unless such digital asset broker or digital asset 
        dealer is a member of a national securities association 
        registered under section 15A.
          ``(2) Treatment under section 15a.--
                  ``(A) In general.--For purposes of section 15A--
                          ``(i) the term `broker' includes a digital 
                        asset broker;
                          ``(ii) the term `dealer' includes a digital 
                        asset dealer; and
                          ``(iii) the term `security' includes a 
                        restricted digital asset.
                  ``(B) Clarification.--Notwithstanding subparagraph 
                (A), a national securities association shall only 
                examine for and enforce against a digital asset broker 
                and digital asset dealer rules of such national 
                securities association written specifically for digital 
                asset brokers and a digital asset dealers.
          ``(3) Exception.--A digital asset broker or digital asset 
        dealer may register under this section without obtaining 
        membership in a national securities association until the end 
        of the 360-day period beginning on the date the first national 
        securities association adopts rules to admit digital asset 
        brokers or digital asset dealers as members.
  ``(c) Additional Registrations With the Commission.--
          ``(1) In general.--A registered digital asset broker or 
        registered digital asset dealer shall be permitted to maintain 
        any other registration with the Commission relating to the 
        other activities of the registered digital asset broker or 
        registered digital asset dealer, including as--
                  ``(A) a national securities exchange;
                  ``(B) a broker;
                  ``(C) a dealer;
                  ``(D) an alternative trading system, pursuant to part 
                242 of title 17, Code of Federal Regulations, as in 
                effect on the date of enactment of this section; or
                  ``(E) a digital asset trading system.
          ``(2) Rulemaking.--The Commission shall prescribe rules for 
        an entity with multiple registrations described under paragraph 
        (1) to exempt the entity from duplicative, conflicting, or 
        unduly burdensome provisions of this Act and the rules under 
        this Act, to the extent such an exemption would protect 
        investors, maintain fair, orderly, and efficient markets, and 
        facilitate capital formation.
          ``(3) Self-regulatory organizations.--The Commission shall 
        require any self-regulatory organization with a registered 
        digital asset broker or registered digital asset dealer as a 
        member to provide such rules as may be necessary to further 
        compliance with this section, protect investors, maintain fair, 
        orderly, and efficient markets, and facilitate capital 
        formation.
  ``(d) Additional Registrations With the Commodity Futures Trading 
Commission.--A registered digital asset broker or registered digital 
asset dealer shall be permitted to maintain a registration with the 
Commodity Futures Trading Commission as a digital commodity broker or 
digital commodity dealer, to list or trade contracts of sale for 
digital commodities.''.

SEC. 306. REQUIREMENTS OF DIGITAL ASSET BROKERS AND DIGITAL ASSET 
                    DEALERS.

  Section 15H of the Securities Exchange Act of 1934, as added by 
section 305, is amended by adding at the end the following:
  ``(e) Anti-fraud.--No digital asset broker or digital asset dealer 
shall make use of the mails or any means or instrumentality of 
interstate commerce to effect any transaction in, or to induce or 
attempt to induce the purchase or sale of, any restricted digital asset 
by means of any manipulative, deceptive, or other fraudulent device or 
contrivance.
  ``(f) Holding of Customer Assets.--
          ``(1) In general.--A digital asset broker or digital asset 
        dealer shall hold customer money, assets, and property in a 
        manner to minimize the risk of loss to the customer or 
        unreasonable delay in the access to the money, assets, and 
        property of the customer.
          ``(2) Qualified digital asset custodian required.--A digital 
        asset broker or digital asset dealer shall hold customer 
        restricted digital assets described in paragraph (1) with a 
        qualified digital asset custodian described under section 6B.
          ``(3) Segregation of funds.--
                  ``(A) In general.--A digital asset broker or digital 
                asset dealer shall treat and deal with all money, 
                assets, and property held for a customer of the digital 
                asset broker or digital asset dealer, or that accrues 
                to a customer as a result of trading in restricted 
                digital assets, as belonging to the customer.
                  ``(B) Commingling prohibited.--Money, assets, and 
                property of a customer described in subparagraph (A) 
                shall be separately accounted for and shall not be 
                commingled with the funds of the digital asset broker 
                or digital asset dealer or be used to margin, secure, 
                or guarantee any trades of any person other than the 
                customer of the digital asset broker or digital asset 
                dealer for whom the same are held.
          ``(4) Exceptions.--
                  ``(A) Use of funds.--
                          ``(i) In general.--Notwithstanding paragraph 
                        (3), money, assets, and property of customers 
                        of a digital asset broker or digital asset 
                        dealer described in paragraph (3) may be 
                        maintained and deposited in the same account or 
                        accounts with any bank, trust company, or 
                        qualified digital asset custodian described 
                        under section 6B, if the money, assets, and 
                        property remain segregated from the money, 
                        assets, and property of the digital asset 
                        broker or digital asset dealer.
                          ``(ii) Withdrawal.--Notwithstanding paragraph 
                        (3), such share of the money, assets, and 
                        property described in paragraph (3) as in the 
                        normal course of business shall be necessary to 
                        transfer, adjust, or settle a restricted 
                        digital asset transaction pursuant to a 
                        customer's instruction (standing or otherwise) 
                        may be withdrawn and applied to such purposes, 
                        including the withdrawal and payment of 
                        commissions, brokerage, interest, taxes, 
                        storage, and other charges lawfully accruing in 
                        connection with a restricted digital asset 
                        transaction.
                          ``(iii) Commission action.--In accordance 
                        with such terms and conditions as the 
                        Commission may prescribe by rule, regulation, 
                        or order, any money, assets, or property of a 
                        customer of a digital asset broker or digital 
                        asset dealer described in paragraph (3) may be 
                        commingled and deposited as provided in this 
                        section with any other money, assets, or 
                        property received by the digital asset broker 
                        or digital asset dealer and required by the 
                        Commission to be separately accounted for and 
                        treated and dealt with as belonging to the 
                        customer of the digital asset broker or digital 
                        asset dealer.
                  ``(B) Participation in blockchain services.--
                          ``(i) In general.--A customer shall have the 
                        right to waive the restrictions in paragraph 
                        (3) for any unit of a digital asset to be used 
                        under clause (ii), by affirmatively electing, 
                        in writing to the digital asset broker or 
                        digital asset dealer, to waive the 
                        restrictions.
                          ``(ii) Use of funds.--Customer digital assets 
                        removed from segregation under clause (i) may 
                        be pooled and used by the digital asset broker 
                        or digital asset dealer or its designee to 
                        provide a blockchain service for a blockchain 
                        system to which the unit of the digital asset 
                        removed from segregation under clause (i) 
                        relates.
                          ``(iii) Limitations.--The Commission may, by 
                        rule, establish notice and disclosure 
                        requirements, and any other limitations and 
                        rules related to the waiving of any 
                        restrictions under this subparagraph that are 
                        reasonably necessary to protect customers.
                          ``(iv) Blockchain service defined.--In this 
                        subparagraph, the term `blockchain service' 
                        means any activity relating to validating 
                        transactions on a blockchain system, providing 
                        security for a blockchain system, or other 
                        similar activity required for the ongoing 
                        operation of a blockchain system.
          ``(5) Further limitations.--No person shall treat or deal 
        with a restricted digital asset held on behalf of any customer 
        pursuant to paragraph (3) by utilizing any unit of such 
        restricted digital asset to participate in a blockchain service 
        (as defined in paragraph (4)(B)(iv) or a decentralized 
        governance system associated with the restricted digital asset 
        or the blockchain system to which the restricted digital asset 
        relates in any manner other than that which is expressly 
        directed by the customer from which such unit of a restricted 
        digital asset was received.
  ``(g) Capital Requirements.--
          ``(1) In general.--Each registered digital asset broker and 
        registered digital asset dealer shall meet such minimum capital 
        requirements as the Commission may prescribe to ensure that the 
        digital asset broker or digital asset dealer is able to--
                  ``(A) conduct an orderly wind-down of the activities 
                of the digital asset broker or digital asset dealer; 
                and
                  ``(B) fulfill the customer obligations of the digital 
                asset broker or digital asset dealer.
          ``(2) Calculation.--For purposes of any Commission rule or 
        order adopted under this section or any interpretation thereof 
        regulating a digital asset broker or digital asset dealer's 
        financial responsibility obligations and capital requirements, 
        a registered digital asset broker or digital asset dealer that 
        maintains control of customer digital assets in a manner that 
        satisfies the rules issued by the Commission under subsection 
        (f)(2) shall not be required to include the value of such 
        digital assets as assets or liabilities of the digital asset 
        broker or digital asset dealer.
          ``(3) Coordination of capital requirements.--
                  ``(A) Commission rule.--The Commission shall, by 
                rule, provide appropriate offsets to any applicable 
                capital requirement for a person with multiple 
                registrations, including as a broker, dealer, digital 
                asset broker, or digital asset dealer.
                  ``(B) Joint rule.--The Commission and the Commodity 
                Futures Trading Commission shall jointly, by rule, 
                provide appropriate offsets to any applicable capital 
                requirement for a person with multiple registrations, 
                including as a digital asset broker, digital asset 
                dealer, digital asset trading system, digital commodity 
                broker, digital commodity dealer, or digital commodity 
                exchange.
  ``(h) Reporting and Recordkeeping.--Each registered digital asset 
broker and digital asset dealer--
          ``(1) shall make such reports as are required by the 
        Commission by rule or regulation regarding the transactions, 
        positions, and financial condition of the digital asset broker 
        or digital asset dealer;
          ``(2) shall keep books and records in such form and manner 
        and for such period as may be prescribed by the Commission by 
        rule or regulation; and
          ``(3) shall keep the books and records open to inspection and 
        examination by any representative of the Commission.
  ``(i) Treatment Under the Bank Secrecy Act.--A digital asset broker 
and a digital asset dealer shall be treated as a financial institution 
for purposes of the Bank Secrecy Act.''.

SEC. 307. RULES RELATED TO CONFLICTS OF INTEREST.

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

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

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

SEC. 308. TREATMENT OF CERTAIN DIGITAL ASSETS IN CONNECTION WITH 
                    FEDERALLY REGULATED INTERMEDIARIES.

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

SEC. 309. EXCLUSION FOR ANCILLARY ACTIVITIES.

  The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), as 
amended by section 305, is further amended by inserting after section 
15H the following:

``SEC. 15I. EXCLUSION FOR ANCILLARY ACTIVITIES.

  ``(a) In General.--Notwithstanding any other provision of this Act, a 
person shall not be subject to this Act and the regulations thereunder 
solely based on the person undertaking any ancillary activities.
  ``(b) Exceptions.--Subsection (a) shall not be construed to apply to 
the anti-fraud and anti-manipulation authorities of the Commission.
  ``(c) Ancillary Activities Defined.--In this section, the term 
`ancillary activities' means any of the following activities related to 
the operation of a blockchain system:
          ``(1) Compiling network transactions, operating or 
        participating in a liquidity pool, relaying, searching, 
        sequencing, validating, or acting in a similar capacity with 
        respect to a digital asset.
          ``(2) Providing computational work, operating a node, or 
        procuring, offering, or utilizing network bandwidth, or other 
        similar incidental services with respect to a digital asset.
          ``(3) Providing a user-interface that enables a user to read 
        and access data about a blockchain system, send messages, or 
        otherwise interact with a blockchain system.
          ``(4) Developing, publishing, constituting, administering, 
        maintaining, or otherwise distributing a blockchain system.
          ``(5) Developing, publishing, constituting, administering, 
        maintaining, or otherwise distributing software or systems that 
        create or deploy a hardware or software wallet or other system 
        facilitating an individual user's own personal ability to keep, 
        safeguard, or custody the user's digital assets or related 
        private keys.''.

SEC. 310. REGISTRATION AND REQUIREMENTS FOR NOTICE-REGISTERED DIGITAL 
                    ASSET CLEARING AGENCIES.

  Section 17A(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78q-
1(b)) is amended--
          (1) in subsection (1), by inserting ``(other than a notice-
        registered digital asset clearing agency)'' after ``unlawful 
        for any clearing agency''; and
          (2) by adding at the end the following:
          ``(9) Registration and requirements for notice-registered 
        digital asset clearing agency.--
                  ``(A) Eligibility.--A person may register with the 
                Commission as a notice-registered digital asset 
                clearing agency if the person--
                          ``(i) is otherwise registered as a digital 
                        asset broker or digital asset dealer with the 
                        Commission and is engaging in a business 
                        involving restricted digital assets, in 
                        compliance with Commission rules pursuant to 
                        section 15H(f); or
                          ``(ii) is a bank engaging in a business 
                        involving digital assets, in compliance with 
                        applicable banking law and regulation relating 
                        to the custody and safekeeping of such assets.
                  ``(B) Registration.--A person may register with the 
                Commission as a notice-registered digital asset 
                clearing agency by providing the Commission with notice 
                of the activities of the person or planned activities 
                in such form as the Commission determines appropriate. 
                Such notice shall include information describing the 
                person's policies and procedures relating to the 
                holding of customer assets.
                  ``(C) Rulemaking.--The Commission may adopt rules, 
                which may not take effect until at least 360 days 
                following the date of enactment of this paragraph, with 
                regard to the activities of notice-registered digital 
                asset clearing agencies, taking into account the nature 
                of restricted digital assets.''.

SEC. 311. TREATMENT OF CUSTODY ACTIVITIES BY BANKING INSTITUTIONS.

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

SEC. 312. EFFECTIVE DATE; ADMINISTRATION.

  (a) In General.--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.
  (b) Limitation.--During fiscal years 2024, 2025, and 2026, 
registration fees collected by the Securities and Exchange Commission 
shall not be deposited in the Securities and Exchange Commission 
Reserve Fund.

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

SEC. 401. COMMISSION JURISDICTION OVER DIGITAL COMMODITY TRANSACTIONS.

  (a) In General.--Section 2(a)(1) of the Commodity Exchange Act (7 
U.S.C. 2(a)(1)) is amended by adding at the end the following:
                  ``(J) Except as expressly provided in this Act, 
                nothing in the Financial Innovation and Technology for 
                the 21st Century Act shall affect or apply to, or be 
                interpreted to affect or apply to--
                          ``(i) any agreement, contract, or transaction 
                        that is subject to regulation under this Act 
                        as--
                                  ``(I) a contract of sale of a 
                                commodity for future delivery or an 
                                option on such a contract;
                                  ``(II) a swap;
                                  ``(III) a security futures product;
                                  ``(IV) an option authorized under 
                                section 4c of this Act;
                                  ``(V) an agreement, contract, or 
                                transaction described in subparagraph 
                                (C)(i) or (D)(i) of subsection (c)(2) 
                                of this section; or
                                  ``(VI) a leverage transaction 
                                authorized under section 19 of this 
                                Act; or
                          ``(ii) the activities of any person with 
                        respect to any such an agreement, contract, or 
                        transaction.''.
  (b) In General.--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) In General.--Section 2(c)(2) of the Commodity Exchange Act (7 
U.S.C. 2(c)(2)) is amended--
          (1) in subparagraph (D)(ii)--
                  (A) in subclause (III), in the matter that precedes 
                item (aa), by inserting ``of a commodity, other than a 
                digital commodity,'' before ``that''; and
                  (B) by redesignating subclauses (IV) and (V) as 
                subclauses (V) and (VI) and inserting after subclause 
                (III) the following:
                                  ``(IV) a contract of sale of a 
                                digital commodity that--
                                          ``(aa) results in actual 
                                        delivery, as the Commission 
                                        shall by rule determine, within 
                                        2 days or such other period as 
                                        the Commission may determine by 
                                        rule or regulation based upon 
                                        the typical commercial practice 
                                        in cash or spot markets for the 
                                        digital commodity involved; or
                                          ``(bb) is executed with a 
                                        registered digital commodity 
                                        dealer--
                                                  ``(AA) directly;
                                                  ``(BB) through a 
                                                registered digital 
                                                commodity broker; or
                                                  ``(CC) on or subject 
                                                to the rules of a 
                                                registered digital 
                                                commodity exchange;''; 
                                                and
          (2) by adding at the end the following:
  ``(F) Commission Jurisdiction With Respect to Digital Commodity 
Transactions.--
          ``(i) In general.--Subject to sections 6d and 12(e), the 
        Commission shall have exclusive jurisdiction with respect to 
        any account, agreement, contract, or transaction involving a 
        contract of sale of a digital commodity in interstate commerce, 
        including in a digital commodity cash or spot market, that is 
        offered, solicited, traded, facilitated, executed, cleared, 
        reported, or otherwise dealt in--
                  ``(I) on or subject to the rules of a registered 
                entity or an entity that is required to be registered 
                as a registered entity; or
                  ``(II) by any other entity registered, or required to 
                be registered, with the Commission.
          ``(ii) Limitations.--Clause (i) shall not apply with respect 
        to custodial or depository activities for a digital commodity, 
        or custodial or depository activities for any promise or right 
        to a future digital commodity, of an entity regulated by an 
        appropriate Federal banking agency or a State bank supervisor 
        (within the meaning of section 3 of the Federal Deposit 
        Insurance Act).
          ``(iii) Mixed digital asset transactions.--
                  ``(I) In general.--Clause (i) shall not apply to a 
                mixed digital asset transaction.
                  ``(II) Oversight of mixed digital asset 
                transactions.--
                          ``(aa) On a cftc regulated platform.--A mixed 
                        digital asset transaction that occurs on or 
                        subject to the rules of a registered entity or 
                        by any other entity registered with the 
                        Commission--
                                  ``(AA) shall not occur except on or 
                                subject to the rules of a registered 
                                entity or by any other entity that is 
                                dually registered with the Commission 
                                and the Securities and Exchange 
                                Commission; and
                                  ``(BB) shall be subject to the 
                                jurisdiction of the Commission and the 
                                Securities and Exchange Commission.
                          ``(bb) Off exchange.--A mixed digital asset 
                        transaction that does not occur on or subject 
                        to the rules of a registered entity or by any 
                        other entity registered with the Commission 
                        shall be subject to the exclusive jurisdiction 
                        of the Securities and Exchange Commission.
                  ``(III) Reports on mixed digital asset 
                transactions.--A digital asset issuer, related person, 
                affiliated person, or other person registered with the 
                Securities and Exchange Commission that engages in a 
                mixed digital asset transaction, shall, on request, 
                open to inspection and examination by the Commodity 
                Futures Trading Commission all books and records 
                relating to the mixed digital asset transaction, 
                subject to the confidentiality and disclosure 
                requirements of section 8.
  ``(G) Agreements, Contracts, and Transactions in Stablecoins.--
          ``(i) Treatment of permitted payment stablecoins on 
        commission-registered entities.--Except as provided in clauses 
        (ii) and (iii), the Commission shall only have jurisdiction 
        over a cash or spot agreement, contract, or transaction in a 
        permitted payment stablecoin that is offered, offered to enter 
        into, entered into, executed, confirmed the execution of, 
        solicited, or accepted--
                  ``(I) on or subject to the rules of a registered 
                entity; or
                  ``(II) by any other entity registered by the 
                Commission.
          ``(ii) Permitted payment stablecoin transaction rules.--This 
        Act shall only apply to a transaction described in clause (i) 
        for the purposes of regulating the offer, execution, 
        solicitation, or acceptance of a cash or spot permitted payment 
        stablecoin transaction on a registered entity or other entity 
        registered by the Commission with respect to requirements 
        imposed with respect to--
                  ``(I) recordkeeping;
                  ``(II) custody;
                  ``(III) segregation;
                  ``(IV) reporting;
                  ``(V) trading procedures and trade processing 
                requirements;
                  ``(VI) information sharing;
                  ``(VII) conflicts of interest;
                  ``(VIII) antifraud, antimanipulation, or false 
                reporting; or
                  ``(IX) any other transaction level requirement 
                imposed on the registered entity or other entity 
                registered by the Commission that the Commission by 
                rule determines would foster the development of fair 
                and orderly cash or spot markets in digital 
                commodities, be necessary or appropriate in the public 
                interest, and be consistent with the protection of 
                customers.
          ``(iii) No authority over permitted payment stablecoins.--
        Notwithstanding clause (ii), the Commission shall not make a 
        rule or regulation, impose a requirement or obligation on a 
        registered entity or other entity registered by 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, 
        including a requirement or obligation regarding--
                  ``(I) design;
                  ``(II) structure;
                  ``(III) issuance;
                  ``(IV) redemption;
                  ``(V) financial resources;
                  ``(VI) collateral; or
                  ``(VII) any other aspect of such an operation or such 
                a stablecoin.''.
  (d) Conforming Amendment.--Section 2(a)(1)(A) of such Act (7 U.S.C. 
2(a)(1)(A)) is amended in the 1st sentence by inserting ``subsection 
(c)(2)(F) of this section or'' before ``section 19''.

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

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

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

  Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-2) is amended--
          (1) in subsection (a), by striking ``5(d) and 5b(c)(2)'' and 
        inserting ``5(d), 5b(c)(2), and 5i(c)'';
          (2) in subsection (b)--
                  (A) in each of paragraphs (1) and (2), by inserting 
                ``digital commodity exchange,'' before ``derivatives''; 
                and
                  (B) in paragraph (3), by inserting ``digital 
                commodity exchange,'' before ``derivatives'' each place 
                it appears;
          (3) in subsection (c)--
                  (A) in paragraph (2), by inserting ``or 
                participants'' before ``(in'';
                  (B) in paragraph (4)(B), by striking ``1a(10)'' and 
                inserting ``1a(9)''; and
                  (C) in paragraph (5), by adding at the end the 
                following:
                  ``(D) Special rules for digital commodity 
                contracts.--In certifying any new rule or rule 
                amendment, or listing any new contract or instrument, 
                in connection with a contract of sale of a commodity 
                for future delivery, option, swap, or other agreement, 
                contract, or transaction, that is based on or 
                references a digital commodity, a registered entity 
                shall make or rely on a certification under subsection 
                (d) for the digital commodity.''; and
          (4) by inserting after subsection (c) the following:
  ``(d) Certifications for Digital Commodity Trading.--
          ``(1) In general.--Notwithstanding subsection (c), for the 
        purposes of listing or offering a digital commodity for trading 
        in a digital commodity cash or spot market, an eligible entity 
        shall issue a written certification that the digital commodity 
        meets the requirements of this Act (including regulations 
        thereunder).
          ``(2) Contents of the certification.--
                  ``(A) In general.--In making a written certification 
                under this paragraph, the eligible entity shall furnish 
                to the Commission--
                          ``(i) an analysis of how the digital 
                        commodity meets the requirements of section 
                        5i(c)(3);
                          ``(ii) information about the digital 
                        commodity regarding--
                                  ``(I) its purpose and use;
                                  ``(II) its unit creation or release 
                                process;
                                  ``(III) its consensus mechanism;
                                  ``(IV) its governance structure;
                                  ``(V) its participation and 
                                distribution; and
                                  ``(VI) its current and proposed 
                                functionality; and
                          ``(iii) any other information, analysis, or 
                        documentation the Commission may, by rule, 
                        require.
                  ``(B) Reliance on prior disclosures.--In making a 
                certification under this subsection, an eligible entity 
                may rely on the records and disclosures of any relevant 
                person registered with the Securities and Exchange 
                Commission or other State or Federal agency.
          ``(3) Modifications.--
                  ``(A) In general.--An eligible entity shall modify a 
                certification made under paragraph (1) to--
                          ``(i) account for significant changes in any 
                        information provided to the Commission under 
                        paragraph (2)(A)(ii); or
                          ``(ii) permit or restrict trading in units of 
                        a digital commodity asset held by a related 
                        person or an affiliated person.
                  ``(B) Recertification.--Modifications required by 
                this subsection shall be subject to the same 
                disapproval and review process as a new certification 
                under paragraphs (4) and (5).
          ``(4) Disapproval.--
                  ``(A) In general.--The written certification 
                described in paragraph (1) shall become effective 
                unless the Commission finds that the digital asset does 
                not meet the requirements of this Act or the rules and 
                regulations thereunder.
                  ``(B) Analysis required.--The Commission shall 
                include, with any findings referred to in subparagraph 
                (A), a detailed analysis of the factors on which the 
                decision was based.
                  ``(C) Public findings.--The Commission shall make 
                public any disapproval decision, and any related 
                findings and analysis, made under this paragraph.
          ``(5) Review.--
                  ``(A) In general.--Unless the Commission makes a 
                disapproval decision under paragraph (4), the written 
                certification described in paragraph (1) shall become 
                effective, pursuant to the certification by the 
                eligible entity and notice of the certification to the 
                public (in a manner determined by the Commission) on 
                the date that is--
                          ``(i) 20 business days after the date the 
                        Commission receives the certification (or such 
                        shorter period as determined by the Commission 
                        by rule or regulation), in the case of a 
                        digital commodity that has not been certified 
                        under this section or for which a certification 
                        is being modified under paragraph (3); or
                          ``(ii) 2 business days after the date the 
                        Commission receives the certification (or such 
                        shorter period as determined by the Commission 
                        by rule or regulation) for any digital 
                        commodity that has been certified under this 
                        section.
                  ``(B) Extensions.--The time for consideration under 
                subparagraph (A) may be extended through notice to the 
                eligible entity that there are novel or complex issues 
                that require additional time to analyze, that the 
                explanation by the submitting eligible entity is 
                inadequate, or of a potential inconsistency with this 
                Act--
                          ``(i) once, for 30 business days, through 
                        written notice to the eligible entity by the 
                        Chairman; and
                          ``(ii) once, for an additional 30 business 
                        days, through written notice to the digital 
                        commodity exchange from the Commission that 
                        includes a description of any deficiencies with 
                        the certification, including any--
                                  ``(I) novel or complex issues which 
                                require additional time to analyze;
                                  ``(II) missing information or 
                                inadequate explanations; or
                                  ``(III) potential inconsistencies 
                                with this Act.
          ``(6) Certification required.--Notwithstanding any other 
        requirement of this Act, a registered entity or other entity 
        registered with the Commission shall not list for trading, 
        accept for clearing, offer to enter into, enter into, execute, 
        confirm the execution of, or conduct any office or business 
        anywhere in the United States, its territories or possessions, 
        for the purpose of soliciting, or accepting any order for, or 
        otherwise dealing in, any transaction in, or in connection 
        with, a digital asset, unless a certification has been made 
        under this section for the digital asset.
          ``(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; or
                          ``(ii) serves only customers in a single 
                        State or territory.
          ``(2) Additional registrations.--
                  ``(A) With the commission.--
                          ``(i) In general.--A registered digital 
                        commodity exchange may also register as--
                                  ``(I) a designated contract market; 
                                or
                                  ``(II) a swap execution facility.
                          ``(ii) Rules.--For an entity with multiple 
                        registrations under clause (i), the 
                        Commission--
                                  ``(I) shall prescribe rules to exempt 
                                the entity from duplicative, 
                                conflicting, or unduly burdensome 
                                provisions of this Act and the rules 
                                under this Act, to the extent such an 
                                exemption would foster the development 
                                of fair and orderly cash or spot 
                                markets in digital commodities, be 
                                necessary or appropriate in the public 
                                interest, and be consistent with the 
                                protection of customers; and
                                  ``(II) may, after an analysis of the 
                                risks and benefits, prescribe rules to 
                                provide for portfolio margining, as may 
                                be necessary to protect market 
                                participants, promote fair and 
                                equitable trading in digital commodity 
                                markets, and promote responsible 
                                economic or financial innovation.
                  ``(B) With the securities and exchange commission.--A 
                registered digital commodity exchange may register with 
                the Securities and Exchange Commission as a digital 
                asset trading system to list or trade contracts of sale 
                for digital assets deemed securities.
                  ``(C) With a registered futures association.--
                          ``(i) In general.--A registered digital 
                        commodity exchange shall also be a member of a 
                        registered futures association and comply with 
                        rules related to such activity, if the 
                        registered digital commodity exchange accepts 
                        customer funds required to be segregated under 
                        subsection (d).
                          ``(ii) Rulemaking required.--The Commission 
                        shall require any registered futures 
                        association with a digital commodity exchange 
                        as a member to provide such rules as may be 
                        necessary to further compliance with subsection 
                        (d), protect customers, and promote the public 
                        interest.
                  ``(D) Registration required.--A person required to be 
                registered as a digital commodity exchange under this 
                section shall register with the Commission as such 
                regardless of whether the person is registered as such 
                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.
          ``(2) Prohibition on acting as a counterparty.--A registered 
        digital commodity exchange or any affiliate of such an exchange 
        shall not act as counterparty to any transaction executed on or 
        subject to the rules of the registered digital commodity 
        exchange.
          ``(3) Trading securities.--A registered digital commodity 
        exchange that is also registered with the Securities and 
        Exchange Commission may offer a contract of sale of a digital 
        asset deemed a security.
          ``(4) Rules for certain digital asset sales.--The digital 
        commodity exchange shall have in place such rules as may be 
        necessary to reasonably ensure the orderly sale of any unit of 
        a digital commodity sold by a related person or an affiliated 
        person.
  ``(c) Core Principles for Digital Commodity Exchanges.--
          ``(1) Compliance with core principles.--
                  ``(A) In general.--To be registered, and maintain 
                registration, as a digital commodity exchange, a 
                digital commodity exchange shall comply with--
                          ``(i) the core principles described in this 
                        subsection; and
                          ``(ii) any requirement that the Commission 
                        may impose by rule or regulation pursuant to 
                        section 8a(5).
                  ``(B) Reasonable discretion of a digital commodity 
                exchange.--Unless otherwise determined by the 
                Commission by rule or regulation, a digital commodity 
                exchange described in subparagraph (A) shall have 
                reasonable discretion in establishing the manner in 
                which the digital commodity exchange complies with the 
                core principles described in this subsection.
          ``(2) Compliance with rules.--A digital commodity exchange 
        shall--
                  ``(A) establish and enforce compliance with any rule 
                of the digital commodity exchange, including--
                          ``(i) the terms and conditions of the trades 
                        traded or processed on or through the digital 
                        commodity exchange; and
                          ``(ii) any limitation on access to the 
                        digital commodity exchange;
                  ``(B) establish and enforce trading, trade 
                processing, and participation rules that will deter 
                abuses and have the capacity to detect, investigate, 
                and enforce those rules, including means--
                          ``(i) to provide market participants with 
                        impartial access to the market; and
                          ``(ii) to capture information that may be 
                        used in establishing whether rule violations 
                        have occurred; and
                  ``(C) establish rules governing the operation of the 
                exchange, including rules specifying trading procedures 
                to be used in entering and executing orders traded or 
                posted on the facility.
          ``(3) Listing standards for digital commodities.--
                  ``(A) In general.--A digital commodity exchange shall 
                permit trading only in a digital commodity that is not 
                readily susceptible to manipulation.
                  ``(B) Public information requirements.--
                          ``(i) In general.--A digital commodity 
                        exchange shall permit trading only in a digital 
                        commodity if the information required in clause 
                        (ii) is correct, current, and available to the 
                        public.
                          ``(ii) Required information.-- With respect 
                        to a digital commodity and each blockchain 
                        system to which the digital commodity relates 
                        for which the digital commodity exchange will 
                        make the digital commodity available to the 
                        customers of the digital commodity exchange, 
                        the information required in this clause is as 
                        follows:
                                  ``(I) Source code.--The source code 
                                for any blockchain system to which the 
                                digital commodity relates.
                                  ``(II) Transaction history.--A 
                                narrative description of the steps 
                                necessary to independently access, 
                                search, and verify the transaction 
                                history of any blockchain system to 
                                which the digital commodity relates.
                                  ``(III) Digital asset economics.--A 
                                narrative description of the purpose of 
                                any blockchain system to which the 
                                digital asset relates and the operation 
                                of any such blockchain system, 
                                including--
                                          ``(aa) information explaining 
                                        the launch and supply process, 
                                        including the number of digital 
                                        assets to be issued in an 
                                        initial allocation, the total 
                                        number of digital assets to be 
                                        created, the release schedule 
                                        for the digital assets, and the 
                                        total number of digital assets 
                                        then outstanding;
                                          ``(bb) information detailing 
                                        any applicable consensus 
                                        mechanism or process for 
                                        validating transactions, method 
                                        of generating or mining digital 
                                        assets, and any process for 
                                        burning or destroying digital 
                                        assets on the blockchain 
                                        system;
                                          ``(cc) an explanation of 
                                        governance mechanisms for 
                                        implementing changes to the 
                                        blockchain system or forming 
                                        consensus among holders of the 
                                        digital assets; and
                                          ``(dd) sufficient information 
                                        for a third party to create a 
                                        tool for verifying the 
                                        transaction history of the 
                                        digital asset.
                                  ``(IV) Additional information.--Such 
                                additional information as the 
                                Commission may, by rule, determine to 
                                be necessary for a customer to 
                                understand the financial and 
                                operational risks of a digital 
                                commodity, and to be in the public 
                                interest or in furtherance of the 
                                requirements of this Act.
                  ``(C) Additional listing considerations.--In addition 
                to the requirements of subparagraphs (A) and (B), a 
                digital commodity exchange shall consider--
                          ``(i) if a sufficient percentage of the units 
                        of the digital asset are units of a digital 
                        commodity to permit robust price discovery;
                          ``(ii) if it is reasonably unlikely that the 
                        transaction history can be fraudulently altered 
                        by any person or group of persons acting 
                        collectively;
                          ``(iii) if the operating structure and system 
                        of the digital commodity is secure from 
                        cybersecurity threats;
                          ``(iv) if the functionality of the digital 
                        commodity will protect holders from operational 
                        failures;
                          ``(v) if sufficient public information about 
                        the operation, functionality, and use of the 
                        digital commodity is available; and
                          ``(vi) any other factor which the Commission 
                        has, by rule, determined to be in the public 
                        interest or in furtherance of the requirements 
                        of this Act.
                  ``(D) Restricted digital assets.--A digital commodity 
                exchange shall not permit the trading of a unit of a 
                digital asset that is a restricted digital asset.
          ``(4) Treatment of customer assets.--A digital commodity 
        exchange shall establish standards and procedures that are 
        designed to protect and ensure the safety of customer money, 
        assets, and property.
          ``(5) Monitoring of trading and trade processing.--
                  ``(A) In general.--A digital commodity exchange shall 
                provide a competitive, open, and efficient market and 
                mechanism for executing transactions that protects the 
                price discovery process of trading on the exchange.
                  ``(B) Protection of markets and market 
                participants.--A digital commodity exchange shall 
                establish and enforce rules--
                          ``(i) to protect markets and market 
                        participants from abusive practices committed 
                        by any party, including abusive practices 
                        committed by a party acting as an agent for a 
                        participant; and
                          ``(ii) to promote fair and equitable trading 
                        on the exchange.
                  ``(C) Trading procedures.--A digital commodity 
                exchange shall--
                          ``(i) establish and enforce rules or terms 
                        and conditions defining, or specifications 
                        detailing--
                                  ``(I) trading procedures to be used 
                                in entering and executing orders traded 
                                on or through the facilities of the 
                                digital commodity exchange; and
                                  ``(II) procedures for trade 
                                processing of digital commodities on or 
                                through the facilities of the digital 
                                commodity exchange; and
                          ``(ii) monitor trading in digital commodities 
                        to prevent manipulation, price distortion, and 
                        disruptions of the delivery or cash settlement 
                        process through surveillance, compliance, and 
                        disciplinary practices and procedures, 
                        including methods for conducting real-time 
                        monitoring of trading and comprehensive and 
                        accurate trade reconstructions.
          ``(6) Ability to obtain information.--A digital commodity 
        exchange shall--
                  ``(A) establish and enforce rules that will allow the 
                facility to obtain any necessary information to perform 
                any of the functions described in this section;
                  ``(B) provide the information to the Commission on 
                request; and
                  ``(C) have the capacity to carry out such 
                international information-sharing agreements as the 
                Commission may require.
          ``(7) Emergency authority.--A digital commodity exchange 
        shall adopt rules to provide for the exercise of emergency 
        authority, in consultation or cooperation with the Commission 
        or a registered entity, as is necessary and appropriate, 
        including the authority to facilitate the liquidation or 
        transfer of open positions in any digital commodity or to 
        suspend or curtail trading in a digital commodity.
          ``(8) Timely publication of trading information.--
                  ``(A) In general.--A digital commodity exchange shall 
                make public timely information on price, trading 
                volume, and other trading data on digital commodities 
                to the extent prescribed by the Commission.
                  ``(B) Capacity of digital commodity exchange.--A 
                digital commodity exchange shall have the capacity to 
                electronically capture and transmit trade information 
                with respect to transactions executed on the exchange.
          ``(9) Recordkeeping and reporting.--
                  ``(A) In general.--A digital commodity exchange 
                shall--
                          ``(i) maintain records of all activities 
                        relating to the business of the facility, 
                        including a complete audit trail, in a form and 
                        manner acceptable to the Commission for a 
                        period of 5 years;
                          ``(ii) report to the Commission, in a form 
                        and manner acceptable to the Commission, such 
                        information as the Commission determines to be 
                        necessary or appropriate for the Commission to 
                        perform the duties of the Commission under this 
                        Act; and
                          ``(iii) keep any such records of digital 
                        commodities which relate to a security open to 
                        inspection and examination by the Securities 
                        and Exchange Commission.
                  ``(B) Information sharing.--Subject to section 8, and 
                on request, the Commission shall share information 
                collected under subparagraph (A) with--
                          ``(i) the Board;
                          ``(ii) the Securities and Exchange 
                        Commission;
                          ``(iii) each appropriate Federal banking 
                        agency;
                          ``(iv) each appropriate State bank supervisor 
                        (within the meaning of section 3 of the Federal 
                        Deposit Insurance Act);
                          ``(v) the Financial Stability Oversight 
                        Council;
                          ``(vi) the Department of Justice; and
                          ``(vii) any other person that the Commission 
                        determines to be appropriate, including--
                                  ``(I) foreign financial supervisors 
                                (including foreign futures 
                                authorities);
                                  ``(II) foreign central banks; and
                                  ``(III) foreign ministries.
                  ``(C) Confidentiality agreement.--Before the 
                Commission may share information with any entity 
                described in subparagraph (B), the Commission shall 
                receive a written agreement from the entity stating 
                that the entity shall abide by the confidentiality 
                requirements described in section 8 relating to the 
                information on digital commodities that is provided.
                  ``(D) Providing information.--A digital commodity 
                exchange shall provide to the Commission (including any 
                designee of the Commission) information under 
                subparagraph (A) in such form and at such frequency as 
                is required by the Commission.
          ``(10) Antitrust considerations.--Unless necessary or 
        appropriate to achieve the purposes of this Act, a digital 
        commodity exchange shall not--
                  ``(A) adopt any rules or take any actions that result 
                in any unreasonable restraint of trade; or
                  ``(B) impose any material anticompetitive burden on 
                trading.
          ``(11) Conflicts of interest.--A registered digital commodity 
        exchange shall implement conflict-of-interest systems and 
        procedures that--
                  ``(A) establish structural and institutional 
                safeguards--
                          ``(i) to minimize conflicts of interest that 
                        might potentially bias the judgment or 
                        supervision of the digital commodity exchange 
                        and contravene the principles of fair and 
                        equitable trading and the business conduct 
                        standards described in this Act, including 
                        conflicts arising out of transactions or 
                        arrangements with affiliates (including 
                        affiliates engaging in digital commodity 
                        activities) which may include information 
                        partitions and the legal separation of 
                        different persons or entities involved in 
                        digital commodity activities; and
                          ``(ii) to ensure that the activities of any 
                        person within the digital commodity exchange or 
                        any affiliated entity relating to research or 
                        analysis of the price or market for any digital 
                        commodity or acting in a role of providing 
                        dealing, brokering, or advising activities are 
                        separated by appropriate informational 
                        partitions within the digital commodity 
                        exchange or any affiliated entity from the 
                        review, pressure, or oversight of persons whose 
                        involvement in pricing, trading, exchange, or 
                        clearing activities might potentially bias 
                        their judgment or supervision and contravene 
                        the core principles of open access and the 
                        business conduct standards described in this 
                        Act; and
                  ``(B) address such other issues as the Commission 
                determines to be appropriate.
          ``(12) Financial resources.--
                  ``(A) In general.--A digital commodity exchange shall 
                have adequate financial, operational, and managerial 
                resources, as determined by the Commission, to 
                discharge each responsibility of the digital commodity 
                exchange.
                  ``(B) Minimum amount of financial resources.--A 
                digital commodity exchange shall possess financial 
                resources that, at a minimum, exceed the total amount 
                that would enable the digital commodity exchange to 
                conduct an orderly wind-down of its activities.
          ``(13) Disciplinary procedures.--A digital commodity exchange 
        shall establish and enforce disciplinary procedures that 
        authorize the digital commodity exchange to discipline, 
        suspend, or expel members or market participants that violate 
        the rules of the digital commodity exchange, or similar methods 
        for performing the same functions, including delegation of the 
        functions to third parties.
          ``(14) Governance fitness standards.--
                  ``(A) Governance arrangements.--A digital commodity 
                exchange shall establish governance arrangements that 
                are transparent to fulfill public interest 
                requirements.
                  ``(B) Fitness standards.--A digital commodity 
                exchange shall establish and enforce appropriate 
                fitness standards for--
                          ``(i) directors; and
                          ``(ii) any individual or entity with direct 
                        access to, or control of, customer assets.
          ``(15) System safeguards.--A digital commodity exchange 
        shall--
                  ``(A) establish and maintain a program of risk 
                analysis and oversight to identify and minimize sources 
                of operational and security risks, through the 
                development of appropriate controls and procedures, and 
                automated systems, that--
                          ``(i) are reliable and secure; and
                          ``(ii) have adequate scalable capacity;
                  ``(B) establish and maintain emergency procedures, 
                backup facilities, and a plan for disaster recovery 
                that allow for--
                          ``(i) the timely recovery and resumption of 
                        operations; and
                          ``(ii) the fulfillment of the 
                        responsibilities and obligations of the digital 
                        commodity exchange; and
                  ``(C) periodically conduct tests to verify that the 
                backup resources of the digital commodity exchange are 
                sufficient to ensure continued--
                          ``(i) order processing and trade matching;
                          ``(ii) price reporting;
                          ``(iii) market surveillance; and
                          ``(iv) maintenance of a comprehensive and 
                        accurate audit trail.
  ``(d) Holding of Customer Assets.--
          ``(1) In general.--A digital commodity exchange shall hold 
        customer money, assets, and property in a manner to minimize 
        the risk of loss to the customer or unreasonable delay in the 
        access to the money, assets, and property of the customer.
                  ``(A) Segregation of funds.--
                          ``(i) In general.--A digital commodity 
                        exchange shall treat and deal with all money, 
                        assets, and property that is received by the 
                        digital commodity exchange, or accrues to a 
                        customer as the result of trading in digital 
                        commodities, as belonging to the customer.
                          ``(ii) Commingling prohibited.--Money, 
                        assets, and property of a customer described in 
                        clause (i) shall be separately accounted for 
                        and shall not be commingled with the funds of 
                        the digital commodity exchange or be used to 
                        margin, secure, or guarantee any trades or 
                        accounts of any customer or person other than 
                        the person for whom the same are held.
                  ``(B) Exceptions.--
                          ``(i) Use of funds.--
                                  ``(I) In general.--Notwithstanding 
                                subparagraph (A), money, assets, and 
                                property of customers of a digital 
                                commodity exchange described in 
                                subparagraph (A) may, for convenience, 
                                be commingled and deposited in the same 
                                account or accounts with any bank, 
                                trust company, derivatives clearing 
                                organization, or qualified digital 
                                commodity custodian.
                                  ``(II) Withdrawal.--Notwithstanding 
                                subparagraph (A), such share of the 
                                money, assets, and property described 
                                in item (aa) as in the normal course of 
                                business shall be necessary to margin, 
                                guarantee, secure, transfer, adjust, or 
                                settle a contract of sale of a digital 
                                commodity with a registered entity may 
                                be withdrawn and applied to such 
                                purposes, including the payment of 
                                commissions, brokerage, interest, 
                                taxes, storage, and other charges, 
                                lawfully accruing in connection with 
                                the contract of sale of a digital 
                                commodity.
                          ``(ii) Commission action.--Notwithstanding 
                        subparagraph (A), in accordance with such terms 
                        and conditions as the Commission may prescribe 
                        by rule, regulation, or order, any money, 
                        assets, or property of the customers of a 
                        digital commodity exchange described in 
                        subparagraph (A) may be commingled and 
                        deposited in customer accounts with any other 
                        money, assets, or property received by the 
                        digital commodity exchange and required by the 
                        Commission to be separately accounted for and 
                        treated and dealt with as belonging to the 
                        customer of the digital commodity exchange.
          ``(2) Permitted investments.--Money described in subparagraph 
        (A) may be invested in obligations of the United States, in 
        general obligations of any State or of any political 
        subdivision of a State, and in obligations fully guaranteed as 
        to principal and interest by the United States, or in any other 
        investment that the Commission may by rule or regulation 
        prescribe, and such investments shall be made in accordance 
        with such rules and regulations and subject to such conditions 
        as the Commission may prescribe.
          ``(3) Customer protection during bankruptcy.--
                  ``(A) Customer property.--All assets held on behalf 
                of a customer by a digital commodity exchange, and all 
                money, assets, and property of any customer received by 
                a digital commodity exchange registered under section 
                5i of this Act for trading or custody, or to 
                facilitate, margin, guarantee, or secure contracts of 
                sale of a digital commodity (including money, assets, 
                or property accruing to the customer as the result of 
                the transactions), shall be considered customer 
                property for purposes of section 761 of title 11, 
                United States Code.
                  ``(B) Transactions.--A transaction involving a unit 
                of a digital commodity occurring on or subject to the 
                rules of a digital commodity exchange shall be 
                considered a `contract for the purchase or sale of a 
                commodity for future delivery, on or subject to the 
                rules of, a contract market or board of trade' for the 
                purposes of the definition of a `commodity contract' in 
                section 761 of title 11, United States Code.
                  ``(C) Exchanges.--A digital commodity exchange shall 
                be considered a futures commission merchant for 
                purposes of section 761 of title 11, United States 
                Code.
          ``(4) Misuse of customer property.--
                  ``(A) In general.--It shall be unlawful--
                          ``(i) for any digital commodity exchange that 
                        has received any customer money, assets, or 
                        property for custody to dispose of, or use any 
                        such money, assets, or property as belonging to 
                        the digital commodity exchange; or
                          ``(ii) for any other person, including any 
                        depository, other digital commodity exchange, 
                        or digital commodity custodian that has 
                        received any customer money, assets, or 
                        property for deposit, to hold, dispose of, or 
                        use any such money, assets, or property, or 
                        property, as belonging to the depositing 
                        digital commodity exchange or any person other 
                        than the customers of the digital commodity 
                        exchange.
                  ``(B) Use further defined.--For purposes of this 
                section, `use' of a digital commodity includes 
                utilizing any unit of a digital asset to participate in 
                a blockchain service defined in paragraph (5) or a 
                decentralized governance system associated with the 
                digital commodity or the blockchain system to which the 
                digital commodity relates in any manner other than that 
                expressly directed by the customer from whom the unit 
                of a digital commodity was received.
          ``(5) Participation in blockchain services.--
                  ``(A) In general.--A customer shall have the right to 
                waive the restrictions in paragraph (1) for any unit of 
                a digital commodity, by affirmatively electing, in 
                writing to the digital commodity exchange, to waive the 
                restrictions.
                  ``(B) Use of funds.--Customer digital commodities 
                removed from segregation under subparagraph (A) may be 
                pooled and used by the digital commodity exchange or 
                its designee to provide a blockchain service for a 
                blockchain system to which the unit of the digital 
                asset removed from segregation in subparagraph (A) 
                relates.
                  ``(C) Limitations.--The Commission may, by rule, 
                establish notice and disclosure requirements, and any 
                other limitations and rules related to the waiving of 
                any restrictions under this paragraph that are 
                reasonably necessary to protect customers, including 
                eligible contract participants, non-eligible contract 
                participants, or any other class of customers.
                  ``(D) Blockchain service defined.--In this 
                subparagraph, the term `blockchain service' means any 
                activity relating to validating transactions on a 
                blockchain system, providing security for a blockchain 
                system, or other similar activity required for the 
                ongoing operation of a blockchain system.
  ``(e) Market Access Requirements.--
          ``(1) In general.--A digital commodity exchange shall require 
        any person who is not an eligible contract participant to 
        access trading on the exchange through a digital commodity 
        broker.
          ``(2) Affiliated commodity brokers.--A registered digital 
        commodity exchange may maintain an affiliated digital commodity 
        broker to facilitate access to the digital commodity exchange, 
        if--
                  ``(A) no other digital commodity brokers are 
                permitted to facilitate access to the exchange;
                  ``(B) the affiliated digital commodity broker limits 
                its activities only to providing customer access to the 
                digital commodity exchange; and
                  ``(C) the affiliated digital commodity broker is not 
                also registered as a digital commodity dealer.
          ``(3) Direct access for eligible contract participants.--
        Nothing in this section shall prohibit a digital commodity 
        exchange in compliance with this section from permitting direct 
        access for eligible contract participants.
          ``(4) Additional requirements.--
                  ``(A) In general.--The Commission may, by rule, 
                impose any additional requirements related to the 
                operations and activities of the digital commodity 
                exchange and the affiliated digital commodity broker 
                necessary to protect market participants, promote fair 
                and equitable trading on the digital commodity 
                exchange, and promote responsible economic or financial 
                innovation.
                  ``(B) Delegation of authority.--The Commission may 
                delegate to a registered futures association such 
                oversight and regulatory requirements as the Commission 
                determines are necessary to--
                          ``(i) supervise the activities of the digital 
                        commodity exchange and an affiliated digital 
                        commodity broker; and
                          ``(ii) protect market participants, promote 
                        fair and equitable trading on the digital 
                        commodity exchange, and promote responsible 
                        economic or financial innovation.
  ``(f) Designation of Chief Compliance Officer.--
          ``(1) In general.--A digital commodity exchange shall 
        designate an individual to serve as a chief compliance officer.
          ``(2) Duties.--The chief compliance officer shall--
                  ``(A) report directly to the board or to the senior 
                officer of the exchange;
                  ``(B) review compliance with the core principles in 
                this subsection;
                  ``(C) in consultation with the board of the exchange, 
                a body performing a function similar to that of a 
                board, or the senior officer of the exchange, resolve 
                any conflicts of interest that may arise;
                  ``(D) establish and administer the policies and 
                procedures required to be established pursuant to this 
                section;
                  ``(E) ensure compliance with this Act and the rules 
                and regulations issued under this Act, including rules 
                prescribed by the Commission pursuant to this section; 
                and
                  ``(F) establish procedures for the remediation of 
                noncompliance issues found during compliance office 
                reviews, look backs, internal or external audit 
                findings, self-reported errors, or through validated 
                complaints.
          ``(3) Requirements for procedures.--In establishing 
        procedures under paragraph (2)(F), the chief compliance officer 
        shall design the procedures to establish the handling, 
        management response, remediation, retesting, and closing of 
        noncompliance issues.
          ``(4) Annual reports.--
                  ``(A) In general.--In accordance with rules 
                prescribed by the Commission, the chief compliance 
                officer shall annually prepare and sign a report that 
                contains a description of--
                          ``(i) the compliance of the digital commodity 
                        exchange with this Act; and
                          ``(ii) the policies and procedures, including 
                        the code of ethics and conflict of interest 
                        policies, of the digital commodity exchange.
                  ``(B) Requirements.--The chief compliance officer 
                shall--
                          ``(i) submit each report described in 
                        subparagraph (A) with the appropriate financial 
                        report of the digital commodity exchange that 
                        is required to be submitted to the Commission 
                        pursuant to this section; and
                          ``(ii) include in the report a certification 
                        that, under penalty of law, the report is 
                        accurate and complete.
  ``(g) Appointment of Trustee.--
          ``(1) In general.--If a proceeding under section 5e results 
        in the suspension or revocation of the registration of a 
        digital commodity exchange, or if a digital commodity exchange 
        withdraws from registration, the Commission, on notice to the 
        digital commodity exchange, may apply to the appropriate United 
        States district court where the digital commodity exchange is 
        located for the appointment of a trustee.
          ``(2) Assumption of jurisdiction.--If the Commission applies 
        for appointment of a trustee under paragraph (1)--
                  ``(A) the court may take exclusive jurisdiction over 
                the digital commodity exchange and the records and 
                assets of the digital commodity exchange, wherever 
                located; and
                  ``(B) if the court takes jurisdiction under 
                subparagraph (A), the court shall appoint the 
                Commission, or a person designated by the Commission, 
                as trustee with power to take possession and continue 
                to operate or terminate the operations of the digital 
                commodity exchange in an orderly manner for the 
                protection of customers subject to such terms and 
                conditions as the court may prescribe.
  ``(h) Qualified Digital Commodity Custodian.--A digital commodity 
exchange shall hold in a qualified digital commodity custodian each 
unit of a digital commodity that is--
          ``(1) the property of a customer of the digital commodity 
        exchange;
          ``(2) required to be held by the digital commodity exchange 
        under subsection (c)(12) of this section; or
          ``(3) otherwise so required by the Commission to reasonably 
        protect customers or promote the public interest.
  ``(i) Exemptions.--In order to promote responsible economic or 
financial innovation and fair competition, or protect customers, the 
Commission may (on its own initiative or on application of the 
registered digital commodity exchange) exempt, either unconditionally 
or on stated terms or conditions or for stated periods and either 
retroactively or prospectively, or both, a registered digital commodity 
exchange from the requirements of this section, if the Commission 
determines that--
          ``(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 or the digital commodity 
        exchange to discharge regulatory or self-regulatory duties 
        under this Act; or
          ``(2) the digital commodity exchange is subject to 
        comparable, comprehensive supervision and regulation by the 
        appropriate government authorities in the home country of the 
        exchange.
  ``(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 other 
any person.
  ``(k) Federal Preemption.--Notwithstanding any other provision of 
law, the Commission shall have exclusive jurisdiction over any digital 
commodity exchange registered under this section.
  ``(l) Treatment Under the Bank Secrecy Act.--A registered digital 
commodity exchange shall be treated as a financial institution for 
purposes of the Bank Secrecy Act.''.

SEC. 405. QUALIFIED DIGITAL COMMODITY CUSTODIANS.

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

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

  ``(a) In General.--For purposes of this Act, a qualified digital 
commodity custodian is a digital commodity custodian who meets the 
following conditions:
          ``(1) Supervision.--The digital commodity custodian is 
        subject to adequate supervision and appropriate regulation.
          ``(2) No prohibition.--The digital commodity custodian is--
                  ``(A) subject to the supervision of--
                          ``(i) an appropriate Federal banking agency;
                          ``(ii) a State bank supervisor (within the 
                        meaning of section 3 of the Federal Deposit 
                        Insurance Act); or
                          ``(iii) an appropriate foreign governmental 
                        authority in the home country of the digital 
                        commodity custodian; and
                  ``(B) not prohibited by the applicable supervisor 
                referred to in subparagraph (A) from engaging in any 
                activity with respect to the holding of digital 
                commodities.
          ``(3) Information sharing.--
                  ``(A) In general.--The digital commodity custodian 
                agrees to such periodic sharing of information 
                regarding customer accounts the digital commodity 
                custodian holds on behalf of an entity registered with 
                the Commission, as the Commission determines by rule 
                shall be reasonably necessary to effectuate any of the 
                provisions, or to accomplish any of the purposes, of 
                this Act.
                  ``(B) Provision of information.--Any person that is 
                subject to regulation and examination by a prudential 
                regulator may satisfy any information request described 
                in subparagraph (A), by providing the Commission with a 
                detailed listing, in writing, of the digital 
                commodities of a customer within the custody or use of 
                the person.
  ``(b) Adequate Supervision and Appropriate Regulation Further 
Defined.--
          ``(1) In general.--In subsection (a), the terms `adequate 
        supervision' and `appropriate regulation' mean such minimum 
        standards for supervision and regulation as are reasonably 
        necessary to protect the digital commodities of customers of an 
        entity registered with the Commission, including minimum 
        standards relating to--
                  ``(A) accessibility of customer assets;
                  ``(B) financial resources;
                  ``(C) risk management requirements;
                  ``(D) governance arrangements;
                  ``(E) fitness standards;
                  ``(F) recordkeeping;
                  ``(G) information sharing; and
                  ``(H) conflicts of interest.
          ``(2) Deemed compliance.--For purposes of subsection (a), a 
        bank subject to the supervision of an appropriate Federal 
        banking agency or a State bank supervisor (within the meaning 
        of section 3 of the Federal Deposit Insurance Act) is deemed to 
        be subject to adequate supervision and appropriate regulation.
          ``(3) Rulemaking authority.--For purposes of subsection (a), 
        the Commission, by rule or order, may further define the terms 
        `adequate supervision' and `appropriate regulation' as 
        necessary in the public interest, as appropriate for the 
        protection of customers, and consistent with the purposes of 
        this Act.
  ``(c) Authority To Temporarily Suspend Standards.--The Commission 
may, by rule or order, temporarily suspend, in whole or in part, any 
requirement imposed under, or any standard referred to in, this section 
if the Commission determines that the suspension would be consistent 
with the public interest and the purposes of this Act.''.

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

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

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

  ``(a) Registration.--It shall be unlawful for any person to act as a 
digital commodity broker or digital commodity dealer unless the person 
is registered as such with the Commission.
  ``(b) Requirements.--
          ``(1) In general.--A person shall register as a digital 
        commodity broker or digital commodity dealer by filing a 
        registration application with the Commission.
          ``(2) Contents.--
                  ``(A) In general.--The application shall be made in 
                such form and manner as is prescribed by the 
                Commission, and shall contain such information as the 
                Commission considers necessary concerning the business 
                in which the applicant is or will be engaged.
                  ``(B) Continual reporting.--A person that is 
                registered as a digital commodity broker or digital 
                commodity dealer shall continue to submit to the 
                Commission reports that contain such information 
                pertaining to the business of the person as the 
                Commission may require.
          ``(3) Transition.--Within 180 days after the date of the 
        enactment of this section, the Commission shall prescribe rules 
        providing for the registration of digital commodity brokers and 
        digital commodity dealers under this section.
          ``(4) 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 for 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.
          ``(5) Limitations on certain assets.--A registered digital 
        commodity broker or registered digital commodity dealer shall 
        not offer, offer to enter into, enter into, or facilitate any 
        contract for sale of a digital commodity that has not been 
        certified under section 5c(d).
  ``(c) Additional Registrations.--
          ``(1) With the commission.--Any person required to be 
        registered as a digital commodity broker or digital commodity 
        dealer may also be registered as a futures commission merchant, 
        introducing broker, or swap dealer.
          ``(2) With the securities and exchange commission.--Any 
        person required to be registered as a digital commodity broker 
        or digital commodity dealer under this section may register 
        with the Securities and Exchange Commission as a digital asset 
        broker or digital asset dealer, pursuant to section 15(b) of 
        the Securities Exchange Act of 1934, as applicable, if the 
        digital asset broker or digital asset dealer limits its 
        solicitation of orders, acceptance of orders, or execution of 
        orders, or placing of orders on behalf of others involving any 
        contract of sale of digital assets.
          ``(3) With membership in a registered futures association.--
        Any person required to be registered as a digital commodity 
        broker or digital commodity dealer under this section shall be 
        a member of a registered futures association.
          ``(4) Registration required.--Any person required to be 
        registered as a digital commodity broker or digital commodity 
        dealer under this section shall register with the Commission as 
        such regardless of whether the person is registered as such 
        with another State or Federal regulator.
  ``(d) Rulemaking.--
          ``(1) In general.--The Commission shall prescribe such rules 
        applicable to registered digital commodity brokers and 
        registered digital commodity dealers as are appropriate to 
        carry out this section, including rules in the public interest 
        that limit the activities of digital commodity brokers and 
        digital commodity dealers.
          ``(2) Multiple registrants.--The Commission shall prescribe 
        rules or regulations permitting, or may otherwise authorize, 
        exemptions or additional requirements applicable to persons 
        with multiple registrations under this Act, including as 
        futures commission merchants, introducing brokers, digital 
        commodity brokers, digital commodity dealers, or swap dealers, 
        as may be in the public interest to reduce compliance costs and 
        promote customer protection.
  ``(e) Capital Requirements.--
          ``(1) In general.--Each registered digital commodity broker 
        and registered digital commodity dealer shall meet such minimum 
        capital requirements as the Commission may prescribe to ensure 
        that the digital commodity broker or digital commodity dealer, 
        respectively, is able to--
                  ``(A) meet, and continue to meet, at all times, the 
                obligations of such a registrant;
                  ``(B) conduct an orderly wind-down of the activities 
                of the digital commodity broker or digital commodity 
                dealer, respectively; and
                  ``(C) in the case of a digital commodity dealer, 
                fulfill the customer obligations of the digital 
                commodity dealer for any margined, leveraged, or 
                financed transactions.
          ``(2) Rule of construction.--Nothing in this section shall 
        limit, or be construed to limit, the authority of the 
        Securities and Exchange Commission to set financial 
        responsibility rules for a broker or dealer registered pursuant 
        to section 15(b) of the Securities Exchange Act of 1934 (15 
        U.S.C. 78o(b)) (except for section 15(b)(11) of such Act (15 
        U.S.C. 78o(b)(11)) in accordance with section 15(c)(3) of such 
        Act (15 U.S.C. 78o(c)(3)).
          ``(3) Futures commission merchants and other dealers.--
                  ``(A) In general.--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.).
                  ``(B) Coordination of capital requirements.--
                          ``(i) Commission rule.--The Commission shall, 
                        by rule, provide appropriate offsets to any 
                        applicable capital requirement for a person 
                        with multiple registrations as a digital 
                        commodity dealer, digital commodity broker, 
                        futures commission merchant, or introducing 
                        broker.
                          ``(ii) Joint rule.--The Commission and the 
                        Securities and Exchange Commission shall 
                        jointly, by rule, provide appropriate offsets 
                        to any applicable capital requirement for a 
                        person with multiple registrations as a digital 
                        commodity dealer, digital commodity broker, 
                        futures commission merchant, introducing 
                        broker, broker, or dealer.
  ``(f) Reporting and Recordkeeping.--Each registered digital commodity 
broker and registered digital commodity dealer--
          ``(1) shall make such reports as are required by the 
        Commission by rule or regulation regarding the transactions, 
        positions, and financial condition of the digital commodity 
        broker or digital commodity dealer, respectively;
          ``(2) shall keep books and records in such form and manner 
        and for such period as may be prescribed by the Commission by 
        rule or regulation; and
          ``(3) shall keep the books and records open to inspection and 
        examination by any representative of the Commission.
  ``(g) Daily Trading Records.--
          ``(1) In general.--Each registered digital commodity broker 
        and registered 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 registered digital 
        commodity broker and registered 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 registered digital commodity broker 
        and registered digital commodity dealer shall maintain a 
        complete audit trail for conducting comprehensive and accurate 
        trade reconstructions.
  ``(h) Business Conduct Standards.--
          ``(1) In general.--Each registered digital commodity broker 
        and registered digital commodity dealer shall conform with such 
        business conduct standards as the Commission, by rule or 
        regulation, prescribes related to--
                  ``(A) fraud, manipulation, and other abusive 
                practices involving spot or margined, leveraged, or 
                financed digital commodity transactions (including 
                transactions that are offered but not entered into);
                  ``(B) diligent supervision of the business of the 
                registered digital commodity broker or digital 
                commodity dealer, respectively; and
                  ``(C) such other matters as the Commission deems 
                appropriate.
          ``(2) Business conduct requirements.--The Commission shall, 
        by rule, prescribe business conduct requirements which--
                  ``(A) require disclosure by a registered digital 
                commodity broker and registered digital commodity 
                dealer to any counterparty to the transaction (other 
                than an eligible contract participant) of--
                          ``(i) information about the material risks 
                        and characteristics of the digital commodity; 
                        and
                          ``(ii) information about the material risks 
                        and characteristics of the transaction;
                  ``(B) establish a duty for such a digital commodity 
                broker and such a digital commodity dealer to 
                communicate in a fair and balanced manner based on 
                principles of fair dealing and good faith;
                  ``(C) establish standards governing digital commodity 
                platform marketing and advertising, including 
                testimonials and endorsements; and
                  ``(D) establish such other standards and requirements 
                as the Commission may determine are--
                          ``(i) in the public interest;
                          ``(ii) appropriate for the protection of 
                        customers; or
                          ``(iii) otherwise in furtherance of the 
                        purposes of this Act.
          ``(3) Prohibition on fraudulent practices.--It shall be 
        unlawful for a registered digital commodity broker or 
        registered digital commodity dealer to--
                  ``(A) employ any device, scheme, or artifice to 
                defraud any customer or counterparty;
                  ``(B) engage in any transaction, practice, or course 
                of business that operates as a fraud or deceit on any 
                customer or counterparty; or
                  ``(C) engage in any act, practice, or course of 
                business that is fraudulent, deceptive, or 
                manipulative.
  ``(i) Duties.--
          ``(1) Risk management procedures.--Each registered digital 
        commodity broker and registered 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 registered 
        digital commodity broker and registered 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 registered digital 
        commodity broker and registered 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 registered digital 
        commodity broker and digital commodity dealer shall implement 
        conflict-of-interest systems and procedures that--
                  ``(A) establish structural and institutional 
                safeguards--
                          ``(i) to minimize conflicts of interest that 
                        might potentially bias the judgment or 
                        supervision of the digital commodity broker or 
                        digital commodity dealer, respectively, and 
                        contravene the principles of fair and equitable 
                        trading and the business conduct standards 
                        described in this Act, including conflicts 
                        arising out of transactions or arrangements 
                        with affiliates (including affiliates acting as 
                        digital asset issuers, digital commodity 
                        dealers, or qualified digital commodity 
                        custodians), which may include information 
                        partitions and the legal separation of 
                        different digital commodity transaction 
                        intermediaries; and
                          ``(ii) to ensure that the activities of any 
                        person within the digital commodity broker or 
                        digital commodity dealer relating to research 
                        or analysis of the price or market for any 
                        digital commodity or acting in a role of 
                        providing exchange activities or making 
                        determinations as to accepting exchange 
                        customers are separated by appropriate 
                        informational partitions within the digital 
                        commodity broker or digital commodity dealer 
                        from the review, pressure, or oversight of 
                        persons whose involvement in pricing, trading, 
                        exchange, or clearing activities might 
                        potentially bias their judgment or supervision 
                        and contravene the core principles of open 
                        access and the business conduct standards 
                        described in this Act; and
                  ``(B) address such other issues as the Commission 
                determines to be appropriate.
          ``(5) Antitrust considerations.--Unless necessary or 
        appropriate to achieve the purposes of this Act, a digital 
        commodity broker or digital commodity dealer shall not--
                  ``(A) adopt any process or take any action that 
                results in any unreasonable restraint of trade; or
                  ``(B) impose any material anticompetitive burden on 
                trading or clearing.
  ``(j) Designation of Chief Compliance Officer.--
          ``(1) In general.--Each registered digital commodity broker 
        and registered digital commodity dealer shall designate an 
        individual to serve as a chief compliance officer.
          ``(2) Duties.--The chief compliance officer shall--
                  ``(A) report directly to the board or to the senior 
                officer of the registered digital commodity broker or 
                registered digital commodity dealer;
                  ``(B) review the compliance of the registered digital 
                commodity broker or registered digital commodity dealer 
                with respect to the registered digital commodity broker 
                and registered digital commodity dealer requirements 
                described in this section;
                  ``(C) in consultation with the board of directors, a 
                body performing a function similar to the board, or the 
                senior officer of the organization, resolve any 
                conflicts of interest that may arise;
                  ``(D) be responsible for administering each policy 
                and procedure that is required to be established 
                pursuant to this section;
                  ``(E) ensure compliance with this Act (including 
                regulations), including each rule prescribed by the 
                Commission under this section;
                  ``(F) establish procedures for the remediation of 
                noncompliance issues identified by the chief compliance 
                officer through any--
                          ``(i) compliance office review;
                          ``(ii) look-back;
                          ``(iii) internal or external audit finding;
                          ``(iv) self-reported error; or
                          ``(v) validated complaint; and
                  ``(G) establish and follow appropriate procedures for 
                the handling, management response, remediation, 
                retesting, and closing of noncompliance issues.
          ``(3) Annual reports.--
                  ``(A) In general.--In accordance with rules 
                prescribed by the Commission, the chief compliance 
                officer shall annually prepare and sign a report that 
                contains a description of--
                          ``(i) the compliance of the registered 
                        digital commodity broker or registered digital 
                        commodity dealer with respect to this Act 
                        (including regulations); and
                          ``(ii) each policy and procedure of the 
                        registered digital commodity broker or 
                        registered digital commodity dealer of the 
                        chief compliance officer (including the code of 
                        ethics and conflict of interest policies).
                  ``(B) Requirements.--The chief compliance officer 
                shall ensure that a compliance report under 
                subparagraph (A)--
                          ``(i) accompanies each appropriate financial 
                        report of the registered digital commodity 
                        broker or registered digital commodity dealer 
                        that is required to be furnished to the 
                        Commission pursuant to this section; and
                          ``(ii) includes a certification that, under 
                        penalty of law, the compliance report is 
                        accurate and complete.
  ``(k) Segregation of Digital Commodities.--
          ``(1) Holding of customer assets.--
                  ``(A) In general.--Each registered digital commodity 
                broker and registered digital commodity dealer shall 
                hold customer money, assets, and property in a manner 
                to minimize the risk of loss to the customer or 
                unreasonable delay in customer access to the money, 
                assets, and property of the customer.
                  ``(B) Qualified digital commodity custodian.--Each 
                registered digital commodity broker and registered 
                digital commodity dealer shall hold in a qualified 
                digital commodity custodian each unit of a digital 
                commodity that is--
                          ``(i) the property of a customer or 
                        counterparty of the digital commodity broker or 
                        digital commodity dealer, respectively; or
                          ``(ii) otherwise so required by the 
                        Commission to reasonably protect customers or 
                        promote the public interest.
          ``(2) Segregation of funds.--
                  ``(A) In general.--Each registered digital commodity 
                broker and registered digital commodity dealer shall 
                treat and deal with all money, assets, and property 
                that is received by the registered digital commodity 
                broker or registered 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 registered digital commodity 
                        broker and registered 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 
                                        registered digital commodity 
                                        broker or registered digital 
                                        commodity dealer may, for 
                                        convenience, commingle and 
                                        deposit in the same account or 
                                        accounts with any bank, trust 
                                        company, derivatives clearing 
                                        organization, or qualified 
                                        digital commodity custodian 
                                        money, assets, and property of 
                                        customers.
                                          ``(bb) Withdrawal.--The share 
                                        of the money, assets, and 
                                        property described in item (aa) 
                                        as in the normal course of 
                                        business shall be necessary to 
                                        margin, guarantee, secure, 
                                        transfer, adjust, or settle a 
                                        contract for 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 registered 
                                digital commodity broker or registered 
                                digital commodity dealer may be 
                                commingled and deposited in customer 
                                accounts with any other money, assets, 
                                or property received by the digital 
                                commodity broker or digital commodity 
                                dealer, respectively, and required by 
                                the Commission to be separately 
                                accounted for and treated and dealt 
                                with as belonging to the customer of 
                                the digital commodity broker or digital 
                                commodity dealer, respectively.
          ``(3) Permitted investments.--Money described in paragraph 
        (2) may be invested in obligations of the United States, in 
        general obligations of any State or of any political 
        subdivision of a State, in obligations fully guaranteed as to 
        principal and interest by the United States, or in any other 
        investment that the Commission may by rule or regulation allow.
          ``(4) Customer protection during bankruptcy.--
                  ``(A) Customer property.--All money, assets, or 
                property described in paragraph (2) shall be considered 
                customer property for purposes of section 761 of title 
                11, United States Code.
                  ``(B) Transactions.--A transaction involving a unit 
                of a digital commodity occurring with a digital 
                commodity dealer shall be considered a `contract for 
                the purchase or sale of a commodity for future 
                delivery, on or subject to the rules of, a contract 
                market or board of trade' for purposes of the 
                definition of a `commodity contract' in section 761 of 
                title 11, United States Code.
                  ``(C) Brokers and dealers.--A registered digital 
                commodity dealer and a registered digital commodity 
                broker shall be considered a futures commission 
                merchant for purposes of section 761 of title 11, 
                United States Code.
                  ``(D) Assets removed from segregation.--Assets 
                removed from segregation due to a customer election 
                under paragraph (5) 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
                          ``(ii) for any other person, including any 
                        depository, digital commodity exchange, other 
                        digital commodity broker, other digital 
                        commodity dealer, or digital commodity 
                        custodian that has received any customer money, 
                        assets, or property for deposit, to hold, 
                        dispose of, or use any such money, assets, or 
                        property, as belonging to the depositing 
                        digital commodity broker or digital commodity 
                        dealer or any person other than the customers 
                        of the digital commodity broker or digital 
                        commodity dealer, respectively.
                  ``(B) Use further defined.--For purposes of this 
                section, `use' of a digital commodity includes 
                utilizing any unit of a digital asset to participate in 
                a blockchain service defined in paragraph (5) or a 
                decentralized governance system associated with the 
                digital commodity or the blockchain system to which the 
                digital commodity relates in any manner other than that 
                expressly directed by the customer from whom the unit 
                of a digital commodity was received.
          ``(6) Participation in blockchain services.--
                  ``(A) In general.--A customer shall have the right to 
                waive the restrictions in paragraph (1) for any unit of 
                a digital commodity, by affirmatively electing, in 
                writing to the digital commodity broker or digital 
                commodity dealer, to waive the restrictions.
                  ``(B) Use of funds.--Customer digital commodities 
                removed from segregation under subparagraph (A) may be 
                pooled and used by the digital commodity broker or 
                digital commodity dealer, or one of their designees, to 
                provide a blockchain service for a blockchain system to 
                which the unit of the digital asset removed from 
                segregation in subparagraph (A) relates.
                  ``(C) Limitations.--The Commission may, by rule, 
                establish notice and disclosure requirements, and any 
                other limitations and rules related to the waiving of 
                any restrictions under this paragraph that are 
                reasonably necessary to protect customers, including 
                eligible contract participants, non-eligible contract 
                participants, or any other class of customers.
                  ``(D) Blockchain service defined.--In this 
                subparagraph, the term `blockchain service' means any 
                activity relating to validating transactions on a 
                blockchain system, providing security for a blockchain 
                system, or other similar activity required for the 
                ongoing operation of a blockchain system.
  ``(l) Federal Preemption.--Notwithstanding any other provision of 
law, the Commission shall have exclusive jurisdiction over any digital 
commodity broker or digital commodity dealer registered under this 
section.
  ``(m) Exemptions.--In order to promote responsible economic or 
financial innovation and fair competition, or protect customers, the 
Commission may (on its own initiative or on application of the 
registered digital commodity broker or registered digital commodity 
dealer) exempt, unconditionally or on stated terms or conditions, or 
for stated periods, and retroactively or prospectively, or both, a 
registered digital commodity broker or registered digital commodity 
dealer from the requirements of this section, if the Commission 
determines that--
          ``(1)(A) the exemption would be consistent with the public 
        interest and the purposes of this Act; and
          ``(B) the exemption will not have a material adverse effect 
        on the ability of the Commission or the digital commodity 
        broker or digital commodity dealer to discharge regulatory 
        duties under this Act; or
          ``(2) the registered digital commodity broker or registered 
        digital commodity dealer is subject to comparable, 
        comprehensive supervision and regulation by the appropriate 
        government authorities in the home country of the registered 
        digital commodity broker or registered digital commodity 
        dealer, respectively.
  ``(n) Treatment Under the Bank Secrecy Act.--A registered digital 
commodity broker and a registered digital commodity dealer shall be 
treated as a financial institution for purposes of the Bank Secrecy 
Act.''.

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

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

  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,''.

SEC. 409. EXCLUSION FOR ANCILLARY 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. EXCLUSION FOR ANCILLARY ACTIVITIES.

  ``(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 solely based on the person undertaking any ancillary 
activities.
  ``(b) Exceptions.--Subsection (a) shall not be construed to apply to 
the antimanipulation, antifraud, or false reporting enforcement 
authorities of the Commission.
  ``(c) Ancillary Activities Defined.--In this section, the term 
`ancillary activities' means any of the following activities related to 
the operation of a blockchain system:
          ``(1) Compiling network transactions, operating a pool, 
        relaying, searching, sequencing, validating, or acting in a 
        similar capacity with respect to a digital commodity 
        transaction.
          ``(2) Providing computational work, operating a node, or 
        procuring, offering, or utilizing network bandwidth, or other 
        similar incidental services with respect to a digital commodity 
        transaction.
          ``(3) Providing a user interface that enables a user to read, 
        and access data about a blockchain system, send messages, or 
        otherwise interact with a blockchain system.
          ``(4) Developing, publishing, constituting, administering, 
        maintaining, or otherwise distributing a blockchain system.
          ``(5) Developing, publishing, constituting, administering, 
        maintaining, or otherwise distributing software or systems that 
        create or deploy hardware or software, including wallets or 
        other systems, facilitating an individual user's own personal 
        ability to keep, safeguard, or custody a user's digital 
        commodities or related private keys.''.

SEC. 410. 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 V--INNOVATION AND TECHNOLOGY IMPROVEMENTS

SEC. 501. CODIFICATION OF THE SEC STRATEGIC HUB FOR INNOVATION AND 
                    FINANCIAL TECHNOLOGY.

  Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is 
amended by adding at the end the following:
  ``(l) Strategic Hub for Innovation and Financial Technology.--
          ``(1) Office established.--There is established within the 
        Commission the Strategic Hub for Innovation and Financial 
        Technology (referred to in this section as the `FinHub').
          ``(2) Purposes.--The purposes of FinHub are as follows:
                  ``(A) To assist in shaping the approach of the 
                Commission to technological advancements in the 
                financial industry.
                  ``(B) To examine financial technology innovations 
                within capital markets, market participants, and 
                investors.
                  ``(C) To coordinate the response of the Commission to 
                emerging technologies in financial, regulatory, and 
                supervisory systems.
          ``(3) Director of finhub.--FinHub shall have a Director who 
        shall be appointed by the Commission, from among individuals 
        having experience in both emerging technologies and Federal 
        securities law and serve at the pleasure of the Commission. The 
        Director shall report directly to the Commission and perform 
        such functions and duties as the Commission may prescribe.
          ``(4) Responsibilities.--FinHub shall--
                  ``(A) foster responsible technological innovation and 
                fair competition within the Commission, including 
                around financial technology, regulatory technology, and 
                supervisory technology;
                  ``(B) provide internal education and training to the 
                Commission regarding financial technology;
                  ``(C) advise the Commission regarding financial 
                technology that would serve the Commission's oversight 
                functions;
                  ``(D) analyze technological advancements and the 
                impact of regulatory requirements on financial 
                technology companies;
                  ``(E) advise the Commission with respect to 
                rulemakings or other agency or staff action regarding 
                financial technology;
                  ``(F) provide businesses working in emerging 
                financial technology fields with information on the 
                Commission, its rules and regulations; and
                  ``(G) encourage firms working in emerging technology 
                fields to engage with the Commission and obtain 
                feedback from the Commission on potential regulatory 
                issues.
          ``(5) Access to documents.--The Commission shall ensure that 
        FinHub has full access to the documents and information of the 
        Commission and any self-regulatory organization, as necessary 
        to carry out the functions of FinHub.
          ``(6) Report to congress.--
                  ``(A) In general.--Not later than October 31 of each 
                year after 2024, FinHub shall submit to the Committee 
                on Banking, Housing, and Urban Affairs of the Senate 
                and the Committee on Financial Services of the House of 
                Representatives a report on the activities of FinHub 
                during the immediately preceding fiscal year.
                  ``(B) Contents.--Each report required under 
                subparagraph (A) shall include--
                          ``(i) the total number of persons that met 
                        with FinHub;
                          ``(ii) the total number of market 
                        participants FinHub met with, including the 
                        classification of those participants;
                          ``(iii) a summary of general issues discussed 
                        during meetings with persons;
                          ``(iv) information on steps FinHub has taken 
                        to improve Commission services, including 
                        responsiveness to the concerns of persons;
                          ``(v) recommendations--
                                  ``(I) with respect to the regulations 
                                of the Commission and the guidance and 
                                orders of the Commission; and
                                  ``(II) for such legislative actions 
                                as the FinHub determines appropriate; 
                                and
                          ``(vi) any other information, as determined 
                        appropriate by the Director of FinHub.
                  ``(C) Confidentiality.--A report under subparagraph 
                (A) may not contain confidential information.
          ``(7) Systems of records.--
                  ``(A) In general.--The Commission shall establish a 
                detailed system of records (as defined under section 
                552a of title 5, United States Code) to assist FinHub 
                in communicating with interested parties.
                  ``(B) Entities covered by the system.--Entities 
                covered by the system required under subparagraph (A) 
                include entities or persons submitting requests or 
                inquiries and other information to Commission through 
                FinHub.
                  ``(C) Security and storage of records.--FinHub shall 
                store--
                          ``(i) electronic records--
                                  ``(I) in the system required under 
                                subparagraph (A); or
                                  ``(II) on the secure network or other 
                                electronic medium, such as encrypted 
                                hard drives or back-up media, of the 
                                Commission; and
                          ``(ii) paper records in secure facilities.
          ``(8) Effective date.--This subsection shall take effect on 
        the date that is 180 days after the date of the enactment of 
        this subsection.''.

SEC. 502. CODIFICATION OF LABCFTC.

  (a) In General.--Section 18 of the Commodity Exchange Act (7 U.S.C. 
22) is amended by adding at the end the following:
  ``(c) LabCFTC.--
          ``(1) Establishment.--There is established in the Commission 
        LabCFTC.
          ``(2) Purpose.--The purposes of LabCFTC are to--
                  ``(A) promote responsible financial technology 
                innovation and fair competition for the benefit of the 
                American public;
                  ``(B) serve as an information platform to inform the 
                Commission about new financial technology innovation; 
                and
                  ``(C) provide outreach to financial technology 
                innovators to discuss their innovations and the 
                regulatory framework established by this Act and the 
                regulations promulgated thereunder.
          ``(3) Director.--LabCFTC shall have a Director, who shall be 
        appointed by the Commission and serve at the pleasure of the 
        Commission. Notwithstanding section 2(a)(6)(A), the Director 
        shall report directly to the Commission and perform such 
        functions and duties as the Commission may prescribe.
          ``(4) Duties.--LabCFTC shall--
                  ``(A) advise the Commission with respect to 
                rulemakings or other agency or staff action regarding 
                financial technology;
                  ``(B) provide internal education and training to the 
                Commission regarding financial technology;
                  ``(C) advise the Commission regarding financial 
                technology that would bolster the Commission's 
                oversight functions;
                  ``(D) engage with academia, students, and 
                professionals on financial technology issues, ideas, 
                and technology relevant to activities under this Act;
                  ``(E) provide persons working in emerging technology 
                fields with information on the Commission, its rules 
                and regulations, and the role of a registered futures 
                association; and
                  ``(F) encourage persons working in emerging 
                technology fields to engage with the Commission and 
                obtain feedback from the Commission on potential 
                regulatory issues.
          ``(5) Access to documents.--The Commission shall ensure that 
        LabCFTC has full access to the documents and information of the 
        Commission and any self-regulatory organization or registered 
        futures association, as necessary to carry out the functions of 
        LabCFTC.
          ``(6) Report to congress.--
                  ``(A) In general.--Not later than October 31 of each 
                year after 2024, LabCFTC shall submit to the Committee 
                on Agriculture of the House of Representatives and the 
                Committee on Agriculture, Nutrition, and Forestry of 
                the Senate a report on its activities.
                  ``(B) Contents.--Each report required under paragraph 
                (1) shall include--
                          ``(i) the total number of persons that met 
                        with LabCFTC;
                          ``(ii) a summary of general issues discussed 
                        during meetings with the person;
                          ``(iii) information on steps LabCFTC has 
                        taken to improve Commission services, including 
                        responsiveness to the concerns of persons;
                          ``(iv) recommendations made to the Commission 
                        with respect to the regulations, guidance, and 
                        orders of the Commission and such legislative 
                        actions as may be appropriate; and
                          ``(v) any other information determined 
                        appropriate by the Director of LabCFTC.
                  ``(C) Confidentiality.--A report under paragraph (A) 
                shall abide by the confidentiality requirements in 
                section 8.
          ``(7) Systems of records.--
                  ``(A) In general.--The Commission shall establish a 
                detailed system of records (as defined in section 552a 
                of title 5, United States Code) to assist LabCFTC in 
                communicating with interested parties.
                  ``(B) Persons covered by the system.--The persons 
                covered by the system of records shall include persons 
                submitting requests or inquiries and other information 
                to the Commission through LabCFTC.
                  ``(C) Security and storage of records.--The system of 
                records shall store records electronically or on paper 
                in secure facilities, and shall store electronic 
                records on the secure network of the Commission and on 
                other electronic media, such as encrypted hard drives 
                and back-up media, as needed.''.
  (b) Conforming Amendments.--Section 2(a)(6)(A) of such Act (7 U.S.C. 
2(a)(6)(A)) is amended--
          (1) by striking ``paragraph and in'' and inserting 
        ``paragraph,''; and
          (2) by inserting ``and section 18(c)(3),'' before ``the 
        executive''.
  (c) Effective Date.--The Commodity Futures Trading Commission shall 
implement the amendments made by this section (including complying with 
section 18(c)(7) of the Commodity Exchange Act) within 180 days after 
the date of the enactment of this Act.

SEC. 503. CFTC-SEC JOINT ADVISORY COMMITTEE ON DIGITAL ASSETS.

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

SEC. 504. STUDY ON DECENTRALIZED FINANCE.

  (a) In General.--The Commodity Futures Trading Commission and the 
Securities and Exchange Commission shall jointly carry out a study on 
decentralized finance that analyzes--
          (1) the nature, size, role, and use of decentralized finance 
        blockchain protocols;
          (2) the operation of blockchain protocols that comprise 
        decentralized finance;
          (3) the interoperability of blockchain protocols and 
        blockchain systems;
          (4) the interoperability of blockchain protocols and 
        software-based systems, including websites and wallets;
          (5) the decentralized governance systems through which 
        blockchain protocols may be developed, published, constituted, 
        administered, maintained, or otherwise distributed, including--
                  (A) whether the systems enhance or detract from--
                          (i) the decentralization of the decentralized 
                        finance; and
                          (ii) the inherent risks of the decentralized 
                        governance system; and
                  (B) any procedures or requirements that would 
                mitigate the risks identified in subparagraph (A)(ii);
          (6) the benefits of decentralized finance, including--
                  (A) operational resilience and interoperability of 
                blockchain-based systems;
                  (B) market competition and innovation;
                  (C) transaction efficiency;
                  (D) transparency and traceability of transactions; 
                and
                  (E) 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 
        to 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) how decentralized finance may increase the accessibility 
        of cross-border transactions; and
          (11) the feasibility of embedding self-executing compliance 
        and risk controls into decentralized finance.
  (b) 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).
  (c) 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 (11) 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).
  (d) Definitions.--In this section:
          (1) Decentralized finance.--
                  (A) In general.--The term ``decentralized finance'' 
                means blockchain protocols that allow users to engage 
                in financial transactions in a self-directed manner so 
                that a third-party intermediary does not effectuate the 
                transactions or take custody of digital assets of a 
                user during any part of the transactions.
                  (B) Relationship to ancillary activities.--The term 
                ``decentralized finance'' shall not be interpreted to 
                limit or exclude any activity from the meaning of 
                ``ancillary activities'', as defined in section 15H(c) 
                of the Securities Exchange Act of 1934 or section 4v(c) 
                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 DIGITAL ASSETS.

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

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

SEC. 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.

                        TITLE VI--MISCELLANEOUS

SEC. 601. FINDINGS; SENSE OF CONGRESS.

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

                          Purpose and Summary

    Introduced on July 20, 2023, by Representative Glenn ``GT'' 
Thompson with Representatives French Hill, Dusty Johnson, Tom 
Emmer, and Warren Davidson as original cosponsors, H.R. 4763, 
the Financial Innovation and Technology for the 21st Century 
Act, provides the Commodity Futures Trading Commission (CFTC) 
with new jurisdiction over digital commodities and clarifies 
the Securities and Exchange Commission's (SEC) jurisdiction 
over digital assets offered as part of an investment contract. 
Additionally, the Act establishes a process to permit the 
secondary market trading of digital commodities if they were 
initially offered as part of an investment contract. Finally, 
the Act imposes robust customer protections on all entities 
required to be registered with the CFTC and the SEC. Additional 
cosponsors include Representatives Marcus Molinaro, Henry 
Cuellar, Wiley Nickel, John Curtis, Jim Banks, Patrick McHenry, 
and Ritchie Torres.

                  Background and Need for Legislation

    H.R. 4763, as marked up, establishes a digital asset market 
structure framework that is consistent with existing regulatory 
financial market requirements, but recognizes the unique 
characteristics of digital assets. This functional framework 
provides digital asset firms with regulatory certainty and 
reduces the regulatory turbulence created by jurisdictional 
infighting and regulation-by-enforcement. The reported 
legislation will ensure the next generation of financial 
innovation develops in the United States.

Innovation

    Digital assets have the potential to make our financial 
system more efficient and accessible to consumers. At a June 6, 
2023, hearing before the Committee on Agriculture (June 2023 
HAC Hearing), former CFTC Chairman Chris Giancarlo 
characterized the existing financial architecture, which stores 
value on the balance sheets of proprietary commercial firms, as 
slow, expensive, unstable, and exclusive. He testified that 
blockchain technology and digital assets provide a new 
architecture of value, finance, banking, and money that is more 
reliable and inclusive. At the same hearing, Coinbase Global, 
Inc. Chief Legal Officer Paul Grewal testified that ``digital 
assets are creating new ways to store and transfer value while 
making existing systems--like the financial system--better,'' 
including providing a means for ``cheaper, faster, and more 
reliable international payments.'' Former CFTC Commissioner Dan 
Berkovitz also testified that ``[d]igital assets and the 
associated blockchain technologies have the potential to 
transform the availability, scope, and efficiency of financial 
services to American consumers and businesses and across the 
globe.''
    As the House Committee on Financial Services (HFSC) and 
House Committee on Agriculture (HAC) heard in testimony across 
multiple hearings, digital assets are changing the way we 
conduct business globally. Digital assets serve as the 
foundation for developments in blockchain systems that can in 
turn facilitate improvements in supply chain management, 
identity verification, file storage, and numerous other 
industries.
    In testimony before HFSC on June 13, 2023 (June 2023 HFSC 
Hearing), Dr. Emin G. Gun Sirer underscored the stakes of 
failing to allow digital assets to flourish in the United 
States, stating:

          As we move towards a more digitally-native world, 
        aided by AI, virtual reality, and a work-from-home 
        society, we will have to rely increasingly on 
        digitally-native transfer and programmability of value.

    He further testified:

          Blockchains are the clear technological answer to 
        these needs and are definitively synergistic with the 
        global economy. The addressable market for digitizing 
        the world's assets and transferring value safely across 
        the internet is greater than the sum of all the value 
        of all existing assets. Failure to see the power of 
        blockchain technology--whether due to a lack of 
        understanding or misplaced fears of the technology--
        will have disastrous consequences. Failure to rapidly 
        provide sensible regulatory frameworks will not only 
        undermine economic growth but also make it easier for 
        bad actors to conduct illicit activities.

    Further, when Dr. Tonya Evans, a professor at Penn State 
Dickinson Law, testified before the House Financial Services 
Subcommittee on Digital Assets, Financial Technology and 
Inclusion on March 9, 2023, she underscored how far the United 
States is from ``a sensible regulatory framework.'' Dr. Evans 
explained:

          It remains unclear how responsible builders and 
        market participants in the future of money, work, and 
        creativity can operate confidently, efficiently, and 
        with clarity. Without such a foundation, private 
        industry development will be left in a holding pattern 
        or will simply move valuable tax dollars and 
        opportunities to jurisdictions with clearer rules and 
        policies that encourage, rather than stifle, 
        innovation.

    At an April 27, 2023, hearing before the Committee on 
Agriculture's Subcommittee on Commodity Markets, Digital 
Assets, and Rural Development (April 2023 HAC Hearing), Hedera 
Head of Global Policy Nilmini Rubin testified:

          [T]he ability of blockchains to provide immutable, 
        auditable, and order-based records enables businesses 
        and organizations to store, track and monitor data in 
        new and powerful ways.

    Ms. Rubin testified further that blockchains can provide 
new tools to more effectively and efficiently ``store, track, 
and monitor data to reduce waste, fraud, and abuse, and provide 
economic, social, and environmental benefits.'' She described 
examples of these initiatives, including data storage and 
provenance verification to support human rights reporting, 
value exchange supporting rural development, transparent 
platforms supporting the environment, supply chain traceability 
supporting waste reduction, supply chain monitoring supporting 
vaccine safety, and supply chain tracking supporting 
pharmaceutical safety.
    At a May 10, 2023, joint hearing of the Financial Services 
Committee's Subcommittee on Digital Assets, Financial 
Technology and Inclusion and the Committee on Agriculture's 
Subcommittee on Commodity Markets, Digital Assets, and Rural 
Development (May 2023 Joint Hearing), Kraken Chief Legal 
Officer Marco Santori testified:

          [T]his discussion is not just about people using 
        tokens or people using digital assets. This discussion 
        is about people using the product of those digital 
        assets, the functional use cases that exist today, and 
        this Congress has heard from witnesses who have laid 
        bare some of those uses.
          I can add a couple to that pile, but maybe one in 
        particular that I think illustrates that distinction 
        between the use case and the coin. Today, when you 
        watch a video on your phone, and we all probably watch 
        videos on our phone from time to time, those videos are 
        recorded in far-off places using different standards, 
        resolutions, color schemes, et cetera. Transforming 
        that into a version that fits on your phone takes 
        computing and processing power. It takes time and 
        effort. And it is expensive. There are blockchain-based 
        networks now that coordinate and incentivize that 
        process, it is called transcoding, so that end-users 
        can see that video that is being recorded in a 
        different resolution on their phone, on their screen, 
        on a big screen, on IMAX, right?
          People are using that technology today to view videos 
        of all kinds, mundane use cases that have nothing to do 
        with blockchain technology. But those use cases are 
        being provisioned and delivered because of functional 
        networks in digital assets.

Economic Impact

    The lack of a comprehensive federal regulatory framework 
for digital assets has led to many digital asset innovators 
moving offshore to pursue development overseas, at the expense 
of U.S. economic growth. Other countries are rushing to build 
frameworks and become developmental hubs for the digital asset 
ecosystem. Currently, the largest trading platform and the 
largest stablecoin issuer are based outside of the United 
States. Many entrepreneurs are warning against doing business 
in the United States and advocating for digital asset companies 
to move offshore.
    Many jurisdictions are successfully building digital asset 
regulatory frameworks and incorporating distributed ledger 
technology into their economies. For example, the European 
Union recently approved its Markets in Crypto-Assets (MiCA) 
regulation, and the United Kingdom will soon finalize its own 
digital asset regulatory proposal. To emphasize this impact, 
Coy Garrison, former counsel to SEC Commissioner Hester Peirce, 
testified at the June 2023 HFSC Hearing about the economic 
impact resulting from other countries regulating digital assets 
while the U.S. remains inactive:

          The status quo puts the U.S. at a competitive 
        disadvantage. The European Union, Canada, Dubai, and 
        Hong Kong are examples of jurisdictions that in recent 
        months have implemented new legislation or regulations 
        for digital assets, which create attractive 
        destinations for entities that are made to feel 
        increasingly unwelcome by regulators here in the U.S. 
        This is not empty rhetoric: I have travelled to two of 
        these jurisdictions in the past six months to explore 
        business opportunities under these new foreign 
        regulatory regimes, and I have regular conversations 
        with industry participants in the U.S. actively 
        considering moving to new jurisdictions.

    At the June 2023 HAC Hearing, Robinhood Markets, Inc. Chief 
Legal, Compliance and Corporate Affairs Officer Daniel M. 
Gallagher testified:

          The current environment is bad for American consumers 
        who want greater access to digital assets, bad for 
        innovation in the blockchain and digital asset 
        industries, and bad for the already-eroding competitive 
        position of the U.S. with regard to digital asset 
        markets. Regulatory clarity for digital assets is, 
        therefore, critical: it would allow token issuers, 
        exchanges, intermediaries, and other market 
        participants to provide products and services their 
        customers want without the constant threat of crippling 
        enforcement actions, and would help ensure that the 
        U.S. remains the global leader in responsible 
        blockchain and digital asset innovation, as well as 
        vibrant, appropriately regulated digital asset markets.

Customer Risk

    The current regulatory framework for digital assets fails 
to provide adequate consumer protection. At the June 2023 HFSC 
Hearing, Mr. Garrison, testified that:

          The status quo fails to protect people who trade or 
        hold digital assets on centralized exchanges. [ . . . ] 
        The status quo also creates a business environment 
        where responsible actors in the digital asset industry 
        are hindered in their potential to innovate, add jobs 
        to the economy, and realize the benefits of their 
        technology. They are also limited in their ability to 
        compete against traditional institutions.

    Digital commodities account for approximately 70% of the 
digital assets traded today. Because there is no federal 
oversight of the digital commodity marketplace, there are no 
federally mandated customer protections for at least 70% of the 
digital asset market today, including requirements pertaining 
to customer disclosures, segregation of customer funds, and 
conflicts of interest. Additionally, without registration and 
oversight of digital commodity intermediaries and trading 
platforms, customers are unable to discern reputable entities 
from the disreputable ones. Consequently, customers face 
significant risks with respect to the digital commodities they 
purchase, how they purchase those commodities, how an 
intermediary or trading platform custodies their commodities, 
and their ability to access those commodities, especially if 
the intermediary or trading platform holding their commodities 
dissolves. At the May 2023 Joint Hearing, Former CFTC Chairman 
Timothy Massad testified that:

          [I]nvestor protection on crypto trading and lending 
        platforms is woefully inadequate. These platforms do 
        not observe standards common in our financial markets 
        that ensure protection of customer assets, prohibition 
        of conflicts of interest, prevention of fraud and 
        manipulation, and adequate transparency, among other 
        things. That was made painfully obvious last year by 
        the failures of trading platform FTX, crypto lender 
        Celsius, the Terra/Luna stablecoin and others, 
        resulting in hundreds of thousands of investors 
        suffering losses.

    At the June 2023 HAC Hearing, CFTC Chairman Rostin Behnam 
testified:

          The bankruptcy of several large digital asset 
        platforms erased billions of dollars in customer funds. 
        Multiple large market participants allegedly engaged in 
        manipulative and abusive trading activity, including 
        through opaque arrangements with affiliated trading 
        platforms, undermining confidence in these nascent 
        markets. Cybersecurity vulnerabilities continue to be 
        exploited in weekly hacks, resulting in billions of 
        dollars in lost funds.

    These customer protection failures highlight the urgent 
need for legislation to provide robust customer protections for 
U.S. citizens trading digital commodities. At the June 2023 HAC 
Hearing, Mr. Gallagher testified:

          [M]illions of Americans--including millions of 
        Robinhood customers--want to participate and are 
        participating responsibly in the digital asset economy, 
        and they will continue to do so whether in the U.S. or 
        through foreign platforms. We believe policymakers 
        should support policy solutions that encourage 
        Americans to engage in digital asset markets through 
        responsible, appropriately regulated U.S. firms, rather 
        than incentivizing people to participate through often 
        unregulated or lightly regulated foreign platforms.

Regulatory Gap

    Currently, there is no comprehensive federal regulatory 
regime for the cash or spot digital commodity markets. The 
Commodity Exchange Act (CEA) and the CFTC regulations 
promulgated thereunder provide a comprehensive regulatory 
regime for the trading of commodity derivatives, including 
digital commodity derivatives (e.g., buying or selling Bitcoin 
futures contracts). This includes registration and regulatory 
requirements for exchanges and intermediaries. Under the CEA, 
the CFTC also has ``after-the-fact'' enforcement jurisdiction 
over fraud and manipulation in the cash or spot commodity 
markets (e.g., buying or selling a commodity, including digital 
commodities, like Bitcoin). However, the CFTC has no power to 
impose registration and regulatory requirements for exchanges 
or intermediaries, or on market participants in the cash or 
spot digital commodity markets. This lack of a comprehensive 
federal regulatory framework for digital commodity cash or spot 
transactions is referred to as the ``spot market regulatory 
gap.''
    Daniel Gorfine, former Chief Innovation Officer at the 
CFTC, testified at the House Financial Services Subcommittee on 
Digital Assets, Financial Technology and Inclusion's hearing on 
April 27, 2023 (April 27 HFSC Hearing), stating:

          The overall regulatory landscape for digital assets 
        has not changed significantly since Bitcoin first 
        traded in 2009--which means that there is no 
        comprehensive market oversight framework.''

    At the May 2023 Joint Hearing, Former CFTC Chair Massad 
testified:

          Four years ago, I wrote a paper published by the 
        Brookings Institute that began with the following 
        sentence: ``There is a gap in the regulation of crypto 
        assets that Congress needs to fix.''
          The gap I talked about then was the absence of a 
        federal regulator for the spot market in crypto tokens 
        that are not securities, such as bitcoin. It still 
        exists, and it is made more complicated by the ongoing 
        debate we have had about how to classify digital 
        assets: are they securities or commodities, or 
        something else?

    At the June 2023 HAC Hearing, CFTC Chairman Behnam 
testified about the need for legislation to fill the regulatory 
gap. Chair Behnam testified:

          I have consistently highlighted the need for 
        Congressional action to address the lack of federal 
        regulation over the digital commodity market.

    Chair Behnam added that the Financial Stability Oversight 
Council's (FSOC) Report on Digital Asset Financial Stability 
Risks and Regulation (Oct. 2022) (FSOC Report) called on 
Congress to enact legislation to fill the clear regulatory gap 
over the spot market for digital assets that are not 
securities.
    The FSOC Report succinctly summarized the spot-market gap:

          U.S. law provides for limited direct federal 
        oversight of spot markets for crypto-assets that are 
        not securities . . . As a result, those markets may not 
        feature robust rules and regulations designed to ensure 
        orderly and transparent trading, to prevent conflicts 
        of interest and market manipulation, and to protect 
        investors and the economy more broadly. Indeed, U.S. 
        regulators have found possible sources of fraud and 
        manipulation in the spot Bitcoin market.
          The spot markets for crypto-assets that are not 
        securities provide relatively fewer protections for 
        retail investors compared to other financial markets 
        that have significant retail participation. In 
        addition, crypto-asset platforms in the spot market for 
        non-security crypto-assets engage in practices that are 
        commonly subjected to greater regulation in other 
        financial markets. In similarly structured financial 
        markets, trading rules apply related to practices of 
        trade execution and settlement to ensure fairness and 
        transparency and to limit abusive trading practices 
        more generally.

           *       *       *       *       *       *       *

          Significant market integrity and investor protection 
        issues may persist because of the limited direct 
        federal oversight of these spot markets, due to abusive 
        trading practices, inadequate protections for custodied 
        assets, or other practices. Increased interconnections 
        between this market and traditional financial 
        institutions could pose financial stability 
        vulnerabilities. In addition, if the scale of crypto-
        asset activities were to increase rapidly, these issues 
        could pose financial stability issues regardless of 
        interconnections with the traditional financial system.

    In the light of these gaps, the FSOC Report recommended 
that Congress pass legislation to address their concerns:

          To address this regulatory gap, the Council 
        recommends that Congress pass legislation that provides 
        for explicit rulemaking authority for federal financial 
        regulators over the spot market for crypto-assets that 
        are not securities. The Council recommends that this 
        rulemaking authority should not interfere with or 
        weaken market regulators' current jurisdictional 
        remits. The rulemaking authority should cover a range 
        of subjects, including but not limited to conflicts of 
        interest; abusive trading practices; public trade 
        reporting requirements; recordkeeping; governance 
        standards; cybersecurity requirements; customer asset 
        segregation; capital and margin; custody, settlement, 
        and clearing; orderly trading; transparency; any 
        further anti-fraud authorities that may be necessary; 
        investor protection; dispute resolution; operating 
        norms; and a general authority to address unanticipated 
        additional issues that may arise. Legislation should 
        provide for enforcement and examination authority to 
        ensure compliance with these rules.

Commodity v. Security

    SEC Chair Gary Gensler has opined on numerous occasions 
that the ``test to determine whether a crypto asset is a 
security is clear.'' However, SEC Commissioner Hester Peirce 
and former SEC Commissioner Elad Roisman disagree, citing 
requests the SEC receives for clarity and the consistent 
outreach to the Commission staff for no-action and other 
relief. Commissioner Peirce has repeatedly emphasized her 
concerns with the SEC's enforcement-centric approach and 
highlighted the importance of regulatory clarity for the 
digital asset markets.
    Under the Securities Act of 1933 (Securities Act) and the 
Securities Exchange Act of 1934 (Exchange Act), the SEC has 
full regulatory authority over the offer, sale, and the trading 
of securities, including investment contracts, and security 
derivatives. Under the federal securities laws, every offer and 
sale of securities must be either registered with the SEC or 
conducted pursuant to an exemption to registration.
    Both the term ``security'' and the term ``commodity'' are 
defined in statute in ways that are broader than one might 
expect:
           The federal securities laws define the term 
        ``security'' to include not only specific types of 
        financial instruments such as stocks and bonds, but 
        also several undefined terms, notably ``investment 
        contract.'' The term ``investment contract'' captures 
        unique or novel instruments and arrangements including 
        many utilized by digital asset projects which raised 
        funds.
           The Commodity Exchange Act (CEA) defines 
        ``commodity'' broadly to include all ``goods and 
        articles and all services, rights, and interests . . . 
        in which contracts for future delivery are presently or 
        in the future dealt in.'' In 2015, the CFTC clarified 
        that bitcoin and certain other virtual currencies are 
        commodities under the CEA.
    Because of these broad definitions, the line between a 
security and a commodity can be somewhat blurred. At a very 
basic level securities are commodities. That is to say 
``securities'' are a ``good, article, service, right, or 
interest'' in which contracts for future delivery are presently 
dealt, so they meet the definition of a ``commodity.'' This 
would imply that the CFTC would have regulatory authority over 
security derivatives and enforcement authority over security 
spot market transactions. However, the CEA does not grant the 
CFTC any authority which would supersede or limit the 
jurisdiction of the SEC or restrict the SEC from carrying out 
their duties and responsibilities. Since the SEC is provided 
with jurisdiction over transactions in securities, in the 
instances in which an asset, transaction, or arrangement is 
determined to be a security, CFTC jurisdiction does not apply.
    It is difficult to determine whether a digital asset is 
offered as part of an investment contract or falls under the 
definition of commodity in the CEA. Until there is a 
consistent, clear framework in place, market participants, 
consumers, and investors will continue to seek regulatory 
clarity given the requirements that stem from the 
classification of a particular digital asset.
    Witnesses who have testified before both HFSC and HAC have 
further asserted that there is no legal clarity or bright line 
test to ascertain whether a digital asset is a commodity or a 
security. At the April 2023 HFSC Hearing, Zachary Zweihorn, a 
partner at Davis Polk & Wardwell LLP, testified:

          Most digital assets are not simply the digital 
        equivalent of conventional stocks or bonds, but 
        something different in kind--an instrument with both 
        functional and speculative uses. Indeed, the Commission 
        staff's ``framework'' for analyzing the security-status 
        of a digital asset consists of a non-exclusive list of 
        over 60 characteristics to be considered and weighed to 
        analyze how likely a digital asset is to be a security. 
        This is not a formula that results in any level of 
        certainty.

Regulation by Enforcement

    Rather than develop comprehensive regulations to address 
how digital asset intermediaries and trading platforms can 
register and comply with SEC regulations, the SEC has instead 
sought to ``regulate'' the digital asset marketplace by 
pursuing enforcement actions against these entities.
    At the April 2023 HFSC Hearing, Mr. Zweihorn summarized the 
quandary that exists for market participants when he testified:

          The result is a Catch-22: It is unlawful for a firm 
        to intermediate trading in a digital asset that is a 
        security unless the firm is appropriately registered. 
        But if registered, it is unlawful for the firm to 
        facilitate trading in a digital asset security, unless 
        the purported issuer of the security has taken some 
        other action to register or otherwise make information 
        available. A firm is required to register to facilitate 
        trading, but if registered, it is prohibited from 
        facilitating trading--unless the issuer of the security 
        takes steps that are entirely outside the control of 
        the intermediary.

Incompatibility of Securities Laws

    The SEC has failed to provide a viable path for the 
registration of digital asset intermediaries and the offering 
of securities. Moreover, the SEC's regulations are heavily 
dependent on the roles of intermediaries and therefore directly 
at odds with transactions based on decentralized blockchain 
technology.
    At the April 2023 HAC Hearing, FalconX Deputy General 
Counsel Purvi Maniar testified that:

          [T]he securities regulatory architecture . . . is 
        ill-suited for most digital assets. Securities have no 
        independent utility other than profit participation. As 
        a result, securities regulations focus on robust 
        disclosure of facts affecting the profit movement, such 
        as earnings, cash flow, or material events affecting 
        earnings. However, most securities law-mandated 
        financial disclosures have little applicability to 
        digital assets. Moreover, the requirement under the 
        securities laws that spot securities must be traded on 
        regulated exchange[s] [sic] using third-party 
        intermediaries eliminates the benefits of peer-to peer 
        transactions. The ability to transfer spot assets 
        instantly and safely on a peer-to-peer basis, one of 
        the key benefits of digital assets, does not exist if 
        one is required to place an order with a broker-dealer 
        intermediary on a third-party exchange subject to a 
        multi-day settlement cycle. As a result, few digital 
        asset companies have sought registration or exemption 
        under the securities laws; presumably, it is why few of 
        those applications have been granted, given the 
        difficulties of shoehorning digital assets into the 
        securities law framework.

    At the May 2023 Joint Hearing, Kraken Chief Legal Officer 
Marco Santori testified that:

          A fundamental goal of the U.S. securities laws is to 
        provide the public with truthful disclosure about 
        material risks that may impact their investment, 
        thereby empowering citizens to make their own 
        decisions. The disclosure requirements and standards 
        for traditional securities under the Securities Act of 
        1933 do not work well for digital assets. For example, 
        what is ``material'' information related to a publicly 
        traded company is likely to be very different than what 
        is material for a decentralized, blockchain-based 
        asset. The value of a digital asset--unlike the value 
        of stocks and bonds--is often not dependent on the 
        issuer's operations or financial condition. Forcing 
        digital assets into the existing corporate disclosure 
        regime deprives consumers of the most valuable 
        information while overwhelming them with the least 
        valuable.

    Mr. Santori further testified that:
    Extensive evidence in the public record that illustrates 
the practical barriers to NSE registration for digital asset 
platforms, including:
           Digital asset trading platforms interact 
        directly with retail clients. NSEs, by contrast, permit 
        only broker-dealers to participate.
           Securities exchanges are not set up for 
        global, 24x7 trading. Stocks listed on NSEs trade only 
        during regular market hours. Digital assets trade 24x7, 
        with no pressures on price or volume created by opening 
        and closing times. Digital asset prices and volumes are 
        subject to market forces at all times.
           U.S. securities exchanges form part of a 
        National Market System (NMS) and they trade exclusively 
        NMS securities. Digital asset trading platforms trade a 
        variety of assets that will fall under the CFTC's 
        jurisdiction, such as Bitcoin (BTC), Ethereum (ETH), 
        and other digital asset commodities.

          SEC-Registered ATSs function like exchanges, but are 
        regulated by FINRA and the SEC as broker-dealers. 
        Currently, there are very few broker-dealers, and even 
        fewer ATSs that are registered with FINRA to trade 
        digital assets. These ATSs are currently only permitted 
        to trade digital assets that are securities. ATSs 
        cannot trade non-securities such as BTC, ETH, or 
        stablecoins.
          Today, any digital asset trading platform that is 
        registered as an ATS would have to immediately stop 
        trading all digital assets they currently trade, either 
        on the SEC's theory that such assets are unregistered 
        securities, or because such assets are non-securities. 
        This would create significant market disruption. For 
        example, BTC and ETH, which are commodities, account 
        for more than 60% of the digital asset market 
        capitalization.

    Mr. Santori recommended:
    To resolve these gaps, Congress can create a new 
registration category for centralized digital asset markets 
that:
           Remains open to direct retail participation, 
        as ATSs are, and not be limited to requirements that 
        customers are registered broker-dealers (as with NSEs).
           Reduce friction by being open to the trading 
        of non-security digital assets (such as BTC, ETH or 
        stablecoins) side-by-side with digital assets that are 
        determined to be securities.
           Have in place a rulebook that has been 
        reviewed and approved by the SEC or CFTC.

The Committee-Reported Legislation

    The Committees have worked towards establishing a workable 
framework for digital assets over several Congresses by 
introducing bills, sending letters to regulators, and holding 
hearings and roundtables. The Committees worked together 
throughout the 118th Congress to establish a common approach 
for digital asset regulation, given the issues that digital 
assets raise implicate the jurisdictions of both the SEC and 
CFTC. This work includes two hearings in the Agriculture 
Committee and three hearings in the Financial Services 
Committee on digital assets market structure, as well as a 
historic joint hearing of both Committees to examine the 
regulatory gaps with respect to digital assets.
    The Committees have heard testimony regarding digital asset 
market structure from SEC Chair Gensler, CFTC Chairman Benham, 
the Chief Executive Officer of the National Futures 
Association, the Chief Operating Officer of the New York Stock 
Exchange, legal experts in securities and commodities law, and 
various digital asset market participants, including trading 
platforms, broker-dealers, digital asset projects, and 
blockchain developers. Almost all witnesses testified that 
there is a regulatory gap for digital assets between the SEC's 
jurisdiction over securities and the CFTC's jurisdiction over 
commodity derivatives that must be addressed through 
legislation. Indeed, rather than shun regulation, the market 
participants are calling on Congress to resolve the regulatory 
gap.
    At the May 2023 Joint Hearing, Kraken Chief Legal Officer 
Marco Santori proposed a legislative framework similar in 
nature to that established by the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (Dodd-Frank Act) that provided the 
CFTC with jurisdiction over the swaps markets and the SEC with 
jurisdiction over the security-based swaps markets:

          With clear jurisdictional lines drawn, regulated 
        digital asset platforms should have a clear path to 
        registration at the CFTC and SEC. Each agency, where 
        appropriate, should have inspection and examination 
        authority over platforms that make digital assets 
        available to trade. This is consistent with the 
        approach adopted for swaps regulation.

    At the June 2023 HAC Hearing, CFTC Chairman Behnam called 
upon the Committee to follow the path it took to enact the 
Dodd-Frank Act:

          Following the 2008 financial crisis, this Committee--
        working on a bipartisan basis--responded with reforms 
        to the previously unregulated swaps market that were 
        anchored in core principles of sound market regulation: 
        transparency, reporting, and registration, to name just 
        a few.

    The work of both Committees culminated in the release of 
draft legislation on digital asset market structure in June 
2023. The Committees revised the bill to respond to feedback 
from federal agencies, market participants, and members from 
both sides of the aisle and introduced the bill on July 20, 
2023. Finally, changes were made to the bill through 
amendments, including comprehensive amendments in the nature of 
a substitute, during each mark-up, which are reflected in this 
Report.
    The Committee-reported bill seeks to resolve the issues 
that have plagued the digital asset market and answer the calls 
for regulation from FSOC, the CFTC, and stakeholders by 
establishing a comprehensive regulatory framework for the 
United States' digital asset markets.

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

    Title I provides definitions for new entities, products, 
and assets specific to the digital asset marketplace. The 
definitions are similar to and build on existing definitions of 
products, processes, and registration categories in the 
commodities and securities markets but are tailored for the 
digital asset marketplace. The most significant definitions 
include those for ``digital asset,'' which excludes commodity 
derivatives, securities, and securities derivatives products, 
and ``decentralized network,'' which is the primary threshold 
that must be met before a restricted digital asset can be 
traded as a digital commodity.
    Title I also requires the SEC and CFTC to engage in joint 
rulemakings to further define many of the key terms in the Act 
including ``digital asset,'' ``decentralized network,'' and 
``digital commodity.'' The agencies will also be required to 
issue a joint rulemaking to address the oversight of dually 
registered digital commodity exchanges (with the CFTC) and 
digital asset trading systems (with the SEC). Section 712 of 
the Dodd-Frank Act required similar joint rulemakings over 
definitions and other cooperative oversight activities.
    Title I also prohibits the Financial Crimes Enforcement 
Network (FinCEN) from rulemaking with respect to an 
individual's ability to self-custody digital assets.
    This Title also seeks to address the gap in oversight that 
will occur between enactment and effective date. Before the SEC 
and CFTC can register and regulate entities and activities 
under the Act, they will need to engage in rulemakings. In the 
interim, there will be no comprehensive federal oversight of 
the digital asset markets, leaving consumers at risk of 
suffering losses due to mismanagement or fraud. Additionally, 
before the effective date of the Act and the regulations it 
requires, the SEC may seek to aggressively regulate the digital 
commodity marketplace in a manner inconsistent with the Act's 
intent, which could exacerbate the flight of digital asset 
innovation and growth out of the United States.
    At the May 2023 Joint Hearing, Kraken Chief Legal Officer 
Marco Santori testified:

          [T]he creation of new, regulated trading platforms, 
        the allocation of jurisdiction, and the establishment 
        of inter-agency mechanisms for cooperation will take 
        time. Until these new mechanisms can be firmly 
        established, transitional arrangements should be put in 
        place to allow digital asset markets to continue to 
        operate with minimal disruption, and as little harm as 
        possible to retail investors.

    In addition to bringing necessary customer protections to 
customers as soon as possible through interim measures, the 
Committees want to ensure that the SEC does not act contrary to 
the intent of the reported bill's digital asset market 
structure framework during the period from the bill's enactment 
to its effective date.
    To address these issues, Title I provides entities with the 
ability to file a notice of intent to register and comply with 
certain conditions including making their books and records 
available for inspection, making certain customer disclosures, 
and protecting customer assets. Without these requirements, 
regulators would remain in the dark as to the operations of 
these entities until they were registered, which may not occur 
until several years after enactment. These noticed entities 
would also be required to become members of a federally 
registered self-regulatory organization (SRO) and comply with 
that organization's rules. SROs have historically brought 
regulation and oversight to markets before federal regulations 
can be finalized.
    At the May 2023 Joint Hearing, Matthew Kulkin, former 
Director of the CFTC's Division of Swap Dealer and Intermediary 
Oversight (DSIO), testified:

          [F]or several decades, [the CFTC SRO for the 
        derivatives markets, the National Futures Association 
        (NFA)], has exercised its authority to protect 
        customers, particularly retail customers, from fraud, 
        abuse, and misconduct.

    By requiring membership with a federally registered SRO and 
requiring compliance with its rules during the notice period, 
the reported legislation can bring customer protections to the 
digital asset marketplace in a much more expeditious manner 
than the SEC and CFTC's joint rulemaking efforts.
    In exchange for compliance with these requirements, the 
noticed entities will be exempt from certain current SEC 
registration requirements. These provisions do not impact the 
agencies' anti-fraud or anti-manipulation authorities or 
preclude the agencies from jointly requiring a noticed entity 
to delist an asset that is inconsistent with the securities or 
commodities laws. Section 712(f) of the Dodd-Frank Act provided 
similar authority to the CFTC and SEC to exempt persons from 
the Act's requirements while rulemakings were being finalized.
    Title I directs the SEC and CFTC to consult with foreign 
regulatory agencies on international standards on digital 
assets. Section 752 of the Dodd-Frank Act provided similar 
authority to encourage cooperation with foreign regulators.
    Finally, this Title requires rulemakings under the Act to 
be issued within one year from the date of enactment. Section 
712(e) and (f) of the Dodd-Frank Act provided similar 
implantation and transition authorities to the SEC and CFTC.

              TITLE II--OFFERS AND SALES OF DIGITAL ASSETS

    Title II provides a new exemption for digital asset issuers 
to issue digital assets. The new exemption incorporates 
requirements from existing exemptions that are used by start-
ups and entrepreneurs, including the SEC's Regulation A and 
Regulation Crowdfunding. Under the new exemption, innovators 
will be able to raise up to $75 million in a 12-month period 
through the sale of digital assets if they comply with certain 
conditions. Digital assets issued under this exemption are 
restricted digital assets.
    The Title establishes the framework through which certain 
persons are permitted to engage in restricted digital asset 
transactions. Generally, restricted digital assets are 
permitted to be offered or sold on a digital asset trading 
system (DATS) under the supervision of the SEC. Persons closely 
related to the digital asset issuer (``related persons'' and 
``affiliated persons'') are subject to additional restrictions 
on their sale of those digital assets. This Title also exempts 
end user distributions, broad, non-discretionary distributions 
issued for no more than nominal consideration (e.g., air drops 
and validation rewards), from being considered transactions in 
a security.
    Title II provides a new disclosure framework specific to 
the new exemption for the issuance of restricted digital 
assets. The new, enhanced disclosure mandated under Title II 
ensures that disclosures for digital assets provide investors 
with information that is relevant to this unique asset class. 
The enhanced disclosures include the digital asset's source 
code, transaction history, network specifications, launch and 
supply process, governance regime, development plan, and 
material risks.
    This Title also provides the process by which a restricted 
digital asset is no longer restricted and can be traded as a 
digital commodity if the associated blockchain network has been 
certified as decentralized. The certification process builds in 
several controls that prevent the SEC from abusing its position 
as a gatekeeper. The SEC is provided with an opportunity to 
rebut the assertion that the network meets the decentralization 
test within a certain period of time. The rebuttal may be 
appealed to the U.S. Court of Appeals for the D.C. Circuit.

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

    The Title provides the SEC with jurisdiction over 
restricted digital asset transactions and limited authority 
over permitted payment stablecoin transactions, to the extent 
such transactions occur on, with, or through a person or entity 
registered with the SEC.
    Title III creates a framework for DATS, digital asset 
brokers (DAB), and digital asset dealers (DAD). The 
registration and compliance frameworks for these entities were 
drawn from existing structures for brokers, dealers, and 
alternative trading systems.
    Under Title III, intermediaries must follow longstanding 
segregation requirements, including prohibiting the commingling 
of customer funds with the funds of the intermediary. The Title 
provides customers with the right to opt out of the segregation 
provisions to allow the DAB or DAD to pool and use their funds 
for blockchain services.
    Title III specifies that a DATS must hold customer digital 
assets in a qualified digital asset custodian (QDAC), which 
would be an entity regulated by a Federal banking agency, a 
State bank supervisor, the CFTC, the SEC, or a foreign banking 
regulator. The SEC is responsible for establishing minimum 
standards for supervision and regulation that regulators must 
implement for an entity to be deemed ``qualified.'' The QDAC 
must share information with the SEC regarding customer 
accounts. The Title also sets forth registration and 
requirements for digital asset clearing agencies (DACA). Under 
this Title, digital asset intermediaries and exchanges would be 
required to implement policies to mitigate conflicts of 
interest.
    To ensure that market participants are eligible to trade 
restricted digital assets and digital commodities on the same 
platform, Title III allows a DATS, DAB, and DAD to register 
with the CFTC as a digital commodity exchange, digital 
commodity broker, and a digital commodity dealer, respectively, 
and thereafter, list digital commodities for trading.
    Title III exempts certain ``ancillary activities'' from 
direct regulation by the SEC. Ancillary activities are defined 
as validating or providing incidental services with respect to 
a digital commodity, providing user-interfaces for a blockchain 
network, publishing and updating software, and developing 
wallets for blockchain networks. This exemption does not impact 
the SEC's anti-fraud and anti-manipulation authority over these 
activities.
    This Title also reverses the SEC's Staff Accounting 
Bulletin 121, which alters the way custodians treat digital 
assets on their balance sheets.
    Lastly, the Title prohibits fees collected by the SEC to be 
deposited in the SEC Reserve Fund for three years. The 
effective date of the Title is the later of 360 days from 
enactment or 60 days after publication of the final rule 
implementing this Title.

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

    Title IV provides the CFTC with exclusive jurisdiction over 
cash or spot digital commodity transactions and limited 
authority over permitted payment stablecoin transactions, to 
the extent such transactions occur on, with, or through a 
person or entity registered with the CFTC. The CFTC is granted 
limited authority over the trading of permitted payment 
stablecoins to ensure there is no duplication of oversight 
between the CFTC and prudential regulators pertaining to off-
exchange transactions.
    Title IV establishes three new registration categories at 
the CFTC: digital commodity exchange (DCE), digital commodity 
broker (DCB), and digital commodity dealer (DCD). The 
registration and compliance frameworks for these entities were 
drawn from existing structures in the CEA for derivatives 
exchanges, introducing brokers, futures commission merchants 
(FCMs), and swap dealers.
    Title IV's compliance framework for DCEs is largely drawn 
from the core principle requirements imposed on derivatives 
exchanges under the CEA. Under the Title, a registered DCE 
would be required to comply with longstanding CEA core 
principles, including the monitoring of trading activity, 
prohibition of abusive trading practices, minimum capital 
requirements, public reporting of trading information, 
conflicts of interest, governance standards, and cybersecurity.
    Title IV requires registered DCBs and DCDs to become 
members of a registered futures association, comply with its 
rules, and comply with several prescriptive requirements 
similar to those imposed on derivatives intermediaries under 
the CEA. These include minimum capital, fair dealing, risk 
disclosures, advertising limitations, conflicts of interest, 
recordkeeping and reporting, daily trading records, and 
employee fitness standards. The Title also provides similar 
customer segregation requirements and customer asset 
protections for DCBs and DCDs as are provided for DCEs. Title 
IV specifies that a registered DCE, DCB, and DCD must hold 
customer digital commodities in a qualified digital commodity 
custodian (QDCC) to ensure that customer assets deposited with 
a CFTC-registered entity are held in a safe and appropriate 
manner, separate from the independent control of the DCE, DCB, 
or DCD. This approach is consistent with Section 4d of the CEA 
which provides that an FCM shall hold all customer money, 
securities, and property in a bank, trust company, or 
clearinghouse organization.
    A QDCC must be regulated by a Federal banking agency, a 
State bank supervisor, the CFTC, the SEC, or foreign banking 
regulator in the home country of the QDCC. The CFTC is 
permitted to establish minimum standards for supervision and 
regulation for an entity to be deemed ``qualified.'' The QDCC 
must share information with the CFTC regarding customer 
accounts. Additionally, Title IV requires DCEs, DCBs, and DCDs 
to follow longstanding CEA segregation requirements imposed on 
CFTC regulated entities, including prohibiting the commingling 
of customer funds with firm funds but allowing the comingling 
of multiple customers' funds in an omnibus customer account.
    Title IV also extends the bankruptcy protections provided 
to customers of FCMs to customers of DCEs, DCBs, and DCDs. As 
with FCMs under the CEA, customer funds in segregation have a 
bankruptcy preference in the event of a DCE, DCB, or DCD 
insolvency. Identical to the bankruptcy protections under the 
CEA for customers of FCMs, to the extent that DCE, DCB or DCD 
customer funds are insufficient to pay customer claims, the 
remainder of what customers are owed will participate pro rata 
in the distributions to unsecured creditors of the bankrupt 
DCE, DCB, or DCD.
    To provide market participants with the flexibility to 
trade restricted digital assets and digital commodities on the 
same exchange, Title IV allows a DCE, DCB, and DCD to register 
with the SEC as a DATS, DAB, and DAD, respectively, and 
thereafter, offer restricted digital assets for trading.
    Similar to Title III, Title IV exempts certain ``ancillary 
activities'' from direct regulation by the CFTC. Ancillary 
activities are defined as validating or providing incidental 
services with respect to a digital commodity, providing user-
interfaces for a blockchain network, publishing and updating 
software, or developing wallets for blockchain networks. This 
exemption does not impact the CFTC's anti-fraud, anti-
manipulation, or false reporting authority over these 
activities.

            TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS

    Title V consists of a variety of provisions intended to 
improve the CFTC's and SEC's approach to innovation and digital 
asset regulation and study sectors of the digital asset 
marketplace not addressed in the legislation. Specifically, 
Title V codifies both the CFTC's LabCFTC and the SEC's 
Strategic Hub for Innovation and Financial Technology (FinHub), 
and structures both as an independent office that reports to 
their respective full Commission.
    This change ensures that both offices will assist their 
respective agencies with their approach to technological 
advancements, examine the impact that financial technology 
innovations have on market participants, and coordinate the 
CFTC and SEC's response to emerging technologies in financial, 
regulatory, and supervisory systems. This legislation also 
requires LabCFTC and FinHub to each separately report annually 
to Congress on their activities.
    The Title also requires the SEC and CFTC to form a Joint 
Advisory Committee on Digital Assets comprised of digital asset 
market participants. This Committee will be tasked with 
providing recommendations to the SEC and CFTC regarding the 
promulgation of rules required by this Act. This approach is 
similar to the joint CFTC SEC Advisory Committee on Emerging 
Regulatory Issues that was established by the CFTC and SEC in 
response to the 2010 Flash Crash. That joint advisory committee 
met five times in 2010 and 2011 and published a report and 
recommendations. It has been dormant since 2014.
    Title V also requires studies on decentralized finance 
(DeFi), non-fungible digital assets, tokenized securities and 
derivative products, and financial literacy among digital asset 
holders.
    The study on DeFi is required to be conducted by the CFTC 
and the SEC. The agencies must study the size, scope, role, 
nature, and use of DeFi protocols, the benefits and risks of 
DeFi, how DeFi has integrated into the traditional financial 
markets (including the risks of DeFi integration), and the 
levels and types of illicit activities in DeFi compared to 
traditional financial markets.
    GAO is required to conduct a study on non-fungible digital 
assets. This study must include an analysis of the size, scope, 
role, nature, and use of non-fungible digital assets, the 
similarities and differences between non-fungible digital 
assets and other digital assets, the benefits and risks of non-
fungible digital assets, how non-fungible digital assets have 
integrated into traditional marketplaces, including the risks 
of such integration, and the levels and types of illicit 
activities in non-fungible digital asset markets.
    CFTC and SEC are jointly required to study whether 
additional guidance or rules are necessary to facilitate the 
development of tokenized securities and derivatives products. 
The study will also examine if further rules would foster the 
development of fair and orderly financial markets, be 
appropriate for the public interest, and provide further 
investor protections.

                        TITLE VI--MISCELLANEOUS

    Title VI includes findings related to the benefits of 
digital assets and expresses Congress' support for blockchain 
technology and digital assets.

                            Related Hearings


                             118TH CONGRESS

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearings were used to develop H.R. 4763: The Committee on 
Financial Services held a hearing on June 13, 2023, titled 
``The Future of Digital Assets: Providing Clarity for the 
Digital Asset Ecosystem.''
    The Subcommittee on Digital Assets, Financial Technology 
and Inclusion of the Committee on Financial Services and the 
Subcommittee on Commodity Markets, Digital Assets, and Rural 
Development of the Committee on Agriculture held a joint 
hearing on May 10, 2023, titled ``The Future of Digital Assets: 
Measuring the Regulatory Gaps in the Digital Asset Markets.''
    The Subcommittee on Digital Assets, Financial Technology 
and Inclusion of the Committee on Financial Services held a 
hearing on April 27, 2023, titled ``The Future of Digital 
Assets: Identifying the Regulatory Gaps in Digital Asset Market 
Structure.''
    The Committee on Financial Services held a hearing on April 
18, 2023, titled ``Oversight of the Securities and Exchange 
Commission.''
    The Subcommittee on Digital Assets, Financial Technology 
and Inclusion of the Committee on Financial Services held a 
hearing on March 9, 2023, titled ``Coincidence or Coordinated? 
The Administration's Attack on the Digital Asset Ecosystem.''

                             117TH CONGRESS

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearings were used to develop H.R. 4763: The Committee on 
Financial Services held a hearing on December 13, 2022, titled 
``Investigating the Collapse of FTX.''
    The Committee on Financial Services held a hearing on 
December 8, 2021, titled ``Digital Assets and the Feature of 
Finance: Understanding the Challenges and Benefits of Financial 
Innovation in the United States.''
    The Committee on Financial Services held a hearing on 
October 5, 2021, titled ``Oversight of the U.S. Securities and 
Exchange Commission: Wall Street's Cop Is Finally Back on the 
Beat.''
    The Subcommittee on Oversight and Investigations held a 
hearing on June 30, 2021, titled ``Will the Crypto Frenzy Lead 
to Financial Independence and Early Retirement or Financial 
Ruin?''

                             115TH CONGRESS

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearing was used to develop H.R. 4763: The Subcommittee on 
Capital Markets held a hearing on March 14, 2018, titled 
``Examining the Cryptocurrencies and ICO Markets;''

                        Committee Consideration

    The Committee on Financial Services met in open session on 
July 26, 2023, and ordered H.R. 4763 to be reported favorably 
to the House as amended by a recorded vote of 35 ayes to 15 
nays (Record vote no. FC-76), a quorum being present. Before 
the question was called to order the bill favorably reported, 
the Committee adopted an amendment in the nature of a 
substitute offered by Mr. Hill by voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the order to report legislation and amendments thereto. H.R. 
4763 was ordered reported favorably to the House as amended by 
a recorded vote of 35 ayes to 15 nays (Record vote no. FC-76), 
a quorum being present.
    An amendment offered by Mr. Foster, no. 1, was not agreed 
to by voice vote, a quorum being present.
    An amendment offered by Mr. Sherman, no. 2, was not agreed 
to by voice vote, a quorum being present.
    An en bloc vote for amendments offered by Ms. Waters, no. 
3, Mr. Lynch, no. 11, and Mr. Lynch, no. 13, was not agreed to 
by a recorded vote of 19 ayes to 29 nays, a quorum being 
present (Record vote no. FC-75).
    An amendment by Mr. Gottheimer, no. 4, was agreed to by 
voice vote, a quorum being present.
    An amendment by Mr. Lynch, no. 6, was agreed to by voice 
vote, a quorum being present.
    An amendment by Mr. Himes, no. 7, was agreed to by voice 
vote, a quorum being present.
    An amendment by Mr. Nickel, no. 8, was agreed to by voice 
vote, a quorum being present.
    An amendment by Mr. Horsford, no. 9, was agreed to by voice 
vote, a quorum being present.
    An amendment by Mr. Lynch, no. 12, was not agreed to by 
voice vote, a quorum being present.


                      Committee Overisght Findings

    Pursuant to clause 3(c) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the goal of H.R. 4763 is to ensure 
that the Commodity Futures Trading Commission (CFTC) has 
jurisdiction over digital commodities and clarifies the 
Securities and Exchange Commission's (SEC) jurisdiction over 
digital assets offered as part of an investment contract, 
including imposing robust customer protections on all entities 
required to be registered with the CFTC and the SEC.

                 Congressional Budget Office Estimates

    The Committee has requested but not received a cost 
estimate from the Director of the Congressional Budget Office. 
However, pursuant to clause 3(d)(1) of House rule XIII, the 
Committee will adopt as its own the cost estimate by the 
Director of the Congressional Budget Office once it has been 
prepared.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    The Committee has requested but not received an estimate 
from the Director of the Congressional Budget Office. However, 
pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives, once an estimate has been prepared by 
the Director of the Congressional Budget Office, as required by 
section 402 of the Congressional Budget Act of 1973, the 
Committee will adopt as its own the estimate of new budget 
authority, entitlement authority, or tax expenditures or 
revenues contained in the cost estimate.

                       Federal Mandates Statement

    The Committee has requested but not received an estimate 
from the Director of the Congressional Budget Office of the 
Federal mandates pursuant to section 423 of the Unfunded 
Mandates Reform Act. The Committee will adopt the estimate once 
it has been prepared by the Director.

                      Advisory Committee Statement

    Pursuant to 5 U.S.C. 1004(b), H.R. 4763 requires the CFTC 
and the SEC to form a Joint Advisory Committee on Digital 
Assets comprised of digital asset marketplace stakeholders. The 
functions of the proposed Joint Advisory Committee on Digital 
Assets could not be performed by an agency or advisory 
committee already in existence.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any Congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
Federal program, including any program that was included in a 
report to Congress pursuant to section 21 of the Public Law 
111-139 or the most recent Catalog of Federal Domestic 
Assistance.

             Section-by-Section Analysis of the Legislation


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

Sec. 101. Definitions under the Securities Act of 1933

    Section 101 provides for definitions under the Securities 
Act of 1933.

Sec. 102. Definitions under the Securities Exchange Act of 1934

    Section 102 provides for definitions under the Securities 
Exchange Act of 1934.

Sec. 103. Definitions under the Commodity Exchange Act

    Section 103 is within the House Committee on Agriculture's 
jurisdiction pursuant to rule X. The House Committee on 
Agriculture's Report of H.R. 4763 includes a summary of this 
section.

Sec. 104. Definitions under this Act

    Section 104 provides for definitions under this Act.

Sec. 105. Joint rulemakings

    Section 105 provides for joint rulemakings between the 
Securities and Exchange Commission (SEC) and the Commodity 
Futures Trading Commission (CFTC), including joint rulemakings 
related to defining key terms in the Act, the oversight of 
dually registered exchanges, and the oversight of mixed digital 
asset transactions. Section 105 requires a joint rulemaking 
related to mixed digital asset transactions and prohibits the 
Financial Crimes Enforcement Network from issuing any rule that 
would limit self-custody by an individual. Additionally, 
Section 105 requires the SEC and CFTC to jointly issue 
rulemakings regarding the process to delist an asset for 
trading under the notice of intent to register period.

Sec. 106. Notice of intent to register for CFTC intermediaries

    Section 106 is within the House Committee on Agriculture's 
jurisdiction pursuant to rule X. The House Committee on 
Agriculture's Report of H.R. 4763 includes a summary of this 
section.

Sec. 107. Notice of intent to register for SEC intermediaries

    Section 107 permits a digital asset broker (DAB), digital 
asset dealer (DAD), or digital asset trading system (DATS) to 
file a notice of intent to register with the SEC. The filer 
must submit information regarding its operations to the 
Commission, submit to inspection by the Commission, and be a 
member of FINRA. As a member of FINRA, it must also apply with 
all applicable membership requirements, including risk 
disclosures for customers and segregation of customer assets. 
Filing a notice provides the filer with an exemption from 
registration as an intermediary with the SEC with respect to 
digital asset transactions, until such time as the rules are 
written and permanent registration commences. It does not limit 
the authority of the CFTC or SEC to bring anti-fraud or anti-
manipulation enforcement actions or to require a filer to 
delist a digital asset. Finally, Section 107 provides that it 
is unlawful for a filer to knowingly provide a false statement 
to the SEC.

Sec. 108. Commodity Exchange Act savings provisions

    Section 108 is within the House Committee on Agriculture's 
jurisdiction pursuant to rule X. The House Committee on 
Agriculture's Report of H.R. 4763 includes a summary of this 
section.

Sec. 109. International harmonization

    Section 109 requires the CFTC and the SEC to work with 
foreign regulators to establish consistent international 
standards for the regulation of digital asset markets.

Sec. 110. Implementation

    Section 110 requires the CFTC and the SEC to promulgate all 
rules required by the Act no later than 360 days after 
enactment of the Act.

              TITLE II--OFFERS AND SALES OF DIGITAL ASSETS

Sec. 201. Exempted transactions in digital assets

    Section 201 establishes an exemption from the securities 
laws for a digital asset issuer's sale of digital assets that 
meet the following conditions: (1) the issuer's total sales of 
the digital asset over the prior 12 months does not exceed $75 
million; (2) a non-accredited investor's purchases of the 
digital asset from the issuer over the prior 12 months are less 
than the greater of 10% of the purchaser's annual income or 10% 
of their net worth; (3) the purchaser does not own more than 
10% of the units of the digital asset after the completion of 
the transaction; and (4) the transaction involves the sale of a 
digital asset as part of an investment contract.
    The digital asset issuer must file information with the 
Commission as prescribed by the Act. The digital asset issuer 
must file annual and semiannual reports until a defined period 
after the blockchain system is certified as decentralized. Any 
intermediaries involved in the offer or sale of a unit of a 
digital asset under this exemption must be registered with the 
SEC. A unit of a digital asset acquired from the digital asset 
issuer in reliance on this exemption is a restricted digital 
asset.

Sec. 202. Requirements for offers and sales of certain digital assets

    Section 202 sets out the conditions under which certain 
persons are permitted to engage in restricted digital asset 
transactions and digital commodity transactions. Generally, 
restricted digital assets are permitted to trade on a DATS 
under the supervision of the SEC and digital commodities are 
permitted to trade on a DCE under the supervision of the CFTC. 
Related and affiliated persons are subject to more restrictions 
on when they may sell digital assets that they hold. This 
section also exempts end user distributions--broad, non-
discretionary distributions issued for no more than nominal 
consideration--from the securities laws.

Sec. 203. Enhanced disclosure requirements

    Section 203 provides for a new disclosure regime for 
digital assets. The information required to be disclosed is 
focused on the nature of the risks surrounding digital assets, 
including source code, project economics, development plan, 
related and affiliated persons, and material risk factors.

Sec. 204. Certification of certain digital assets

    Section 204 provides for a process for a blockchain 
relating to a digital asset to be certified as decentralized. 
The certification process permits any person to certify to the 
SEC that the blockchain network meets the requirements of the 
Act. As part of this process, an individual will submit general 
information pertaining to the blockchain network and an 
analysis of the factors on which decentralization is based. The 
certification is considered automatically approved after 60 
days unless the Commission issues a stay. The SEC may rebut the 
certification, which may be appealed by the party making the 
certification to the U.S. Court of Appeals for the D.C. 
Circuit.

Sec. 205. Effective date

    Section 205 provides that the provisions under this Title 
will take effect one year after enactment or, in the case of 
rulemakings under the Title, not less than 60 days after 
publication of the final rule.

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

Sec. 301. Treatment of digital commodities and other digital assets

    Section 301 excludes digital commodities and permitted 
payment stablecoins from the definition of a security under the 
securities laws. It also specifies that DATS shall not be 
deemed a ``facility'' of an exchange.

Sec. 302. Antifraud authority over payment stablecoins

    Section 302 provides the SEC with anti-fraud and anti-
manipulation authority over transactions with or involving 
permitted payment stablecoins that occur on or with a SEC 
registered entity. It also provides the SEC with limited 
authority to transactions in permitted payment stablecoins, 
when transacted by or through an entity registered with the 
Commission. Finally, section 302 specifies that the SEC shall 
have no authority over the design, structure, issuance, 
redemption, financial resources, collateral, or any other 
aspect of a payment stablecoin's operation.

Sec. 303. Registration of Digital Asset Trading Systems

    Section 303 establishes a registration framework for DATS. 
It also provides for the dual registration of a DATS as a DCE 
registered with the CFTC.

Section 304. Requirements for Digital Asset Trading Systems

    Section 304 establishes the requirements for DATS. The SEC 
is instructed to prescribe rules in various areas including 
order display, fair access, security of automated systems, 
examinations, and reporting. DATS may not act as custodians and 
are required to hold customer restricted digital assets in a 
qualified digital asset custodian.
    Section 304 also sets out the rules for qualified digital 
asset custodians, including requirements that it be adequately 
supervised and appropriately regulated by a federal, state, or 
foreign banking regulator.

Section 305. Registration of Digital Asset Brokers and Digital Asset 
        Dealers

    Section 305 establishes a registration framework for DAB 
and DAD. It requires digital asset brokers and dealers to be 
members of FINRA. Digital asset brokers and dealers may 
register with the CFTC as digital commodity brokers and 
dealers.

Section 306. Requirements of Digital Asset Brokers and Digital Asset 
        Dealers

    Section 306 subjects digital asset brokers and dealers to 
the same antifraud authorities that currently exist within 
securities laws. The section also requires digital asset 
brokers and dealers to comply with requirements including 
capital, recordkeeping, segregation of customer funds, and use 
of a qualified digital asset custodian. Customers may waive 
customer segregation requirements so that digital asset brokers 
and dealers may use their digital assets to participate in a 
blockchain service. Digital asset brokers and digital asset 
dealers under this section are treated as financial 
institutions, requiring their compliance with the Bank Secrecy 
Act.

Sec. 307. Rules related to conflicts of interest

    Section 307 amends securities laws to ensure that each 
digital asset trading system, digital asset broker, digital 
asset dealer, and notice-registered digital asset clearing 
agency reasonably implement policies that mitigate any 
conflicts of interest and transactions or arrangements with 
affiliates.

Sec. 308. Treatment of certain digital assets in connection with 
        federally regulated intermediaries

    Section 308 adds digital assets to ``covered securities'' 
which are exempt from state blue sky law registration 
requirements.

Sec. 309. Exclusion for ancillary activities

    Section 309 exempts certain ancillary activities related to 
the operation and maintenance of blockchain networks from SEC 
regulation, although not from the Commission's anti-fraud or 
anti-manipulation enforcement authorities.
    Ancillary activities include validating or providing 
incidental services with respect to a restricted digital asset, 
providing user-interfaces for a blockchain network, publishing 
and updating software, or developing wallets for blockchain 
networks.

Sec. 310. Registration and requirements for notice-registered digital 
        asset clearing agencies

    Section 310 permits digital asset brokers and dealers whose 
operations do not involve digital commodities and banks 
providing custody of digital assets to register as a notice-
registered digital asset clearing agency. SEC rules regarding 
this section shall not take effect until at least a year after 
enactment.

Sec. 311. Treatment of custody activities by banking institutions

    Section 311 prevents federal regulators from imposing 
requirements on financial institutions to include customers' 
assets as liabilities on their balance sheets or from holding 
additional capital against these assets, except as necessary to 
mitigate against operational risks as determined by the 
appropriate federal banking agency.

Section 312. Effective date; administration

    Section 312 provides that the provisions under this Title 
will take effect one year after enactment or, in the case of 
rulemakings under the Title, not less than 60 days after 
publication of the final rule. Further, it limits, for three 
years, the deposit of registration fees in the SEC's Reserve 
Fund.

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

Sec. 401. Commission jurisdiction over digital commodity transactions

    Section 401 is within the House Committee on Agriculture's 
jurisdiction pursuant to rule X. The House Committee on 
Agriculture's Report of H.R. 4763 includes a summary of this 
section.

Sec. 402. Requiring futures commission merchants to use qualified 
        digital commodity custodians

    Section 402 is within the House Committee on Agriculture's 
jurisdiction pursuant to rule X. The House Committee on 
Agriculture's Report of H.R. 4763 includes a summary of this 
section.

Sec. 403. Trading certification and approval for digital commodities

    Section 403 is within the House Committee on Agriculture's 
jurisdiction pursuant to rule X. The House Committee on 
Agriculture's Report of H.R. 4763 includes a summary of this 
section.

Sec. 404. Registration of digital commodity exchanges

    Section 404 is within the House Committee on Agriculture's 
jurisdiction pursuant to rule X. The House Committee on 
Agriculture's Report of H.R. 4763 includes a summary of this 
section.

Sec. 405. Qualified digital commodity custodians

    Section 405 is within the House Committee on Agriculture's 
jurisdiction pursuant to rule X. The House Committee on 
Agriculture's Report of H.R. 4763 includes a summary of this 
section.

Sec. 406. Registration and regulation of digital commodity brokers and 
        dealers

    Section 406 is within the House Committee on Agriculture's 
jurisdiction pursuant to rule X. The House Committee on 
Agriculture's Report of H.R. 4763 includes a summary of this 
section.

Sec. 407. Registration of associated persons

    Section 407 is within the House Committee on Agriculture's 
jurisdiction pursuant to rule X. The House Committee on 
Agriculture's Report of H.R. 4763 includes a summary of this 
section.

Sec. 408. Registration of commodity pool operators and commodity 
        trading advisors

    Section 408 is within the House Committee on Agriculture's 
jurisdiction pursuant to rule X. The House Committee on 
Agriculture's Report of H.R. 4763 includes a summary of this 
section.

Sec. 409. Exclusion for ancillary activities

    Section 409 is within the House Committee on Agriculture's 
jurisdiction pursuant to rule X. The House Committee on 
Agriculture's Report of H.R. 4763 includes a summary of this 
section.

Sec. 410. Effective date

    Section 410 is within the House Committee on Agriculture's 
jurisdiction pursuant to rule X. The House Committee on 
Agriculture's Report of H.R. 4763 includes a summary of this 
section.

            TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS

Sec. 501. Codification of the SEC Strategic Hub for Innovation and 
        Financial Technology (FinHub)

    Section 501 establishes the SEC Strategic Hub for 
Innovation and Financial Technology (FinHub), which will assist 
the SEC with its approach to technological advancements, 
examine the impact that FinTech innovations have on capital 
markets, market participants, and investors, and coordinate the 
SEC's response to emerging technologies in financial, 
regulatory, and supervisory systems. FinHub will be managed and 
overseen by a Director who will be appointed by the Commission. 
The Director will report to the Commission to ensure that each 
Commissioner can avail themselves of the expertise of the 
office. FinHub shall submit an annual report to Congress on its 
activity.

Sec. 502. Codification of LabCFTC

    Section 502 is within the House Committee on Agriculture's 
jurisdiction pursuant to rule X. The House Committee on 
Agriculture's Report of H.R. 4763 includes a summary of this 
section.

Sec. 503. CFTC SEC Joint Advisory Committee on Digital Assets

    Section 503 establishes a Joint CFTC-SEC Advisory Committee 
on Digital Assets composed of digital asset marketplace 
stakeholders. Among its many duties, the Joint Advisory 
Committee will provide recommendations to the CFTC and the SEC 
regarding their respective promulgation of rules under the Act. 
The section also requires the CFTC and the SEC to publicly 
respond to any recommendations made by the Joint Advisory 
Committee.

Sec. 504. Study on decentralized finance

    Section 504 requires the CFTC and the SEC to conduct a 
study on DeFi, which will include an analysis of the size, 
scope, role, nature, and use of DeFi protocols, the benefits 
and risks of DeFi, how DeFi has integrated into the traditional 
financial markets (including the risks of DeFi integration), 
and the levels and types of illicit activities in DeFi compared 
to traditional financial markets. The agencies must submit a 
report to Congress one year after enactment. GAO shall also 
conduct a report on DeFi and submit it to Congress one year 
after enactment.
    DeFi is defined as a system of software applications that: 
(1) are created through smart contracts deployed to 
permissionless blockchain technology; and (2) allow users to 
engage in financial transactions in a self-directed manner such 
that no third-party intermediary effectuates such transactions 
or takes custody of a user's digital assets during any part of 
such transaction.

Sec. 505. Study on non-fungible digital assets

    Section 506 requires the Government Accountability Office 
(GAO) to conduct a study on non-fungible digital assets (NFT), 
which will include an analysis of the size, scope, role, 
nature, and use of NFTs, the similarities and differences 
between NFTs and other digital assets, the benefits and risks 
of NFTs, how NFTs have integrated into traditional 
marketplaces, including the risks of such integration, and the 
levels and types of illicit activities in NFT markets. GAO must 
make the report publicly available one year after enactment.

Sec. 506. Study on expanding financial literacy amongst digital asset 
        holders

    Section 506 requires the CFTC and SEC to conduct a study on 
the level of financial literacy among retail digital asset 
holders; methods to improve coordination between the SEC and 
CFTC to better disseminate financial literacy materials; and 
effective public-private partnerships in providing financial 
literacy regarding digital assets; and a strategy to increase 
financial literacy regarding digital assets.

Sec. 507. Study on financial market infrastructure improvements

    Section 507 requires the CFTC and the SEC to conduct a 
study on whether additional guidance or rules are necessary to 
facilitate the development of tokenized securities and 
derivatives products. The study will also examine if further 
rules would foster the development of fair and orderly 
financial markets, be appropriate for the public interest, and 
provide further investor protections. The agencies must submit 
the report to Congress one year after enactment.

                        TITLE VI--MISCELLANEOUS

Section 601. Findings; sense of Congress

    Section 601 expresses support for digital asset markets and 
blockchain technology. It also highlights both Committee's work 
to bridge the gap between the CFTC and SEC and establish a 
functional framework for digital asset markets in the United 
States.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                         SECURITIES ACT OF 1933



           *       *       *       *       *       *       *
TITLE I--

           *       *       *       *       *       *       *


                              definitions

  Sec. 2. (a) Definitions.--When used in this title, unless the 
context otherwise requires--
          (1) The term ``security'' means any note, stock, 
        treasury stock, security future, security-based swap, 
        bond, debenture, evidence of indebtedness, certificate 
        of interest or participation in any profit-sharing 
        agreement, collateral-trust certificate, 
        preorganization certificate or subscription, 
        transferable share, investment contract, voting-trust 
        certificate, certificate of deposit for a security, 
        fractional undivided interest in oil, gas, or other 
        mineral rights, any 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), or any put, 
        call, straddle, option, or privilege entered into on a 
        national securities exchange relating to foreign 
        currency, or, in general, any interest or instrument 
        commonly known as a ``security'', or any certificate of 
        interest or participation in, temporary or interim 
        certificate for, receipt for, guarantee of, or warrant 
        or right to subscribe to or purchase, any of the 
        foregoing. The term does not include a digital 
        commodity or permitted payment stablecoin.
          (2) The term ``person'' means an individual, a 
        corporation, a partnership, an association, a joint-
        stock company, a trust, any unincorporated 
        organization, or a government or political subdivision 
        thereof. As used in this paragraph the term ``trust'' 
        shall include only a trust where the interest or 
        interests of the beneficiary or beneficiaries are 
        evidenced by a security.
          (3) The term ``sale'' or ``sell'' shall include every 
        contract of sale or disposition of a security or 
        interest in a security, for value. The term ``offer to 
        sell'', ``offer for sale'', or ``offer'' shall include 
        every attempt or offer to dispose of, or solicitation 
        of an offer to buy, a security or interest in a 
        security, for value. The terms defined in this 
        paragraph and the term ``offer to buy'' as used in 
        subsection (c) of section 5 shall not include 
        preliminary negotiations or agreements between an 
        issuer (or any person directly or indirectly 
        controlling or controlled by an issuer, or under direct 
        or indirect common control with an issuer) and any 
        underwriter or among underwriters who are or are to be 
        in privity of contract with an issuer (or any person 
        directly or indirectly controlling or controlled by an 
        issuer, or under direct or indirect common control with 
        an issuer). Any security given or delivered with, or as 
        a bonus on account of, any purchase of securities or 
        any other thing, shall be conclusively presumed to 
        constitute a part of the subject of such purchase and 
        to have been offered and sold for value. The issue or 
        transfer of a right or privilege, when originally 
        issued or transferred with a security, giving the 
        holder of such security the right to convert such 
        security into another security of the same issuer or of 
        another person, or giving a right to subscribe to 
        another security of the same issuer or of another 
        person, which right cannot be exercised until some 
        future date, shall not be deemed to be an offer or sale 
        of such other security; but the issue or transfer of 
        such other security upon the exercise of such right of 
        conversion or subscription shall be deemed a sale of 
        such other security. Any offer or sale of a security 
        futures product by or on behalf of the issuer of the 
        securities underlying the security futures product, an 
        affiliate of the issuer, or an underwriter, shall 
        constitute a contract for sale of, sale of, offer for 
        sale, or offer to sell the underlying securities. Any 
        offer or sale of a security-based swap by or on behalf 
        of the issuer of the securities upon which such 
        security-based swap is based or is referenced, an 
        affiliate of the issuer, or an underwriter, shall 
        constitute a contract for sale of, sale of, offer for 
        sale, or offer to sell such securities. The publication 
        or distribution by a broker or dealer of a research 
        report about an emerging growth company that is the 
        subject of a proposed public offering of the common 
        equity securities of such emerging growth company 
        pursuant to a registration statement that the issuer 
        proposes to file, or has filed, or that is effective 
        shall be deemed for purposes of paragraph (10) of this 
        subsection and section 5(c) not to constitute an offer 
        for sale or offer to sell a security, even if the 
        broker or dealer is participating or will participate 
        in the registered offering of the securities of the 
        issuer. As used in this paragraph, the term ``research 
        report'' means a written, electronic, or oral 
        communication that includes information, opinions, or 
        recommendations with respect to securities of an issuer 
        or an analysis of a security or an issuer, whether or 
        not it provides information reasonably sufficient upon 
        which to base an investment decision.
          (4) The term ``issuer'' means every person who issues 
        or proposes to issue any security; except that with 
        respect to certificates of deposit, voting-trust 
        certificates, or collateral-trust certificates, or with 
        respect to certificates of interest or shares in an 
        unincorporated investment trust not having a board of 
        directors (or persons performing similar functions) or 
        of the fixed, restricted management, or unit type, the 
        term ``issuer'' means the person or persons performing 
        the acts and assuming the duties of depositor or 
        manager pursuant to the provisions of the trust or 
        other agreement or instrument under which such 
        securities are issued; except that in the case of an 
        unincorporated association which provides by its 
        articles for limited liability of any or all of its 
        members, or in the case of a trust, committee, or other 
        legal entity, the trustees or members thereof shall not 
        be individually liable as issuers of any security 
        issued by the association, trust, committee, or other 
        legal entity; except that with respect to equipment-
        trust certificates or like securities, the term 
        ``issuer'' means the person by whom the equipment or 
        property is or is to be used; and except that with 
        respect to fractional undivided interests in oil, gas, 
        or other mineral rights, the term ``issuer'' means the 
        owner of any such right or of any interest in such 
        right (whether whole or fractional) who creates 
        fractional interests therein for the purpose of public 
        offering.
          (5) The term ``Commission'' means the Securities and 
        Exchange Commission.
          (6) The term ``Territory'' means Puerto Rico, the 
        Virgin Islands, and the insular possessions of the 
        United States.
          (7) The term ``interstate commerce'' means trade or 
        commerce in securities or any transportation or 
        communication relating thereto among the several States 
        or between the District of Columbia or any Territory of 
        the United States and any State or other Territory, or 
        between any foreign country and any State, Territory, 
        or the District of Columbia, or within the District of 
        Columbia.
          (8) The term ``registration statement'' means the 
        statement provided for in section 6, and includes any 
        amendment thereto and any report, document, or 
        memorandum filed as part of such statement or 
        incorporated therein by reference.
          (9) The term ``write'' or ``written'' shall include 
        printed, lithographed, or any means of graphic 
        communication.
          (10) The term ``prospectus'' means any prospectus, 
        notice, circular, advertisement, letter, or 
        communication, written or by radio or television, which 
        offers any security for sale or confirms the sale of 
        any security; except that (a) a communication sent or 
        given after the effective date of the registration 
        statement (other than a prospectus permitted under 
        subsection (b) of section 10) shall not be deemed a 
        prospectus if it is proved that prior to or at the same 
        time with such communication a written prospectus 
        meeting the requirements of subsection (a) of section 
        10 at the time of such communication was sent or given 
        to the person to whom the communication was made, and 
        (b) a notice, circular, advertisement, letter, or 
        communication in respect of a security shall not be 
        deemed to be a prospectus if it states from whom a 
        written prospectus meeting the requirements of section 
        10 may be obtained and, in addition, does no more than 
        identify the security, state the price thereof, state 
        by whom orders will be executed, and contain such other 
        information as the Commission, by rules or regulations 
        deemed necessary or appropriate in the public interest 
        and for the protection of investors, and subject to 
        such terms and conditions as may be prescribed therein, 
        may permit.
          (11) The term ``underwriter'' means any person who 
        has purchased from an issuer with a view to, or offers 
        or sells for an issuer in connection with, the 
        distribution of any security, or participates or has a 
        direct or indirect participation in any such 
        undertaking, or participates or has a participation in 
        the direct or indirect underwriting of any such 
        undertaking; but such term shall not include a person 
        whose interest is limited to a commission from an 
        underwriter or dealer not in excess of the usual and 
        customary distributors' or sellers' commission. As used 
        in this paragraph the term ``issuer'' shall include, in 
        addition to an issuer, any person directly or 
        indirectly controlling or controlled by the issuer, or 
        any person under direct or indirect common control with 
        the issuer.
          (12) The term ``dealer'' means any person who engages 
        either for all or part of his time, directly or 
        indirectly, as agent, broker, or principal, in the 
        business of offering, buying, selling, or otherwise 
        dealing or trading in securities issued by another 
        person.
          (13) The term ``insurance company'' means a company 
        which is organized as an insurance company, whose 
        primary and predominant business activity is the 
        writing of insurance or the reinsuring of risks 
        underwritten by insurance companies, and which is 
        subject to supervision by the insurance commissioner, 
        or a similar official or agency, of a State or 
        territory or the District of Columbia; or any receiver 
        or similar official or any liquidating agent for such 
        company, in his capacity as such.
          (14) The term ``separate account'' means an account 
        established and maintained by an insurance company 
        pursuant to the laws of any State or territory of the 
        United States, the District of Columbia, or of Canada 
        or any province thereof, under which income, gains and 
        losses, whether or not realized, from assets allocated 
        to such account, are, in accordance with the applicable 
        contract, credited to or charged against such account 
        without regard to other income, gains, or losses of the 
        insurance company.
          (15) The term ``accredited investor'' shall mean--
                  
                  (i) a bank as defined in section 3(a)(2) 
                whether acting in its individual or fiduciary 
                capacity; an insurance company as defined in 
                paragraph (13) of this subsection; an 
                investment company registered under the 
                Investment Company Act of 1940 or a business 
                development company as defined in section 
                2(a)(48) of that Act; a Small Business 
                Investment Company licensed by the Small 
                Business Administration; or an employee benefit 
                plan, including an individual retirement 
                account, which is subject to the provisions of 
                the Employee Retirement Income Security Act of 
                1974, if the investment decision is made by a 
                plan fiduciary, as defined in section 3(21) of 
                such Act, which is either a bank, insurance 
                company, or registered investment adviser; or
                  (ii) any person who, on the basis of such 
                factors as financial sophistication, net worth, 
                knowledge, and experience in financial matters, 
                or amount of assets under management qualifies 
                as an accredited investor under rules and 
                regulations which the Commission shall 
                prescribe.
          (16) The terms ``security future'', ``narrow-based 
        security index'', and ``security futures product'' have 
        the same meanings as provided in section 3(a)(55) of 
        the Securities Exchange Act of 1934.
          (17) The terms ``swap'' and ``security-based swap'' 
        have the same meanings as in section 1a of the 
        Commodity Exchange Act (7 U.S.C. 1a).
          (18) The terms ``purchase'' or ``sale'' of a 
        security-based swap shall be deemed to mean the 
        execution, termination (prior to its scheduled maturity 
        date), assignment, exchange, or similar transfer or 
        conveyance of, or extinguishing of rights or 
        obligations under, a security-based swap, as the 
        context may require.
          (19) The term ``emerging growth company'' means an 
        issuer that had total annual gross revenues of less 
        than $1,000,000,000 (as such amount is indexed for 
        inflation every 5 years by the Commission to reflect 
        the change in the Consumer Price Index for All Urban 
        Consumers published by the Bureau of Labor Statistics, 
        setting the threshold to the nearest 1,000,000) during 
        its most recently completed fiscal year. An issuer that 
        is an emerging growth company as of the first day of 
        that fiscal year shall continue to be deemed an 
        emerging growth company until the earliest of--
                  (A) the last day of the fiscal year of the 
                issuer during which it had total annual gross 
                revenues of $1,000,000,000 (as such amount is 
                indexed for inflation every 5 years by the 
                Commission to reflect the change in the 
                Consumer Price Index for All Urban Consumers 
                published by the Bureau of Labor Statistics, 
                setting the threshold to the nearest 1,000,000) 
                or more;
                  (B) the last day of the fiscal year of the 
                issuer following the fifth anniversary of the 
                date of the first sale of common equity 
                securities of the issuer pursuant to an 
                effective registration statement under this 
                title;
                  (C) the date on which such issuer has, during 
                the previous 3-year period, issued more than 
                $1,000,000,000 in non-convertible debt; or
                  (D) the date on which such issuer is deemed 
                to be a ``large accelerated filer'', as defined 
                in section 240.12b-2 of title 17, Code of 
                Federal Regulations, or any successor thereto.
          (20) Affiliated person.--The term ``affiliated 
        person'' means a person (including a related person) 
        that--
                  (A) with respect to a digital asset issuer--
                          (i) directly, or indirectly through 
                        one or more intermediaries, controls, 
                        or is controlled by, or is under common 
                        control with, such digital asset 
                        issuer; and
                          (ii) was described under clause (i) 
                        at any point in the previous 3-month 
                        period; or
                  (B) with respect to any digital asset--
                          (i) beneficially owns 5 percent or 
                        more of the units of such digital asset 
                        that are then outstanding; and
                          (ii) was described under clause (i) 
                        at any point in the previous 3-month 
                        period.
          (21) Blockchain.--The term ``blockchain'' means any 
        technology--
                  (A) where data is--
                          (i) shared across a network to create 
                        a public ledger of verified 
                        transactions or information among 
                        network participants;
                          (ii) linked using cryptography to 
                        maintain the integrity of the public 
                        ledger and to execute other functions; 
                        and
                          (iii) distributed among network 
                        participants in an automated fashion to 
                        concurrently update network 
                        participants on the state of the public 
                        ledger and any other functions; and
                  (B) composed of source code that is publicly 
                available.
          (22) Blockchain protocol.--The term ``blockchain 
        protocol'' means any executable software deployed to a 
        blockchain composed of source code that is publicly 
        available and accessible, including a smart contract or 
        any network of smart contracts.
          (23) Blockchain system.--The term ``blockchain 
        system'' means any blockchain or blockchain protocol.
          (24) Decentralized network.--With respect to a 
        blockchain system to which a digital asset relates, the 
        term ``decentralized network'' means the following 
        conditions are met:
                  (A) During the previous 12-month period, no 
                person--
                          (i) had the unilateral authority, 
                        directly or indirectly, through any 
                        contract, arrangement, understanding, 
                        relationship, or otherwise, to control 
                        or materially alter the functionality 
                        or operation of the blockchain system; 
                        or
                          (ii) had the unilateral authority to 
                        restrict or prohibit any person who is 
                        not a digital asset issuer, related 
                        person, or an affiliated person from--
                                  (I) using, earning, or 
                                transmitting the digital asset;
                                  (II) deploying software that 
                                uses or integrates with the 
                                blockchain system;
                                  (III) participating in a 
                                decentralized governance system 
                                with respect to the blockchain 
                                system; or
                                  (IV) operating a node, 
                                validator, or other form of 
                                computational infrastructure 
                                with respect to the blockchain 
                                system.
                  (B) During the previous 12-month period--
                          (i) no digital asset issuer or 
                        affiliated person beneficially owned, 
                        in the aggregate, 20 percent or more of 
                        the total amount of units of such 
                        digital asset that--
                                  (I) can be created, issued, 
                                or distributed in such 
                                blockchain system; and
                                  (II) were freely 
                                transferrable or otherwise used 
                                or available to be used for the 
                                purposes of such blockchain 
                                system;
                          (ii) no digital asset issuer or 
                        affiliated person had the unilateral 
                        authority to direct the voting, in the 
                        aggregate, of 20 percent or more of the 
                        outstanding voting power of such 
                        digital asset or related decentralized 
                        governance system; or
                          (iii) the digital asset did not 
                        include voting power with respect to 
                        any decentralized governance system of 
                        the blockchain system.
                  (C) During the previous 3-month period, the 
                digital asset issuer, any affiliated person, or 
                any related person has not implemented or 
                contributed any intellectual property to the 
                source code of the blockchain system that 
                materially alters the functionality or 
                operation of the blockchain system, unless such 
                implementation or contribution to the source 
                code--
                          (i) addressed vulnerabilities, 
                        errors, regular maintenance, 
                        cybersecurity risks, or other technical 
                        changes to the blockchain system; or
                          (ii) were adopted through the 
                        consensus or agreement of a 
                        decentralized governance system.
                  (D) During the previous 3-month period, 
                neither any digital asset issuer nor any 
                affiliated person described under paragraph 
                (20)(A) has marketed to the public the digital 
                assets as an investment.
                  (E) During the previous 12-month period, all 
                issuances of units of such digital asset 
                through the programmatic functioning of the 
                blockchain system were end user distributions.
          (25) Decentralized governance system.--
                  (A) In general.--The term ``decentralized 
                governance system'' means, with respect to a 
                blockchain system, any rules-based system 
                permitting persons using the blockchain system 
                or the digital assets related to such 
                blockchain system to form consensus or reach 
                agreement in the development, provision, 
                publication, management, or administration of 
                such blockchain system.
                  (B) Relationship of persons to decentralized 
                governance systems.--Persons acting through a 
                decentralized governance system shall be 
                treated as separate persons unless such persons 
                are under common control.
                  (C) Exclusion.--The term ``decentralized 
                governance system'' does not include a system 
                in which--
                          (i) a person or group of persons 
                        under common control have the ability 
                        to--
                                  (I) unilaterally alter the 
                                rules of consensus or agreement 
                                for the blockchain system; or
                                  (II) determine the final 
                                outcome of decisions related to 
                                the development, provision, 
                                publication, management, or 
                                administration of such 
                                blockchain system;
                          (ii) a person or group of persons is 
                        directly engaging in an activity that 
                        requires registration with the 
                        Commission or the Commodity Futures 
                        Trading Commission other than--
                                  (I) developing, providing, 
                                publishing, managing, or 
                                administering a blockchain 
                                system; or
                                  (II) an activity with respect 
                                to which the organization is 
                                exempt from such registration; 
                                or
                          (iii) a person or group of persons 
                        seeking to knowingly evade the 
                        requirements imposed on a digital asset 
                        issuer, a related person, an affiliated 
                        person, or any other person registered 
                        (or required to be registered) under 
                        the securities laws, the Financial 
                        Innovation and Technology for the 21st 
                        Century Act, or the Commodity Exchange 
                        Act.
          (26) Digital asset.--
                  (A) In general.--The term ``digital asset'' 
                means any fungible digital representation of 
                value that can be exclusively possessed and 
                transferred, person to person, without 
                necessary reliance on an intermediary, and is 
                recorded on a cryptographically secured public 
                distributed ledger.
                  (B) Exclusions.--The term ``digital asset'' 
                does not include--
                          (i) any note, stock, treasury stock, 
                        security future, security-based swap, 
                        bond, debenture, evidence of 
                        indebtedness, certificate of interest 
                        or participation in any profit-sharing 
                        agreement, collateral-trust 
                        certificate, preorganization 
                        certificate or subscription, or 
                        transferable share; or
                          (ii) any asset, which based on its 
                        terms and other characteristics, is, 
                        represents, or is functionally 
                        equivalent to an agreement, contract, 
                        or transaction that is--
                                  (I) a contract of sale of a 
                                commodity (as defined under 
                                section 1a of the Commodity 
                                Exchange Act) for future 
                                delivery or an option thereon;
                                  (II) a security futures 
                                product;
                                  (III) a swap;
                                  (IV) an agreement, contract, 
                                or transaction described in 
                                section 2(c)(2)(C)(i) or 
                                2(c)(2)(D)(i) of the Commodity 
                                Exchange Act;
                                  (V) a commodity option 
                                authorized under section 4c of 
                                the Commodity Exchange Act; or
                                  (VI) a leverage transaction 
                                authorized under section 19 of 
                                the Commodity Exchange Act.
                  (C) Rule of construction.--Nothing in this 
                paragraph shall be construed to create a 
                presumption that a digital asset is a 
                representation of any type of security not 
                excluded from the definition of digital asset.
                  (D) Relationship to a blockchain system.--A 
                digital asset is considered to relate to a 
                blockchain system if the digital asset is 
                intrinsically linked to the blockchain system, 
                including--
                          (i) where the digital asset's value 
                        is reasonably expected to be generated 
                        by the programmatic functioning of the 
                        blockchain system;
                          (ii) where the digital asset has 
                        voting rights with respect to the 
                        decentralized governance system of the 
                        blockchain system; or
                          (iii) where the digital asset is 
                        issued through the programmatic 
                        functioning of the blockchain system.
                  (E) Treatment of certain digital assets sold 
                pursuant to an investment contract.--A digital 
                asset offered or sold or intended to be offered 
                or sold pursuant to an investment contract is 
                not and does not become a security as a result 
                of being sold or otherwise transferred pursuant 
                to that investment contract.
          (27) Digital asset issuer.--
                  (A) In general.--With respect to a digital 
                asset, the term ``digital asset issuer'' means 
                any person that, in exchange for any 
                consideration--
                          (i) issues or causes to be issued a 
                        unit of such digital asset to a person; 
                        or
                          (ii) offers or sells a right to a 
                        future issuance of a unit of such 
                        digital asset to a person.
                  (B) Exclusion.--The term ``digital asset 
                issuer'' does not include any person solely 
                because such person deploys source code that 
                creates or issues units of a digital asset that 
                are only distributed in end user distributions.
                  (C) Prohibition on evasion.--It shall be 
                unlawful for any person to knowingly evade 
                classification as a ``digital asset issuer'' 
                and facilitate an arrangement for the primary 
                purpose of effecting a sale, distribution, or 
                other issuance of a digital asset.
          (28) Digital asset maturity date.--The term ``digital 
        asset maturity date'' means, with respect to any 
        digital asset, the first date on which 20 percent or 
        more of the total units of such digital asset that are 
        then outstanding as of such date are--
                  (A) digital commodities; or
                  (B) digital assets that have been registered 
                with the Commission.
          (29) Digital commodity.--The term ``digital 
        commodity'' has the meaning given that term under 
        section 1a of the Commodity Exchange Act (7 U.S.C. 1a).
          (30) End user distribution.--
                  (A) In general.--The term ``end user 
                distribution'' means an issuance of a unit of a 
                digital asset that--
                          (i) does not involve an exchange of 
                        more than a nominal value of cash, 
                        property, or other assets; and
                          (ii) is distributed in a broad, 
                        equitable, and non-discretionary manner 
                        based on conditions capable of being 
                        satisfied by any participant in the 
                        blockchain system, including as 
                        incentive-based rewards--
                                  (I) to users of the digital 
                                asset or any blockchain system 
                                to which the digital asset 
                                relates;
                                  (II) for activities directly 
                                related to the operation of the 
                                blockchain system, such as 
                                mining, validating, staking, or 
                                other activity directly tied to 
                                the operation of the blockchain 
                                system; or
                                  (III) to the existing holders 
                                of another digital asset, in 
                                proportion to the total units 
                                of such other digital asset as 
                                are held by each person.
                  (B) Prohibition on evasion.--It shall be 
                unlawful for any person to facilitate an end 
                user distribution to knowingly evade 
                classification as a digital asset issuer, 
                related person, or an affiliated person, or the 
                requirements related to a digital asset 
                issuance.
          (31) Functional network.--With respect to a 
        blockchain system to which a digital asset relates, the 
        term ``functional network'' means the network allows 
        network participants to use such digital asset for--
                  (A) the transmission and storage of value on 
                the blockchain system;
                  (B) the participation in services provided by 
                or an application running on the blockchain 
                system; or
                  (C) the participation in the decentralized 
                governance system of the blockchain system.
          (32) Permitted payment stablecoin.--The term 
        ``permitted payment stablecoin''--
                  (A) means a digital asset--
                          (i) that is or is designed to be used 
                        as a means of payment or settlement;
                          (ii) the issuer of which--
                                  (I) is obligated to convert, 
                                redeem, or repurchase for a 
                                fixed amount of monetary value; 
                                or
                                  (II) represents will maintain 
                                or creates the reasonable 
                                expectation that it will 
                                maintain a stable value 
                                relative to the value of a 
                                fixed amount of monetary value; 
                                and
                          (iii) that is subject to regulation 
                        by a Federal or State regulator with 
                        authority over entities that issue 
                        payment stablecoins; and
                  (B) that is not--
                          (i) a national currency; or
                          (ii) a security issued by an 
                        investment company registered under 
                        section 8(a) of the Investment Company 
                        Act of 1940 (15 U.S.C. 80a-8(a)).
          (33) Related person.--With respect to a digital asset 
        issuer, the term ``related person'' means--
                  (A) a founder, promoter, employee, 
                consultant, advisor, or person serving in a 
                similar capacity;
                  (B) any person that is or was in the previous 
                6-month period an executive officer, director, 
                trustee, general partner, advisory board 
                member, or person serving in a similar 
                capacity;
                  (C) any equity holder or other security 
                holder; or
                  (D) any other person that received a unit of 
                digital asset from such digital asset issuer 
                through--
                          (i) an exempt offering, other than an 
                        offering made in reliance on section 
                        4(a)(8); or
                          (ii) a distribution that is not an 
                        end user distribution described under 
                        section 42(d)(1) of the Securities 
                        Exchange Act of 1934.
          (34) Restricted digital asset.--
                  (A) In general.--The term ``restricted 
                digital asset'' means--
                          (i) any unit of a digital asset held 
                        by a person, other than the digital 
                        asset issuer, a related person, or an 
                        affiliated person, prior to the first 
                        date on which each blockchain system to 
                        which the digital asset relates is a 
                        functional network and certified to be 
                        a decentralized network under section 
                        44 of the Securities Exchange Act of 
                        1934, that was--
                                  (I) issued to such person 
                                through a distribution, other 
                                than an end user distribution 
                                described under section 
                                42(d)(1) of the Securities 
                                Exchange Act of 1934; or
                                  (II) acquired by such person 
                                in a transaction that was not 
                                executed on a digital commodity 
                                exchange;
                          (ii) any digital asset held by a 
                        related person or an affiliated person 
                        during any period when any blockchain 
                        system to which the digital asset 
                        relates is not a functional network or 
                        not certified to be a decentralized 
                        network under section 44 of the 
                        Securities Exchange Act of 1934; or
                          (iii) any unit of a digital asset 
                        held by the digital asset issuer.
                  (B) Exclusion.--The term ``restricted digital 
                asset'' does not include a permitted payment 
                stablecoin.
          (35) Securities laws.--The term ``securities laws'' 
        has the meaning given that term under section 3(a) of 
        the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
          (36) Source code.--With respect to a blockchain 
        system, the term ``source code'' means a listing of 
        commands to be compiled or assembled into an executable 
        computer program.
  (b) Consideration of Promotion of Efficiency, Competition, 
and Capital Formation.--Whenever pursuant to this title the 
Commission is engaged in rulemaking and is required to 
consider or determine whether an action is necessary or 
appropriate in the public interest, the Commission shall also 
consider, in addition to the protection of investors, whether 
the action will promote efficiency, competition, and capital 
formation.

           *       *       *       *       *       *       *


                         exempted transactions

  Sec. 4. (a) The provisions of section 5 shall not apply to--
          (1) transactions by any person other than an issuer, 
        underwriter, or dealer.
          (2) transactions by an issuer not involving any 
        public offering.
          (3) transactions by a dealer (including an 
        underwriter no longer acting as an underwriter in 
        respect of the security involved in such transaction), 
        except--
                  (A) transactions taking place prior to the 
                expiration of forty days after the first date 
                upon which the security was bona fide offered 
                to the public by the issuer or by or through an 
                underwriter,
                  (B) transactions in a security as to which a 
                registration statement has been filed taking 
                place prior to the expiration of forty days 
                after the effective date of such registration 
                statement or prior to the expiration of forty 
                days after the first date upon which the 
                security was bona fide offered to the public by 
                the issuer or by or through an underwriter 
                after such effective date, whichever is later 
                (excluding in the computation of such forty 
                days any time during which a stop order issued 
                under section 8 is in effect as to the 
                security), or such shorter period as the 
                Commission may specify by rules and regulations 
                or order, and
                  (C) transactions as to securities 
                constituting the whole or a part of an unsold 
                allotment to or subscription by such dealer as 
                a participant in the distribution of such 
                securities by the issuer or by or through an 
                underwriter.
        With respect to transactions referred to in clause (B), 
        if securities of the issuer have not previously been 
        sold pursuant to an earlier effective registration 
        statement the applicable period, instead of forty days, 
        shall be ninety days, or such shorter period as the 
        Commission may specify by rules and regulations or 
        order.
          (4) brokers' transactions executed upon customers' 
        orders on any exchange or in the over-the-counter 
        market but not the solicitation of such orders.
          (5) transactions involving offers or sales by an 
        issuer solely to one or more accredited investors, if 
        the aggregate offering price of an issue of securities 
        offered in reliance on this paragraph does not exceed 
        the amount allowed under section 3(b)(1) of this title, 
        if there is no advertising or public solicitation in 
        connection with the transaction by the issuer or anyone 
        acting on the issuer's behalf, and if the issuer files 
        such notice with the Commission as the Commission shall 
        prescribe.
          (6) transactions involving the offer or sale of 
        securities by an issuer (including all entities 
        controlled by or under common control with the issuer), 
        provided that--
                  (A) the aggregate amount sold to all 
                investors by the issuer, including any amount 
                sold in reliance on the exemption provided 
                under this paragraph during the 12-month period 
                preceding the date of such transaction, is not 
                more than $1,000,000;
                  (B) the aggregate amount sold to any investor 
                by an issuer, including any amount sold in 
                reliance on the exemption provided under this 
                paragraph during the 12-month period preceding 
                the date of such transaction, does not exceed--
                          (i) the greater of $2,000 or 5 
                        percent of the annual income or net 
                        worth of such investor, as applicable, 
                        if either the annual income or the net 
                        worth of the investor is less than 
                        $100,000; and
                          (ii) 10 percent of the annual income 
                        or net worth of such investor, as 
                        applicable, not to exceed a maximum 
                        aggregate amount sold of $100,000, if 
                        either the annual income or net worth 
                        of the investor is equal to or more 
                        than $100,000;
                  (C) the transaction is conducted through a 
                broker or funding portal that complies with the 
                requirements of section 4A(a); and
                  (D) the issuer complies with the requirements 
                of section 4A(b).
          (7) transactions meeting the requirements of 
        subsection (d).
          (8) transactions involving the offer or sale of units 
        of a digital asset by a digital asset issuer, if--
                  (A) the aggregate amount of units of the 
                digital asset sold by the digital asset issuer 
                in reliance on the exemption provided under 
                this paragraph, during the 12-month period 
                preceding the date of such transaction, 
                including the amount sold in such transaction, 
                is not more than $75,000,000 (as such amount is 
                annually adjusted by the Commission to reflect 
                the change in the Consumer Price Index for All 
                Urban Consumers published by the Bureau of 
                Labor Statistics of the Department of Labor);
                  (B) with respect to a transaction involving 
                the purchase of units of a digital asset by a 
                person who is not an accredited investor, the 
                aggregate amount of all units of digital assets 
                purchased by such person during the 12-month 
                period preceding the date of such transaction, 
                including the unit of a digital asset purchased 
                in such transaction, does not exceed the 
                greater of--
                          (i) 10 percent of the person's annual 
                        income or joint income with that 
                        person's spouse or spousal equivalent; 
                        or
                          (ii) 10 percent of the person's net 
                        worth or joint net worth with the 
                        person's spouse or spousal equivalent;
                  (C) after the completion of the transaction, 
                the purchaser does not own more than 10 percent 
                of the total amount of the units of the digital 
                asset sold in reliance on the exemption under 
                this paragraph;
                  (D) the transaction does not involve the 
                offer or sale of any digital asset not offered 
                as part of an investment contract;
                  (E) the transaction does not involve the 
                offer or sale of a unit of a digital asset by a 
                digital asset issuer that--
                          (i) is not organized under the laws 
                        of a State, a territory of the United 
                        States, or the District of Columbia;
                          (ii) is a development stage company 
                        that either--
                                  (I) has no specific business 
                                plan or purpose; or
                                  (II) has indicated that the 
                                business plan of the company is 
                                to merge with or acquire an 
                                unidentified company;
                          (iii) is an investment company, as 
                        defined in section 3 of the Investment 
                        Company Act of 1940 (15 U.S.C. 80a-3), 
                        or is excluded from the definition of 
                        investment company by section 3(b) or 
                        section 3(c) of that Act (15 U.S.C. 
                        80a-3(b) or 80a-3(c));
                          (iv) is issuing fractional undivided 
                        interests in oil or gas rights, or a 
                        similar interest in other mineral 
                        rights;
                          (v) is, or has been, subject to any 
                        order of the Commission entered 
                        pursuant to section 12(j) of the 
                        Securities Exchange Act of 1934 during 
                        the 5-year period before the filing of 
                        the offering statement; or
                          (vi) is disqualified pursuant to 
                        section 230.262 of title 17, Code of 
                        Federal Regulations; and
                  (F) the issuer meets the requirements of 
                section 4B(a).
  (b) Offers and sales exempt under section 230.506 of title 
17, Code of Federal Regulations (as revised pursuant to section 
201 of the Jumpstart Our Business Startups Act) shall not be 
deemed public offerings under the Federal securities laws as a 
result of general advertising or general solicitation.
  (c)(1) With respect to securities offered and sold in 
compliance with Rule 506 of Regulation D under this Act, no 
person who meets the conditions set forth in paragraph (2) 
shall be subject to registration as a broker or dealer pursuant 
to section 15(a)(1) of this title, solely because--
                  (A) that person maintains a platform or 
                mechanism that permits the offer, sale, 
                purchase, or negotiation of or with respect to 
                securities, or permits general solicitations, 
                general advertisements, or similar or related 
                activities by issuers of such securities, 
                whether online, in person, or through any other 
                means;
                  (B) that person or any person associated with 
                that person co-invests in such securities; or
                  (C) that person or any person associated with 
                that person provides ancillary services with 
                respect to such securities.
  (2) The exemption provided in paragraph (1) shall apply to 
any person described in such paragraph if--
          (A) such person and each person associated with that 
        person receives no compensation in connection with the 
        purchase or sale of such security;
          (B) such person and each person associated with that 
        person does not have possession of customer funds or 
        securities in connection with the purchase or sale of 
        such security; and
          (C) such person is not subject to a statutory 
        disqualification as defined in section 3(a)(39) of this 
        title and does not have any person associated with that 
        person subject to such a statutory disqualification.
  (3) For the purposes of this subsection, the term ``ancillary 
services'' means--
          (A) the provision of due diligence services, in 
        connection with the offer, sale, purchase, or 
        negotiation of such security, so long as such services 
        do not include, for separate compensation, investment 
        advice or recommendations to issuers or investors; and
          (B) the provision of standardized documents to the 
        issuers and investors, so long as such person or entity 
        does not negotiate the terms of the issuance for and on 
        behalf of third parties and issuers are not required to 
        use the standardized documents as a condition of using 
        the service.
  (d) Certain Accredited Investor Transactions.--The 
transactions referred to in subsection (a)(7) are transactions 
meeting the following requirements:
          (1) Accredited investor requirement.--Each purchaser 
        is an accredited investor, as that term is defined in 
        section 230.501(a) of title 17, Code of Federal 
        Regulations (or any successor regulation).
          (2) Prohibition on general solicitation or 
        advertising.--Neither the seller, nor any person acting 
        on the seller's behalf, offers or sells securities by 
        any form of general solicitation or general 
        advertising.
          (3) Information requirement.--In the case of a 
        transaction involving the securities of an issuer that 
        is neither subject to section 13 or 15(d) of the 
        Securities Exchange Act of 1934 (15 U.S.C. 78m; 
        78o(d)), nor exempt from reporting pursuant to section 
        240.12g3-2(b) of title 17, Code of Federal Regulations, 
        nor a foreign government (as defined in section 230.405 
        of title 17, Code of Federal Regulations) eligible to 
        register securities under Schedule B, the seller and a 
        prospective purchaser designated by the seller obtain 
        from the issuer, upon request of the seller, and the 
        seller in all cases makes available to a prospective 
        purchaser, the following information (which shall be 
        reasonably current in relation to the date of resale 
        under this section):
                  (A) The exact name of the issuer and the 
                issuer's predecessor (if any).
                  (B) The address of the issuer's principal 
                executive offices.
                  (C) The exact title and class of the 
                security.
                  (D) The par or stated value of the security.
                  (E) The number of shares or total amount of 
                the securities outstanding as of the end of the 
                issuer's most recent fiscal year.
                  (F) The name and address of the transfer 
                agent, corporate secretary, or other person 
                responsible for transferring shares and stock 
                certificates.
                  (G) A statement of the nature of the business 
                of the issuer and the products and services it 
                offers, which shall be presumed reasonably 
                current if the statement is as of 12 months 
                before the transaction date.
                  (H) The names of the officers and directors 
                of the issuer.
                  (I) The names of any persons registered as a 
                broker, dealer, or agent that shall be paid or 
                given, directly or indirectly, any commission 
                or remuneration for such person's participation 
                in the offer or sale of the securities.
                  (J) The issuer's most recent balance sheet 
                and profit and loss statement and similar 
                financial statements, which shall--
                          (i) be for such part of the 2 
                        preceding fiscal years as the issuer 
                        has been in operation;
                          (ii) be prepared in accordance with 
                        generally accepted accounting 
                        principles or, in the case of a foreign 
                        private issuer, be prepared in 
                        accordance with generally accepted 
                        accounting principles or the 
                        International Financial Reporting 
                        Standards issued by the International 
                        Accounting Standards Board;
                          (iii) be presumed reasonably current 
                        if--
                                  (I) with respect to the 
                                balance sheet, the balance 
                                sheet is as of a date less than 
                                16 months before the 
                                transaction date; and
                                  (II) with respect to the 
                                profit and loss statement, such 
                                statement is for the 12 months 
                                preceding the date of the 
                                issuer's balance sheet; and
                          (iv) if the balance sheet is not as 
                        of a date less than 6 months before the 
                        transaction date, be accompanied by 
                        additional statements of profit and 
                        loss for the period from the date of 
                        such balance sheet to a date less than 
                        6 months before the transaction date.
                  (K) To the extent that the seller is a 
                control person with respect to the issuer, a 
                brief statement regarding the nature of the 
                affiliation, and a statement certified by such 
                seller that they have no reasonable grounds to 
                believe that the issuer is in violation of the 
                securities laws or regulations.
          (4) Issuers disqualified.--The transaction is not for 
        the sale of a security where the seller is an issuer or 
        a subsidiary, either directly or indirectly, of the 
        issuer.
          (5) Bad actor prohibition.--Neither the seller, nor 
        any person that has been or will be paid (directly or 
        indirectly) remuneration or a commission for their 
        participation in the offer or sale of the securities, 
        including solicitation of purchasers for the seller is 
        subject to an event that would disqualify an issuer or 
        other covered person under Rule 506(d)(1) of Regulation 
        D (17 CFR 230.506(d)(1)) or is subject to a statutory 
        disqualification described under section 3(a)(39) of 
        the Securities Exchange Act of 1934.
          (6) Business requirement.--The issuer is engaged in 
        business, is not in the organizational stage or in 
        bankruptcy or receivership, and is not a blank check, 
        blind pool, or shell company that has no specific 
        business plan or purpose or has indicated that the 
        issuer's primary business plan is to engage in a merger 
        or combination of the business with, or an acquisition 
        of, an unidentified person.
          (7) Underwriter prohibition.--The transaction is not 
        with respect to a security that constitutes the whole 
        or part of an unsold allotment to, or a subscription or 
        participation by, a broker or dealer as an underwriter 
        of the security or a redistribution.
          (8) Outstanding class requirement.--The transaction 
        is with respect to a security of a class that has been 
        authorized and outstanding for at least 90 days prior 
        to the date of the transaction.
  (e) Additional Requirements.--
          (1) In general.--With respect to an exempted 
        transaction described under subsection (a)(7):
                  (A) Securities acquired in such transaction 
                shall be deemed to have been acquired in a 
                transaction not involving any public offering.
                  (B) Such transaction shall be deemed not to 
                be a distribution for purposes of section 
                2(a)(11).
                  (C) Securities involved in such transaction 
                shall be deemed to be restricted securities 
                within the meaning of Rule 144 (17 CFR 
                230.144).
          (2) Rule of construction.--The exemption provided by 
        subsection (a)(7) shall not be the exclusive means for 
        establishing an exemption from the registration 
        requirements of section 5.

           *       *       *       *       *       *       *


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

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

           *       *       *       *       *       *       *


SEC. 18. EXEMPTION FROM STATE REGULATION OF SECURITIES OFFERINGS.

  (a) Scope of Exemption.--Except as otherwise provided in this 
section, no law, rule, regulation, or order, or other 
administrative action of any State or any political subdivision 
thereof--
          (1) requiring, or with respect to, registration or 
        qualification of securities, or registration or 
        qualification of securities transactions, shall 
        directly or indirectly apply to a security that--
                  (A) is a covered security; or
                  (B) will be a covered security upon 
                completion of the transaction;
          (2) shall directly or indirectly prohibit, limit, or 
        impose any conditions upon the use of--
                  (A) with respect to a covered security 
                described in subsection (b), any offering 
                document that is prepared by or on behalf of 
                the issuer; or
                  (B) any proxy statement, report to 
                shareholders, or other disclosure document 
                relating to a covered security or the issuer 
                thereof that is required to be and is filed 
                with the Commission or any national securities 
                organization registered under section 15A of 
                the Securities Exchange Act of 1934, except 
                that this subparagraph does not apply to the 
                laws, rules, regulations, or orders, or other 
                administrative actions of the State of 
                incorporation of the issuer; or
          (3) shall directly or indirectly prohibit, limit, or 
        impose conditions, based on the merits of such offering 
        or issuer, upon the offer or sale of any security 
        described in paragraph (1).
  (b) Covered Securities.--For purposes of this section, the 
following are covered securities:
          (1) Exclusive federal registration of nationally 
        traded securities.--A security is a covered security if 
        such security is--
                  (A) a security designated as qualified for 
                trading in the national market system pursuant 
                to section 11A(a)(2) of the Securities Exchange 
                Act of 1934 (15 U.S.C. 78k-1(a)(2)) that is 
                listed, or authorized for listing, on a 
                national securities exchange (or tier or 
                segment thereof); or
                  (B) a security of the same issuer that is 
                equal in seniority or that is a senior security 
                to a security described in subparagraph (A).
          (2) Exclusive federal registration of investment 
        companies.--A security is a covered security if such 
        security is a security issued by an investment company 
        that is registered, or that has filed a registration 
        statement, under the Investment Company Act of 1940.
          (3) Sales to qualified purchasers.--A security is a 
        covered security with respect to the offer or sale of 
        the security to qualified purchasers, as defined by the 
        Commission by rule. In prescribing such rule, the 
        Commission may define the term ``qualified purchaser'' 
        differently with respect to different categories of 
        securities, consistent with the public interest and the 
        protection of investors.
           (4) Exemption in connection with certain exempt 
        offerings.--A security is a covered security with 
        respect to a transaction that is exempt from 
        registration under this title pursuant to--
                  (A) paragraph (1) or (3) of section 4, and 
                the issuer of such security files reports with 
                the Commission pursuant to section 13 or 15(d) 
                of the Securities Exchange Act of 1934;
                  (B) [section 4(4)] section 4(a)(4);
                  (C) [section 4(6)] section 4(a)(6);
                  (D) a rule or regulation adopted pursuant to 
                section 3(b)(2) and such security is--
                          (i) offered or sold on a national 
                        securities exchange; or
                          (ii) offered or sold to a qualified 
                        purchaser, as defined by the Commission 
                        pursuant to paragraph (3) with respect 
                        to that purchase or sale;
                  (E) section 3(a), other than the offer or 
                sale of a security that is exempt from such 
                registration pursuant to paragraph (4), (10), 
                or (11) of such section, except that a 
                municipal security that is exempt from such 
                registration pursuant to paragraph (2) of such 
                section is not a covered security with respect 
                to the offer or sale of such security in the 
                State in which the issuer of such security is 
                located;
                  (F) Commission rules or regulations issued 
                under [section 4(2)] section 4(a)(2), except 
                that this subparagraph does not prohibit a 
                State from imposing notice filing requirements 
                that are substantially similar to those 
                required by rule or regulation under [section 
                4(2)] section 4(a)(2) that are in effect on 
                September 1, 1996; [or]
                  (G) section 4(a)(7)[.]; or
                  (H) section 4(a)(8).
          (5) Exemption for certain digital assets in 
        connection with federally regulated intermediaries.--A 
        restricted digital asset is a covered security with 
        respect to a transaction that is exempt from 
        registration under this Act when--
                  (A) it is brokered, traded, custodied, or 
                cleared by a digital asset broker or digital 
                asset dealer registered under section 15H of 
                the Securities Exchange Act of 1934; or
                  (B) traded through a digital asset trading 
                system.
  (c) Preservation of Authority.--
          (1) Fraud authority.--Consistent with this section, 
        the securities commission (or any agency or office 
        performing like functions) of any State shall retain 
        jurisdiction under the laws of such State to 
        investigate and bring enforcement actions, in 
        connection with securities or securities transactions
                  (A) with respect to--
                          (i) fraud or deceit; or
                          (ii) unlawful conduct by a broker or 
                        dealer; and
                  (B) in connection to a transaction described 
                under section 4(6), with respect to--
                          (i) fraud or deceit; or
                          (ii) unlawful conduct by a broker, 
                        dealer, funding portal, or issuer.
          (2) Preservation of filing requirements.--
                  (A) Notice filings permitted.--Nothing in 
                this 
                section prohibits the securities commission (or 
                any agency or office performing like functions) 
                of any State from requiring the filing of any 
                document filed with the Commission pursuant to 
                this title, together with annual or periodic 
                reports of the value of securities sold or 
                offered to be sold to persons located in the 
                State (if such sales data is not included in 
                documents filed with the Commission), solely 
                for notice purposes and the assessment of any 
                fee, together with a consent to service of 
                process and any required fee.
                  (B) Preservation of fees.--
                          (i) In general.--Until otherwise 
                        provided by law, rule, regulation, or 
                        order, or other administrative action 
                        of any State or any political 
                        subdivision thereof, adopted after the 
                        date of enactment of the National 
                        Securities Markets Improvement Act of 
                        1996, filing or registration fees with 
                        respect to securities or securities 
                        transactions shall continue to be 
                        collected in amounts determined 
                        pursuant to State law as in effect on 
                        the day before such date.
                          (ii) Schedule.--The fees required by 
                        this subparagraph shall be paid, and 
                        all necessary supporting data on sales 
                        or offers for sales required under 
                        subparagraph (A), shall be reported on 
                        the same 
                        schedule as would have been applicable 
                        had the issuer not relied on the 
                        exemption provided in subsection (a).
                  (C) Availability of preemption contingent on 
                payment of fees.--
                          (i) In general.--During the period 
                        beginning on the date of enactment of 
                        the National Securities 
                        Markets Improvement Act of 1996 and 
                        ending 3 years after that date of 
                        enactment, the securities commission 
                        (or any agency or office performing 
                        like functions) of any State may 
                        require the registration of securities 
                        issued by any issuer who refuses to pay 
                        the fees required by subparagraph (B).
                          (ii) Delays.--For purposes of this 
                        subparagraph, delays in payment of fees 
                        or underpayments of fees that are 
                        promptly remedied shall not constitute 
                        a refusal to pay fees.
                  (D) Fees not permitted on listed 
                securities.--Notwithstanding subparagraphs (A), 
                (B), and (C), no filing or fee may be required 
                with respect to any security that is a covered 
                security pursuant to subsection (b)(1), or will 
                be such a covered security upon completion of 
                the transaction, or is a security of the same 
                issuer that is equal in seniority or that is a 
                senior security to a security that is a covered 
                security pursuant to subsection (b)(1).
                  (F) Fees not permitted on crowdfunded 
                securities.--Notwithstanding subparagraphs (A), 
                (B), and (C), no filing or fee may be required 
                with respect to any security that is a covered 
                security pursuant to subsection (b)(4)(B), or 
                will be such a covered security upon completion 
                of the transaction, except for the securities 
                commission (or any agency or office performing 
                like functions) of the State of the principal 
                place of business of the issuer, or any State 
                in which purchasers of 50 percent or greater of 
                the aggregate amount of the issue are 
                residents, provided that for purposes of this 
                subparagraph, the term ``State'' includes the 
                District of Columbia and the territories of the 
                United States.
          (3) Enforcement of requirements.--Nothing in this 
        section shall prohibit the securities commission (or 
        any agency or office performing like functions) of any 
        State from suspending the offer or sale of securities 
        within such State as a result of the failure to submit 
        any filing or fee required under law and permitted 
        under this section.
  (d) Definitions.--For purposes of this section, the following 
definitions shall apply:
          (1) Offering document.--The term ``offering 
        document''--
                  (A) has the meaning given the term 
                ``prospectus'' in section 2(a)(10), but without 
                regard to the provisions of subparagraphs (a) 
                and (b) of that section; and
                  (B) includes a communication that is not 
                deemed to offer a security pursuant to a rule 
                of the Commission.
          (2) Prepared by or on behalf of the issuer.--Not 
        later than 6 months after the date of enactment of the 
        National Securities Markets Improvement Act of 1996, 
        the Commission shall, by rule, define the term 
        ``prepared by or on behalf of the issuer'' for purposes 
        of this section.
          (3) State.--The term ``State'' has the same meaning 
        as in section 3 of the Securities Exchange Act of 1934.
          (4) Senior security.--The term ``senior security'' 
        means any bond, debenture, note, or similar obligation 
        or instrument constituting a security and evidencing 
        indebtedness, and any stock of a class having priority 
        over any other class as to distribution of assets or 
        payment of dividends.

           *       *       *       *       *       *       *

                              ----------                              


                    SECURITIES EXCHANGE ACT OF 1934

TITLE I--REGULATION OF SECURITIES EXCHANGES

           *       *       *       *       *       *       *


                  definitions and application of title

  Sec. 3. (a) When used in this title, unless the context 
otherwise requires--
          (1) The term ``exchange'' means any organization, 
        association, or group of persons, whether incorporated 
        or unincorporated, which constitutes, maintains, or 
        provides a market place or facilities for bringing 
        together purchasers and sellers of securities or for 
        otherwise performing with respect to securities the 
        functions commonly performed by a stock exchange as 
        that term is generally understood, and includes the 
        market place and the market facilities maintained by 
        such exchange. The term ``exchange'' does not include a 
        digital asset trading system, blockchain protocol, or 
        any person or group of persons solely because of their 
        development of a blockchain protocol.
          (2) The term ``facility'' when used with respect to 
        an exchange includes its premises, tangible or 
        intangible property whether on the premises or not, any 
        right to the use of such premises or property or any 
        service thereof for the purpose of effecting or 
        reporting a transaction on an exchange (including, 
        among other things, any system of communication to or 
        from the exchange, by ticker or otherwise, maintained 
        by or with the consent of the exchange), and any right 
        of the exchange to the use of any property or service. 
        A digital asset trading system is not a ``facility'' of 
        an exchange.
          (3)(A) The term ``member'' when used with respect to 
        a national securities exchange means (i) any natural 
        person permitted to effect transactions on the floor of 
        the exchange without the services of another person 
        acting as broker, (ii) any registered broker or dealer 
        with which such a natural person is associated, (iii) 
        any registered broker or dealer permitted to designate 
        as a representative such a natural person, and (iv) any 
        other registered broker or dealer which agrees to be 
        regulated by such exchange and with respect to which 
        the exchange undertakes to enforce compliance with the 
        provisions of this title, the rules and regulations 
        thereunder, and its own rules. For purposes of sections 
        6(b)(1), 6(b)(4), 6(b)(6), 6(b)(7), 6(d), 17(d), 19(d), 
        19(e), 19(g), 19(h), and 21 of this title, the term 
        ``member'' when used with respect to a national 
        securities exchange also means, to the extent of the 
        rules of the exchange specified by the Commission, any 
        person required by the Commission to comply with such 
        rules pursuant to section 6(f) of this title.
          (B) The term ``member'' when used with respect to a 
        registered securities association means any broker or 
        dealer who agrees to be regulated by such association 
        and with respect to whom the association undertakes to 
        enforce compliance with the provisions of this title, 
        the rules and regulations thereunder, and its own 
        rules.
          (4) Broker.--
                  (A) In general.--The term ``broker'' means 
                any person engaged in the business of effecting 
                transactions in securities, other than 
                restricted digital assets, for the account of 
                others.
                  (B) Exception for certain bank activities.--A 
                bank shall not be considered to be a broker 
                because the bank engages in any one or more of 
                the following activities under the conditions 
                described:
                          (i) Third party brokerage 
                        arrangements.--The bank enters into a 
                        contractual or other written 
                        arrangement with a broker or dealer 
                        registered under this title under which 
                        the broker or dealer offers brokerage 
                        services on or off the premises of the 
                        bank if--
                                  (I) such broker or dealer is 
                                clearly identified as the 
                                person performing the brokerage 
                                services;
                                  (II) the broker or dealer 
                                performs brokerage services in 
                                an area that is clearly marked 
                                and, to the extent practicable, 
                                physically separate from the 
                                routine deposit-taking 
                                activities of the bank;
                                  (III) any materials used by 
                                the bank to advertise or 
                                promote generally the 
                                availability of brokerage 
                                services under the arrangement 
                                clearly indicate that the 
                                brokerage services are being 
                                provided by the broker or 
                                dealer and not by the bank;
                                  (IV) any materials used by 
                                the bank to advertise or 
                                promote generally the 
                                availability of brokerage 
                                services under the arrangement 
                                are in compliance with the 
                                Federal securities laws before 
                                distribution;
                                  (V) bank employees (other 
                                than associated persons of a 
                                broker or dealer who are 
                                qualified pursuant to the rules 
                                of a self-regulatory 
                                organization) perform only 
                                clerical or ministerial 
                                functions in connection with 
                                brokerage transactions 
                                including scheduling 
                                appointments with the 
                                associated persons of a broker 
                                or dealer, except that bank 
                                employees may forward customer 
                                funds or securities and may 
                                describe in general terms the 
                                types of investment vehicles 
                                available from the bank and the 
                                broker or dealer under the 
                                arrangement;
                                  (VI) bank employees do not 
                                receive incentive compensation 
                                for any brokerage transaction 
                                unless such employees are 
                                associated persons of a broker 
                                or dealer and are qualified 
                                pursuant to the rules of a 
                                self-regulatory organization, 
                                except that the bank employees 
                                may receive compensation for 
                                the referral of any customer if 
                                the compensation is a nominal 
                                one-time cash fee of a fixed 
                                dollar amount and the payment 
                                of the fee is not contingent on 
                                whether the referral results in 
                                a transaction;
                                  (VII) such services are 
                                provided by the broker or 
                                dealer on a basis in which all 
                                customers that receive any 
                                services are fully disclosed to 
                                the broker or dealer;
                                  (VIII) the bank does not 
                                carry a securities account of 
                                the customer except as 
                                permitted under clause (ii) or 
                                (viii) of this subparagraph; 
                                and
                                  (IX) the bank, broker, or 
                                dealer informs each customer 
                                that the brokerage services are 
                                provided by the broker or 
                                dealer and not by the bank and 
                                that the securities are not 
                                deposits or other obligations 
                                of the bank, are not guaranteed 
                                by the bank, and are not 
                                insured by the Federal Deposit 
                                Insurance Corporation.
                          (ii) Trust activities.--The bank 
                        effects transactions in a trustee 
                        capacity, or effects transactions in a 
                        fiduciary capacity in its trust 
                        department or other department that is 
                        regularly examined by bank examiners 
                        for compliance with fiduciary 
                        principles and standards, and--
                                  (I) is chiefly compensated 
                                for such transactions, 
                                consistent with fiduciary 
                                principles and standards, on 
                                the basis of an administration 
                                or annual fee (payable on a 
                                monthly, quarterly, or other 
                                basis), a percentage of assets 
                                under management, or a flat or 
                                capped per order processing fee 
                                equal to not more than the cost 
                                incurred by the bank in 
                                connection with executing 
                                securities transactions for 
                                trustee and fiduciary 
                                customers, or any combination 
                                of such fees; and
                                  (II) does not publicly 
                                solicit brokerage business, 
                                other than by advertising that 
                                it effects transactions in 
                                securities in conjunction with 
                                advertising its other trust 
                                activities.
                          (iii) Permissible securities 
                        transactions.--The bank effects 
                        transactions in--
                                  (I) commercial paper, bankers 
                                acceptances, or commercial 
                                bills;
                                  (II) exempted securities;
                                  (III) qualified Canadian 
                                government obligations as 
                                defined in section 5136 of the 
                                Revised Statutes, in conformity 
                                with section 15C of this title 
                                and the rules and regulations 
                                thereunder, or obligations of 
                                the North American Development 
                                Bank; or
                                  (IV) any standardized, credit 
                                enhanced debt security issued 
                                by a foreign government 
                                pursuant to the March 1989 plan 
                                of then Secretary of the 
                                Treasury Brady, used by such 
                                foreign government to retire 
                                outstanding commercial bank 
                                loans.
                          (iv) Certain stock purchase plans.--
                                  (I) Employee benefit plans.--
                                The bank effects transactions, 
                                as part of its transfer agency 
                                activities, in the securities 
                                of an issuer as part of any 
                                pension, retirement, profit-
                                sharing, bonus, thrift, 
                                savings, incentive, or other 
                                similar benefit plan for the 
                                employees of that issuer or its 
                                affiliates (as defined in 
                                section 2 of the Bank Holding 
                                Company Act of 1956), if the 
                                bank does not solicit 
                                transactions or provide 
                                investment advice with respect 
                                to the purchase or sale of 
                                securities in connection with 
                                the plan.
                                  (II) Dividend reinvestment 
                                plans.--The bank effects 
                                transactions, as part of its 
                                transfer agency activities, in 
                                the securities of an issuer as 
                                part of that issuer's dividend 
                                reinvestment plan, if--
                                          (aa) the bank does 
                                        not solicit 
                                        transactions or provide 
                                        investment advice with 
                                        respect to the purchase 
                                        or sale of securities 
                                        in connection with the 
                                        plan; and
                                          (bb) the bank does 
                                        not net shareholders' 
                                        buy and sell orders, 
                                        other than for programs 
                                        for odd-lot holders or 
                                        plans registered with 
                                        the Commission.
                                  (III) Issuer plans.--The bank 
                                effects transactions, as part 
                                of its transfer agency 
                                activities, in the securities 
                                of an issuer as part of a plan 
                                or program for the purchase or 
                                sale of that issuer's shares, 
                                if--
                                          (aa) the bank does 
                                        not solicit 
                                        transactions or provide 
                                        investment advice with 
                                        respect to the purchase 
                                        or sale of securities 
                                        in connection with the 
                                        plan or program; and
                                          (bb) the bank does 
                                        not net shareholders' 
                                        buy and sell orders, 
                                        other than for programs 
                                        for odd-lot holders or 
                                        plans registered with 
                                        the Commission.
                                  (IV) Permissible delivery of 
                                materials.--The exception to 
                                being considered a broker for a 
                                bank engaged in activities 
                                described in subclauses (I), 
                                (II), and (III) will not be 
                                affected by delivery of written 
                                or electronic plan materials by 
                                a bank to employees of the 
                                issuer, shareholders of the 
                                issuer, or members of affinity 
                                groups of the issuer, so long 
                                as such materials are--
                                          (aa) comparable in 
                                        scope or nature to that 
                                        permitted by the 
                                        Commission as of the 
                                        date of the enactment 
                                        of the Gramm-Leach-
                                        Bliley Act; or
                                          (bb) otherwise 
                                        permitted by the 
                                        Commission.
                          (v) Sweep accounts.--The bank effects 
                        transactions as part of a program for 
                        the investment or reinvestment of 
                        deposit funds into any no-load, open-
                        end management investment company 
                        registered under the Investment Company 
                        Act of 1940 that holds itself out as a 
                        money market fund.
                          (vi) Affiliate transactions.--The 
                        bank effects transactions for the 
                        account of any affiliate of the bank 
                        (as defined in section 2 of the Bank 
                        Holding Company Act of 1956) other 
                        than--
                                  (I) a registered broker or 
                                dealer; or
                                  (II) an affiliate that is 
                                engaged in merchant banking, as 
                                described in section 4(k)(4)(H) 
                                of the Bank Holding Company Act 
                                of 1956.
                          (vii) Private securities offerings.--
                        The bank--
                                  (I) effects sales as part of 
                                a primary offering of 
                                securities not involving a 
                                public offering, pursuant to 
                                section 3(b), 4(2), or 4(5) of 
                                the Securities Act of 1933 or 
                                the rules and regulations 
                                issued thereunder;
                                  (II) at any time after the 
                                date that is 1 year after the 
                                date of the enactment of the 
                                Gramm-Leach-Bliley Act, is not 
                                affiliated with a broker or 
                                dealer that has been registered 
                                for more than 1 year in 
                                accordance with this Act, and 
                                engages in dealing, market 
                                making, or underwriting 
                                activities, other than with 
                                respect to exempted securities; 
                                and
                                  (III) if the bank is not 
                                affiliated with a broker or 
                                dealer, does not effect any 
                                primary offering described in 
                                subclause (I) the aggregate 
                                amount of which exceeds 25 
                                percent of the capital of the 
                                bank, except that the 
                                limitation of this subclause 
                                shall not apply with respect to 
                                any sale of government 
                                securities or municipal 
                                securities.
                          (viii) Safekeeping and custody 
                        activities.--
                                  (I) In general.--The bank, as 
                                part of customary banking 
                                activities--
                                          (aa) provides 
                                        safekeeping or custody 
                                        services with respect 
                                        to securities, 
                                        including the exercise 
                                        of warrants and other 
                                        rights on behalf of 
                                        customers;
                                          (bb) facilitates the 
                                        transfer of funds or 
                                        securities, as a 
                                        custodian or a clearing 
                                        agency, in connection 
                                        with the clearance and 
                                        settlement of its 
                                        customers' transactions 
                                        in securities;
                                          (cc) effects 
                                        securities lending or 
                                        borrowing transactions 
                                        with or on behalf of 
                                        customers as part of 
                                        services provided to 
                                        customers pursuant to 
                                        division (aa) or (bb) 
                                        or invests cash 
                                        collateral pledged in 
                                        connection with such 
                                        transactions;
                                          (dd) holds securities 
                                        pledged by a customer 
                                        to another person or 
                                        securities subject to 
                                        purchase or resale 
                                        agreements involving a 
                                        customer, or 
                                        facilitates the 
                                        pledging or transfer of 
                                        such securities by book 
                                        entry or as otherwise 
                                        provided under 
                                        applicable law, if the 
                                        bank maintains records 
                                        separately identifying 
                                        the securities and the 
                                        customer; or
                                          (ee) serves as a 
                                        custodian or provider 
                                        of other related 
                                        administrative services 
                                        to any individual 
                                        retirement account, 
                                        pension, retirement, 
                                        profit sharing, bonus, 
                                        thrift savings, 
                                        incentive, or other 
                                        similar benefit plan.
                                  (II) Exception for carrying 
                                broker activities.--The 
                                exception to being considered a 
                                broker for a bank engaged in 
                                activities described in 
                                subclause (I) shall not apply 
                                if the bank, in connection with 
                                such activities, acts in the 
                                United States as a carrying 
                                broker (as such term, and 
                                different formulations thereof, 
                                are used in section 15(c)(3) of 
                                this title and the rules and 
                                regulations thereunder) for any 
                                broker or dealer, unless such 
                                carrying broker activities are 
                                engaged in with respect to 
                                government securities (as 
                                defined in paragraph (42) of 
                                this subsection).
                          (ix) Identified banking products.--
                        The bank effects transactions in 
                        identified banking products as defined 
                        in section 206 of the Gramm-Leach-
                        Bliley Act.
                          (x) Municipal securities.--The bank 
                        effects transactions in municipal 
                        securities.
                          (xi) De minimis exception.--The bank 
                        effects, other than in transactions 
                        referred to in clauses (i) through (x), 
                        not more than 500 transactions in 
                        securities in any calendar year, and 
                        such transactions are not effected by 
                        an employee of the bank who is also an 
                        employee of a broker or dealer.
                  (C) Execution by broker or dealer.--The 
                exception to being considered a broker for a 
                bank engaged in activities described in clauses 
                (ii), (iv), and (viii) of subparagraph (B) 
                shall not apply if the activities described in 
                such provisions result in the trade in the 
                United States of any security that is a 
                publicly traded security in the United States, 
                unless--
                          (i) the bank directs such trade to a 
                        registered broker or dealer for 
                        execution;
                          (ii) the trade is a cross trade or 
                        other substantially similar trade of a 
                        security that--
                                  (I) is made by the bank or 
                                between the bank and an 
                                affiliated fiduciary; and
                                  (II) is not in contravention 
                                of fiduciary principles 
                                established under applicable 
                                Federal or State law; or
                          (iii) the trade is conducted in some 
                        other manner permitted under rules, 
                        regulations, or orders as the 
                        Commission may prescribe or issue.
                  (D) Fiduciary capacity.--For purposes of 
                subparagraph (B)(ii), the term ``fiduciary 
                capacity'' means--
                          (i) in the capacity as trustee, 
                        executor, administrator, registrar of 
                        stocks and bonds, transfer agent, 
                        guardian, assignee, receiver, or 
                        custodian under a uniform gift to minor 
                        act, or as an investment adviser if the 
                        bank receives a fee for its investment 
                        advice;
                          (ii) in any capacity in which the 
                        bank possesses investment discretion on 
                        behalf of another; or
                          (iii) in any other similar capacity.
                  (E) Exception for entities subject to section 
                15(e).--The term ``broker'' does not include a 
                bank that--
                          (i) was, on the day before the date 
                        of enactment of the Gramm-Leach-Bliley 
                        Act, subject to section 15(e); and
                          (ii) is subject to such restrictions 
                        and requirements as the Commission 
                        considers appropriate.
                  (F) Joint rulemaking required.--The 
                Commission and the Board of Governors of the 
                Federal Reserve System shall jointly adopt a 
                single set of rules or regulations to implement 
                the exceptions in subparagraph (B).
          (5) Dealer.--
                  (A) In general.--The term ``dealer'' means 
                any person engaged in the business of buying 
                and selling securities (not including 
                restricted digital assets or security-based 
                swaps, other than security-based swaps with or 
                for persons that are not eligible contract 
                participants) for such person's own account 
                through a broker or otherwise.
                  (B) Exception for person not engaged in the 
                business of dealing.--The term ``dealer'' does 
                not include a person that buys or sells 
                securities (not including security-based swaps, 
                other than security-based swaps with or for 
                persons that are not eligible contract 
                participants) for such person's own account, 
                either individually or in a fiduciary capacity, 
                but not as a part of a regular business.
                  (C) Exception for certain bank activities.--A 
                bank shall not be considered to be a dealer 
                because the bank engages in any of the 
                following activities under the conditions 
                described:
                          (i) Permissible securities 
                        transactions.--The bank buys or sells--
                                  (I) commercial paper, bankers 
                                acceptances, or commercial 
                                bills;
                                  (II) exempted securities;
                                  (III) qualified Canadian 
                                government obligations as 
                                defined in section 5136 of the 
                                Revised Statutes of the United 
                                States, in conformity with 
                                section 15C of this title and 
                                the rules and regulations 
                                thereunder, or obligations of 
                                the North American Development 
                                Bank; or
                                  (IV) any standardized, credit 
                                enhanced debt security issued 
                                by a foreign government 
                                pursuant to the March 1989 plan 
                                of then Secretary of the 
                                Treasury Brady, used by such 
                                foreign government to retire 
                                outstanding commercial bank 
                                loans.
                          (ii) Investment, trustee, and 
                        fiduciary transactions.--The bank buys 
                        or sells securities for investment 
                        purposes--
                                  (I) for the bank; or
                                  (II) for accounts for which 
                                the bank acts as a trustee or 
                                fiduciary.
                          (iii) Asset-backed transactions.--The 
                        bank engages in the issuance or sale to 
                        qualified investors, through a grantor 
                        trust or other separate entity, of 
                        securities backed by or representing an 
                        interest in notes, drafts, acceptances, 
                        loans, leases, receivables, other 
                        obligations (other than securities of 
                        which the bank is not the issuer), or 
                        pools of any such obligations 
                        predominantly originated by--
                                  (I) the bank;
                                  (II) an affiliate of any such 
                                bank other than a broker or 
                                dealer; or
                                  (III) a syndicate of banks of 
                                which the bank is a member, if 
                                the obligations or pool of 
                                obligations consists of 
                                mortgage obligations or 
                                consumer-related receivables.
                          (iv) Identified banking products.--
                        The bank buys or sells identified 
                        banking products, as defined in section 
                        206 of the Gramm-Leach-Bliley Act.
          (6) The term ``bank'' means (A) a banking institution 
        organized under the laws of the United States or a 
        Federal savings association, as defined in section 2(5) 
        of the Home Owners' Loan Act, (B) a member bank of the 
        Federal Reserve System, (C) any other banking 
        institution or savings association, as defined in 
        section 2(4) of the Home Owners' Loan Act, whether 
        incorporated or not, doing business under the laws of 
        any State or of the United States, a substantial 
        portion of the business of which consists of receiving 
        deposits or exercising fiduciary powers similar to 
        those permitted to national banks under the authority 
        of the Comptroller of the Currency pursuant to the 
        first section of Public Law 87-722 (12 U.S.C. 92a), and 
        which is supervised and examined by State or Federal 
        authority having supervision over banks or savings 
        associations, and which is not operated for the purpose 
        of evading the provisions of this title, and (D) a 
        receiver, conservator, or other liquidating agent of 
        any institution or firm included in clauses (A), (B), 
        or (C) of this paragraph.
          (7) The term ``director'' means any director of a 
        corporation or any person performing similar functions 
        with respect to any organization, whether incorporated 
        or unincorporated.
          (8) The term ``issuer'' means any person who issues 
        or proposes to issue any security; except that with 
        respect to certificates of deposit for securities, 
        voting-trust certificates, or collateral-trust 
        certificates, or with respect to certificates of 
        interest or shares in an unincorporated investment 
        trust not having a board of directors or of the fixed, 
        restricted management, or unit type, the term 
        ``issuer'' means the person or persons performing the 
        acts and assuming the duties of depositor or manager 
        pursuant to the provisions of the trust or other 
        agreement or instrument under which such securities are 
        issued; and except that with respect to equipment-trust 
        certificates or like securities, the term ``issuer'' 
        means the person by whom the equipment or property is, 
        or is to be, used.
          (9) The term ``person'' means a natural person, 
        company, government, or political subdivision, agency, 
        or instrumentality of a government.
          (10) The term ``security'' means any note, stock, 
        treasury stock, security future, security-based 
        swap,bond, debenture, certificate of interest or 
        participation in any profit-sharing agreement or in any 
        oil, gas, or other mineral royalty or lease, any 
        collateral-trust certificate, preorganization 
        certificate or subscription, transferable share, 
        investment contract, voting-trust certificate, 
        certificate of deposit for a security, any 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), or any put, call, straddle, option, or 
        privilege entered into on a national securities 
        exchange relating to foreign currency, or in general, 
        any instrument commonly known as a ``security''; or any 
        certificate of interest or participation in, temporary 
        or interim certificate for, receipt for, or warrant or 
        right to subscribe to or purchase, any of the 
        foregoing; but shall not include currency or any note, 
        draft, bill of exchange, or banker's acceptance which 
        has a maturity at the time of issuance of not exceeding 
        nine months, exclusive of days of grace, or any renewal 
        thereof the maturity of which is likewise limited. 
        Subject to subsection (i), the term does not include a 
        digital commodity or permitted payment stablecoin.
          (11) The term ``equity security'' means any stock or 
        similar security; or any security future on any such 
        security; or any security convertible, with or without 
        consideration, into such a security, or carrying any 
        warrant or right to subscribe to or purchase such a 
        security; or any such warrant or right; or any other 
        security which the Commission shall deem to be of 
        similar nature and consider necessary or appropriate, 
        by such rules and regulations as it may prescribe in 
        the public interest or for the protection of investors, 
        to treat as an equity security.
          (12)(A) The term ``exempted security'' or ``exempted 
        securities'' includes--
                  (i) government securities, as defined in 
                paragraph (42) of this subsection;
                  (ii) municipal securities, as defined in 
                paragraph (29) of this subsection;
                  (iii) any interest or participation in any 
                common trust fund or similar fund that is 
                excluded from the definition of the term 
                ``investment company'' under section 3(c)(3) of 
                the Investment Company Act of 1940;
                  (iv) any interest or participation in a 
                single trust fund, or a collective trust fund 
                maintained by a bank, or any security arising 
                out of a contract issued by an insurance 
                company, which interest, participation, or 
                security is issued in connection with a 
                qualified plan as defined in subparagraph (C) 
                of this paragraph;
                  (v) any security issued by or any interest or 
                participation in any pooled income fund, 
                collective trust fund, collective investment 
                fund, or similar fund that is excluded from the 
                definition of an investment company under 
                section 3(c)(10)(B) of the Investment Company 
                Act of 1940;
                  (vi) solely for purposes of sections 12, 13, 
                14, and 16 of this title, any security issued 
                by or any interest or participation in any 
                church plan, company, or account that is 
                excluded from the definition of an investment 
                company under section 3(c)(14) of the 
                Investment Company Act of 1940; and
                  (vii) such other securities (which may 
                include, among others, unregistered securities, 
                the market in which is predominantly 
                intrastate) as the Commission may, by such 
                rules and regulations as it deems consistent 
                with the public interest and the protection of 
                investors, either unconditionally or upon 
                specified terms and conditions or for stated 
                periods, exempt from the operation of any one 
                or more provisions of this title which by their 
                terms do not apply to an ``exempted security'' 
                or to ``exempted securities''.
          (B)(i) Notwithstanding subparagraph (A)(i) of this 
        paragraph, government securities shall not be deemed to 
        be ``exempted securities'' for the purposes of section 
        17A of this title.
          (ii) Notwithstanding subparagraph (A)(ii) of this 
        paragraph, municipal securities shall not be deemed to 
        be ``exempted securities'' for the purposes of sections 
        15 and 17A of this title.
          (C) For purposes of subparagraph (A)(iv) of this 
        paragraph, the term ``qualified plan'' means (i) a 
        stock bonus, pension, or profit-sharing plan which 
        meets the requirements for qualification under section 
        401 of the Internal Revenue Code of 1954, (ii) an 
        annuity plan which meets the requirements for the 
        deduction of the employer's contribution under section 
        404(a)(2) of such Code, (iii) a governmental plan as 
        defined in section 414(d) of such Code which has been 
        established by an employer for the exclusive benefit of 
        its employees or their beneficiaries for the purpose of 
        distributing to such employees or their beneficiaries 
        the corpus and income of the funds accumulated under 
        such plan, if under such plan it is impossible, prior 
        to the satisfaction of all liabilities with respect to 
        such employees and their beneficiaries, for any part of 
        the corpus or income to be used for, or diverted to, 
        purposes other than the exclusive benefit of such 
        employees or their beneficiaries, or (iv) a church 
        plan, company, or account that is excluded from the 
        definition of an investment company under section 
        3(c)(14) of the Investment Company Act of 1940, other 
        than any plan described in clause (i), (ii), or (iii) 
        of this subparagraph which (I) covers employees some or 
        all of whom are employees within the meaning of section 
        401(c) of such Code, or (II) is a plan funded by an 
        annuity contract described in section 403(b) of such 
        Code.
          (13) The terms ``buy'' and ``purchase'' each include 
        any contract to buy, purchase, or otherwise acquire. 
        For security futures products, such term includes any 
        contract, agreement, or transaction for future 
        delivery. For security-based swaps, such terms include 
        the execution, termination (prior to its scheduled 
        maturity date), assignment, exchange, or similar 
        transfer or conveyance of, or extinguishing of rights 
        or obligations under, a security-based swap, as the 
        context may require.
          (14) The terms ``sale'' and ``sell'' each include any 
        contract to sell or otherwise dispose of. For security 
        futures products, such term includes any contract, 
        agreement, or transaction for future delivery. For 
        security-based swaps, such terms include the execution, 
        termination (prior to its scheduled maturity date), 
        assignment, exchange, or similar transfer or conveyance 
        of, or extinguishing of rights or obligations under, a 
        security-based swap, as the context may require.
          (15) The term ``Commission'' means the Securities and 
        Exchange Commission established by section 4 of this 
        title.
          (16) The term ``State'' means any State of the United 
        States, the District of Columbia, Puerto Rico, the 
        Virgin Islands, or any other possession of the United 
        States.
          (17) The term ``interstate commerce'' means trade, 
        commerce, transportation, or communication among the 
        several States, or between any foreign country and any 
        State, or between any State and any place or ship 
        outside thereof. The term also includes intrastate use 
        of (A) any facility of a national securities exchange 
        or of a telephone or other interstate means of 
        communication, or (B) any other interstate 
        instrumentality.
          (18) The term ``person associated with a broker or 
        dealer'' or ``associated person of a broker or dealer'' 
        means any partner, officer, director, or branch manager 
        of such broker or dealer (or any person occupying a 
        similar status or performing similar functions), any 
        person directly or indirectly controlling, controlled 
        by, or under common control with such broker or dealer, 
        or any employee of such broker or dealer, except that 
        any person associated with a broker or dealer whose 
        functions are solely clerical or ministerial shall not 
        be included in the meaning of such term for purposes of 
        section 15(b) of this title (other than paragraph (6) 
        thereof).
          (19) The terms ``investment company,''``affiliated 
        person,''``insurance company,''``separate account,'' 
        and ``company'' have the same meanings as in the 
        Investment Company Act of 1940.
          (20) The terms ``investment adviser'' and 
        ``underwriter'' have the same meanings as in the 
        Investment Advisers Act of 1940.
          (21) The term ``persons associated with a member'' or 
        ``associated person of a member'' when used with 
        respect to a member of a national securities exchange 
        or registered securities association means any partner, 
        officer, director, or branch manager of such member (or 
        any person occupying a similar status or performing 
        similar functions), any person directly or indirectly 
        controlling, controlled by, or under common control 
        with such member, or any employee of such member.
          (22)(A) The term ``securities information processor'' 
        means any person engaged in the business of (i) 
        collecting, processing, or preparing for distribution 
        or publication, or assisting, participating in, or 
        coordinating the distribution or publication of, 
        information with respect to transactions in or 
        quotations for any security (other than an exempted 
        security) or (ii) distributing or publishing (whether 
        by means of a ticker tape, a communications network, a 
        terminal display device, or otherwise) on a current and 
        continuing basis, information with respect to such 
        transactions or quotations. The term ``securities 
        information processor'' does not include any bona fide 
        newspaper, news magazine, or business or financial 
        publication of general and regular circulation, any 
        self-regulatory organization, any bank, broker, dealer, 
        building and loan, savings and loan, or homestead 
        association, or cooperative bank, if such bank, broker, 
        dealer, association, or cooperative bank would be 
        deemed to be a securities information processor solely 
        by reason of functions performed by such institutions 
        as part of customary banking, brokerage, dealing, 
        association, or cooperative bank activities, or any 
        common carrier, as defined in section 3 of the 
        Communications Act of 1934, subject to the jurisdiction 
        of the Federal Communications Commission or a State 
        commission, as defined in section 3 of that Act, unless 
        the Commission determines that such carrier is engaged 
        in the business of collecting, processing, or preparing 
        for distribution or publication, information with 
        respect to transactions in or quotations for any 
        security.
          (B) The term ``exclusive processor'' means any 
        securities information processor or self-regulatory 
        organization which, directly or indirectly, engages on 
        an exclusive basis on behalf of any national securities 
        exchange or registered securities association, or any 
        national securities exchange or registered securities 
        association which engages on an exclusive basis on its 
        own behalf, in collecting, processing, or preparing for 
        distribution or publication any information with 
        respect to (i) transactions or quotations on or 
        effected or made by means of any facility of such 
        exchange or (ii) quotations distributed or published by 
        means of any electronic system operated or controlled 
        by such association.
          (23)(A) The term ``clearing agency'' means any person 
        who acts as an intermediary in making payments or 
        deliveries or both in connection with transactions in 
        securities or who provides facilities for comparison of 
        data respecting the terms of settlement of securities 
        transactions, to reduce the number of settlements of 
        securities transactions, or for the allocation of 
        securities settlement responsibilities. Such term also 
        means any person, such as a securities depository, who 
        (i) acts as a custodian of securities in connection 
        with a system for the central handling of securities 
        whereby all securities of a particular class or series 
        of any issuer deposited within the system are treated 
        as fungible and may be transferred, loaned, or pledged 
        by bookkeeping entry without physical delivery of 
        securities certificates, or (ii) otherwise permits or 
        facilitates the settlement of securities transactions 
        or the hypothecation or lending of securities without 
        physical delivery of securities certificates.
          (B) The term ``clearing agency'' does not include (i) 
        any Federal Reserve bank, Federal home loan bank, or 
        Federal land bank; (ii) any national securities 
        exchange or registered securities association solely by 
        reason of its providing facilities for comparison of 
        data respecting the terms of settlement of securities 
        transactions effected on such exchange or by means of 
        any electronic system operated or controlled by such 
        association; (iii) any bank, broker, dealer, building 
        and loan, savings and loan, or homestead association, 
        or cooperative bank if such bank, broker, dealer, 
        association, or cooperative bank would be deemed to be 
        a clearing agency solely by reason of functions 
        performed by such institution as part of customary 
        banking, brokerage, dealing, association, or 
        cooperative banking activities, or solely by reason of 
        acting on behalf of a clearing agency or a participant 
        therein in connection with the furnishing by the 
        clearing agency of services to its participants or the 
        use of services of the clearing agency by its 
        participants, unless the Commission, by rule, otherwise 
        provides as necessary or appropriate to assure the 
        prompt and accurate clearance and settlement of 
        securities transactions or to prevent evasion of this 
        title; (iv) any life insurance company, its registered 
        separate accounts, or a subsidiary of such insurance 
        company solely by reason of functions commonly 
        performed by such entities in connection with variable 
        annuity contracts or variable life policies issued by 
        such insurance company or its separate accounts; (v) 
        any registered open-end investment company or unit 
        investment trust solely by reason of functions commonly 
        performed by it in connection with shares in such 
        registered open-end investment company or unit 
        investment trust, or (vi) any person solely by reason 
        of its performing functions described in paragraph 
        25(E) of this subsection.
          (24) The term ``participant'' when used with respect 
        to a clearing agency means any person who uses a 
        clearing agency to clear or settle securities 
        transactions or to transfer, pledge, lend, or 
        hypothecate securities. Such term does not include a 
        person whose only use of a clearing agency is (A) 
        through another person who is a participant or (B) as a 
        pledgee of securities.
          (25) The term ``transfer agent'' means any person who 
        engages on behalf of an issuer of securities or on 
        behalf of itself as an issuer of securities in (A) 
        countersigning such securities upon issuance; (B) 
        monitoring the issuance of such securities with a view 
        to preventing unauthorized issuance, a function 
        commonly performed by a person called a registrar; (C) 
        registering the transfer of such securities; (D) 
        exchanging or converting such securities; or (E) 
        transferring record ownership of securities by 
        bookkeeping entry without physical issuance of 
        securities certificates. The term ``transfer agent'' 
        does not include any insurance company or separate 
        account which performs such functions solely with 
        respect to variable annuity contracts or variable life 
        policies which it issues or any registered clearing 
        agency which performs such functions solely with 
        respect to options contracts which it issues.
          (26) The term ``self-regulatory organization'' means 
        any national securities exchange, registered securities 
        association, or registered clearing agency (other than 
        a notice-registered digital asset clearing agency), or 
        (solely for purposes of sections 19(b), 19(c), and 
        23(b) of this title) the Municipal Securities 
        Rulemaking Board established by section 15B of this 
        title.
          (27) The term ``rules of an exchange'', ``rules of an 
        association'', or ``rules of a clearing agency'' means 
        the constitution, articles of incorporation, bylaws, 
        and rules, or instruments corresponding to the 
        foregoing, of an exchange, association of brokers and 
        dealers, or clearing agency, respectively, and such of 
        the stated policies, practices, and interpretations of 
        such exchange, association, or clearing agency as the 
        Commission, by rule, may determine to be necessary or 
        appropriate in the public interest or for the 
        protection of investors to be deemed to be rules of 
        such exchange, association, or clearing agency.
          (28) The term ``rules of a self-regulatory 
        organization'' means the rules of an exchange which is 
        a national securities exchange, the rules of an 
        association of brokers and dealers which is a 
        registered securities association, the rules of a 
        clearing agency which is a registered clearing agency 
        (other than a notice-registered digital asset clearing 
        agency), or the rules of the Municipal Securities 
        Rulemaking Board.
          (29) The term ``municipal securities'' means 
        securities which are direct obligations of, or 
        obligations guaranteed as to principal or interest by, 
        a State or any political subdivision thereof, or any 
        agency or instrumentality of a State or any political 
        subdivision thereof, or any municipal corporate 
        instrumentality of one or more States, or any security 
        which is an industrial development bond (as defined in 
        section 103(c)(2) of the Internal Revenue Code of 1954) 
        the interest on which is excludable from gross income 
        under section 103(a)(1) of such Code if, by reason of 
        the application of paragraph (4) or (6) of section 
        103(c) of such Code (determined as if paragraphs 
        (4)(A), (5), and (7) were not included in such section 
        103(c)), paragraph (1) of such section 103(c) does not 
        apply to such security.
          (30) The term ``municipal securities dealer'' means 
        any person (including a separately identifiable 
        department or division of a bank) engaged in the 
        business of buying and selling municipal securities for 
        his own account, through a broker or otherwise, but 
        does not include--
                  (A) any person insofar as he buys or sells 
                such securities for his own account, either 
                individually or in some fiduciary capacity, but 
                not as a part of a regular business; or
                  (B) a bank, unless the bank is engaged in the 
                business of buying and selling municipal 
                securities for its own account other than in a 
                fiduciary capacity, through a broker or 
                otherwise; Provided, however, That if the bank 
                is engaged in such business through a 
                separately identifiable department or division 
                (as defined by the Municipal Securities 
                Rulemaking Board in accordance with section 
                15B(b)(2)(H) of this title), the department or 
                division and not the bank itself shall be 
                deemed to be the municipal securities dealer.
          (31) The term ``municipal securities broker'' means a 
        broker engaged in the business of effecting 
        transactions in municipal securities for the account of 
        others.
          (32) The term ``person associated with a municipal 
        securities dealer'' when used with respect to a 
        municipal securities dealer which is a bank or a 
        division or department of a bank means any person 
        directly engaged in the management, direction, 
        supervision, or performance of any of the municipal 
        securities dealer's activities with respect to 
        municipal securities, and any person directly or 
        indirectly controlling such activities or controlled by 
        the municipal securities dealer in connection with such 
        activities.
          (33) The term ``municipal securities investment 
        portfolio'' means all municipal securities held for 
        investment and not for sale as part of a regular 
        business by a municipal securities dealer or by a 
        person, directly or indirectly, controlling, controlled 
        by, or under common control with a municipal securities 
        dealer.
          (34) The term ``appropriate regulatory agency'' 
        means--
                  (A) When used with respect to a municipal 
                securities dealer:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank, a 
                        subsidiary or a department or division 
                        of any such bank, a Federal savings 
                        association (as defined in section 
                        3(b)(2) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(2))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation, or a subsidiary or 
                        department or division of any such 
                        Federal savings association;
                          (ii) the Board of Governors of the 
                        Federal Reserve System, in the case of 
                        a State member bank of the Federal 
                        Reserve System, a subsidiary or a 
                        department or division thereof, a bank 
                        holding company, a subsidiary of a bank 
                        holding company which is a bank other 
                        than a bank specified in clause (i), 
                        (iii), or (iv) of this subparagraph, a 
                        subsidiary or a department or division 
                        of such subsidiary, or a savings and 
                        loan holding company;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of a bank 
                        insured by the Federal Deposit 
                        Insurance Corporation (other than a 
                        member of the Federal Reserve System), 
                        a subsidiary or department or division 
                        of any such bank, a State savings 
                        association (as defined in section 
                        3(b)(3) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(3))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation, or a subsidiary or a 
                        department or division of any such 
                        State savings association; and
                          (iv) the Commission in the case of 
                        all other municipal securities dealers.
                  (B) When used with respect to a clearing 
                agency or transfer agent:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank, a 
                        subsidiary of any such bank, a Federal 
                        savings association (as defined in 
                        section 3(b)(2) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(2))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation, or a subsidiary of any 
                        such Federal savings association;
                          (ii) the Board of Governors of the 
                        Federal Reserve System, in the case of 
                        a State member bank of the Federal 
                        Reserve System, a subsidiary thereof, a 
                        bank holding company, a subsidiary of a 
                        bank holding company that is a bank 
                        other than a bank specified in clause 
                        (i) or (iii) of this subparagraph, or a 
                        savings and loan holding company;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of a bank 
                        insured by the Federal Deposit 
                        Insurance Corporation (other than a 
                        member of the Federal Reserve System), 
                        a subsidiary of any such bank, a State 
                        savings association (as defined in 
                        section 3(b)(3) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(3))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation, or a subsidiary of any 
                        such State savings association; and
                          (iv) the Commission in the case of 
                        all other clearing agencies and 
                        transfer agents.
                  (C) When used with respect to a participant 
                or applicant to become a participant in a 
                clearing agency or a person requesting or 
                having access to services offered by a clearing 
                agency:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank or a 
                        Federal savings association (as defined 
                        in section 3(b)(2) of the Federal 
                        Deposit Insurance Act (12 U.S.C. 
                        1813(b)(2))), the deposits of which are 
                        insured by the Federal Deposit 
                        Insurance Corporation when the 
                        appropriate regulatory agency for such 
                        clearing agency is not the Commission;
                          (ii) the Board of Governors of the 
                        Federal Reserve System in the case of a 
                        State member bank of the Federal 
                        Reserve System, a bank holding company, 
                        or a subsidiary of a bank holding 
                        company, a subsidiary of a bank holding 
                        company that is a bank other than a 
                        bank specified in clause (i) or (iii) 
                        of this subparagraph, or a savings and 
                        loan holding company when the 
                        appropriate regulatory agency for such 
                        clearing agency is not the Commission;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of a bank 
                        insured by the Federal Deposit 
                        Insurance Corporation (other than a 
                        member of the Federal Reserve System) 
                        or a State savings association (as 
                        defined in section 3(b)(3) of the 
                        Federal Deposit Insurance Act (12 
                        U.S.C. 1813(b)(3))), the deposits of 
                        which are insured by the Federal 
                        Deposit Insurance Corporation; and when 
                        the appropriate regulatory agency for 
                        such clearing agency is not the 
                        Commission;
                          (iv) the Commission in all other 
                        cases.
                  (D) When used with respect to an 
                institutional investment manager which is a 
                bank the deposits of which are insured in 
                accordance with the Federal Deposit Insurance 
                Act:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank or a 
                        Federal savings association (as defined 
                        in section 3(b)(2) of the Federal 
                        Deposit Insurance Act (12 U.S.C. 
                        1813(b)(2))), the deposits of which are 
                        insured by the Federal Deposit 
                        Insurance Corporation;
                          (ii) the Board of Governors of the 
                        Federal Reserve System, in the case of 
                        any other member bank of the Federal 
                        Reserve System; and
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of any other 
                        insured bank or a State savings 
                        association (as defined in section 
                        3(b)(3) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(3))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation.
                  (E) When used with respect to a national 
                securities exchange or registered securities 
                association, member thereof, person associated 
                with a member thereof, applicant to become a 
                member thereof or to become associated with a 
                member thereof, or person requesting or having 
                access to services offered by such exchange or 
                association or member thereof, or the Municipal 
                Securities Rulemaking Board, the Commission.
                  (F) When used with respect to a person 
                exercising investment discretion with respect 
                to an account:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank or a 
                        Federal savings association (as defined 
                        in section 3(b)(2) of the Federal 
                        Deposit Insurance Act (12 U.S.C. 
                        1813(b)(2))), the deposits of which are 
                        insured by the Federal Deposit 
                        Insurance Corporation;
                          (ii) the Board of Governors of the 
                        Federal Reserve System in the case of 
                        any other member bank of the Federal 
                        Reserve System;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of any other 
                        bank the deposits of which are insured 
                        in accordance with the Federal Deposit 
                        Insurance Act or a State savings 
                        association (as defined in section 
                        3(b)(3) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(3))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation; and
                          (iv) the Commission in the case of 
                        all other such persons.
                  (G) When used with respect to a government 
                securities broker or government securities 
                dealer, or person associated with a government 
                securities broker or government securities 
                dealer:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank, a 
                        Federal savings association (as defined 
                        in section 3(b)(2) of the Federal 
                        Deposit Insurance Act), the deposits of 
                        which are insured by the Federal 
                        Deposit Insurance Corporation, or a 
                        Federal branch or Federal agency of a 
                        foreign bank (as such terms are used in 
                        the International Banking Act of 1978);
                          (ii) the Board of Governors of the 
                        Federal Reserve System, in the case of 
                        a State member bank of the Federal 
                        Reserve System, a foreign bank, an 
                        uninsured State branch or State agency 
                        of a foreign bank, a commercial lending 
                        company owned or controlled by a 
                        foreign bank (as such terms are used in 
                        the International Banking Act of 1978), 
                        or a corporation organized or having an 
                        agreement with the Board of Governors 
                        of the Federal Reserve System pursuant 
                        to section 25 or section 25A of the 
                        Federal Reserve Act;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of a bank 
                        insured by the Federal Deposit 
                        Insurance Corporation (other than a 
                        member of the Federal Reserve System or 
                        a Federal savings bank), a State 
                        savings association (as defined in 
                        section 3(b)(3) of the Federal Deposit 
                        Insurance Act), the deposits of which 
                        are insured by the Federal Deposit 
                        Insurance Corporation, or an insured 
                        State branch of a foreign bank (as such 
                        terms are used in the International 
                        Banking Act of 1978); and
                          (iv) the Commission, in the case of 
                        all other government securities brokers 
                        and government securities dealers.
                  (H) When used with respect to an institution 
                described in subparagraph (D), (F), or (G) of 
                section 2(c)(2), or held under section 4(f), of 
                the Bank Holding Company Act of 1956--
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank;
                          (ii) the Board of Governors of the 
                        Federal Reserve System, in the case of 
                        a State member bank of the Federal 
                        Reserve System or any corporation 
                        chartered under section 25A of the 
                        Federal Reserve Act;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of any other 
                        bank the deposits of which are insured 
                        in accordance with the Federal Deposit 
                        Insurance Act; or
                          (iv) the Commission in the case of 
                        all other such institutions.
        As used in this paragraph, the terms ``bank holding 
        company'' and ``subsidiary of a bank holding company'' 
        have the meanings given them in section 2 of the Bank 
        Holding Company Act of 1956. As used in this paragraph, 
        the term ``savings and loan holding company'' has the 
        same meaning as in section 10(a) of the Home Owners' 
        Loan Act (12 U.S.C. 1467a(a)).
          (35) A person exercises ``investment discretion'' 
        with respect to an account if, directly or indirectly, 
        such person (A) is authorized to determine what 
        securities or other property shall be purchased or sold 
        by or for the account, (B) makes decisions as to what 
        securities or other property shall be purchased or sold 
        by or for the account even though some other person may 
        have responsibility for such investment decisions, or 
        (C) otherwise exercises such influence with respect to 
        the purchase and sale of securities or other property 
        by or for the account as the Commission, by rule, 
        determines, in the public interest or for the 
        protection of investors, should be subject to the 
        operation of the provisions of this title and rules and 
        regulations thereunder.
          (36) A class of persons or markets is subject to 
        ``equal regulation'' if no member of the class has a 
        competitive advantage over any other member thereof 
        resulting from a disparity in their regulation under 
        this title which the Commission determines is unfair 
        and not necessary or appropriate in furtherance of the 
        purposes of this title.
          (37) The term ``records'' means accounts, 
        correspondence, memorandums, tapes, discs, papers, 
        books, and other documents or transcribed information 
        of any type, whether expressed in ordinary or machine 
        language.
          (38) The term ``market maker'' means any specialist 
        permitted to act as a dealer, any dealer acting in the 
        capacity of block positioner, and any dealer who, with 
        respect to a security, holds himself out (by entering 
        quotations in an inter-dealer communications system or 
        otherwise) as being willing to buy and sell such 
        security for his own account on a regular or continuous 
        basis.
          (39) A person is subject to a ``statutory 
        disqualification'' with respect to membership or 
        participation in, or association with a member of, a 
        self-regulatory organization, if such person--
                  (A) has been and is expelled or suspended 
                from membership or participation in, or barred 
                or suspended from being associated with a 
                member of, any self-regulatory organization, 
                foreign equivalent of a self-regulatory 
                organization, foreign or international 
                securities exchange, contract market designated 
                pursuant to section 5 of the Commodity Exchange 
                Act (7 U.S.C. 7), or any substantially 
                equivalent foreign statute or regulation, or 
                futures association registered under section 17 
                of such Act (7 U.S.C. 21), or any substantially 
                equivalent foreign statute or regulation, or 
                has been and is denied trading privileges on 
                any such contract market or foreign equivalent;
          (B) is subject to--
                  (i) an order of the Commission, other 
                appropriate regulatory agency, or foreign 
                financial regulatory authority--
                          (I) denying, suspending for a period 
                        not exceeding 12 months, or revoking 
                        his registration as a broker, dealer, 
                        municipal securities dealer, government 
                        securities broker, government 
                        securities dealer, security-based swap 
                        dealer, or major security-based swap 
                        participant or limiting his activities 
                        as a foreign person performing a 
                        function substantially equivalent to 
                        any of the above; or
                          (II) barring or suspending for a 
                        period not exceeding 12 months his 
                        being associated with a broker, dealer, 
                        municipal securities dealer, government 
                        securities broker, government 
                        securities dealer, security-based swap 
                        dealer, major security-based swap 
                        participant, or foreign person 
                        performing a function substantially 
                        equivalent to any of the above;
                  (ii) an order of the Commodity Futures 
                Trading Commission denying, suspending, or 
                revoking his registration under the Commodity 
                Exchange Act (7 U.S.C. 1 et seq.); or
                  (iii) an order by a foreign financial 
                regulatory authority denying, suspending, or 
                revoking the person's authority to engage in 
                transactions in contracts of sale of a 
                commodity for future delivery or other 
                instruments traded on or subject to the rules 
                of a contract market, board of trade, or 
                foreign equivalent thereof;
                  (C) by his conduct while associated with a 
                broker, dealer, municipal securities dealer, 
                government securities broker, government 
                securities dealer, security-based swap dealer, 
                or major security-based swap participant, or 
                while associated with an entity or person 
                required to be registered under the Commodity 
                Exchange Act, has been found to be a cause of 
                any effective suspension, expulsion, or order 
                of the character described in subparagraph (A) 
                or (B) of this paragraph, and in entering such 
                a suspension, expulsion, or order, the 
                Commission, an appropriate regulatory agency, 
                or any such self-regulatory organization shall 
                have jurisdiction to find whether or not any 
                person was a cause thereof;
                  (D) by his conduct while associated with any 
                broker, dealer, municipal securities dealer, 
                government securities broker, government 
                securities dealer, security-based swap dealer, 
                major security-based swap participant, or any 
                other entity engaged in transactions in 
                securities, or while associated with an entity 
                engaged in transactions in contracts of sale of 
                a commodity for future delivery or other 
                instruments traded on or subject to the rules 
                of a contract market, board of trade, or 
                foreign equivalent thereof, has been found to 
                be a cause of any effective suspension, 
                expulsion, or order by a foreign or 
                international securities exchange or foreign 
                financial regulatory authority empowered by a 
                foreign government to administer or enforce its 
                laws relating to financial transactions as 
                described in subparagraph (A) or (B) of this 
                paragraph;
                  (E) has associated with him any person who is 
                known, or in the exercise of reasonable care 
                should be known, to him to be a person 
                described by subparagraph (A), (B), (C), or (D) 
                of this paragraph; or
                  (F) has committed or omitted any act, or is 
                subject to an order or finding, enumerated in 
                subparagraph (D), (E), (H), or (G) of paragraph 
                (4) of section 15(b) of this title, has been 
                convicted of any offense specified in 
                subparagraph (B) of such paragraph (4) or any 
                other felony within ten years of the date of 
                the filing of an application for membership or 
                participation in, or to become associated with 
                a member of, such self-regulatory organization, 
                is enjoined from any action, conduct, or 
                practice specified in subparagraph (C) of such 
                paragraph (4), has willfully made or caused to 
                be made in any application for membership or 
                participation in, or to become associated with 
                a member of, a self-regulatory organization, 
                report required to be filed with a self-
                regulatory organization, or proceeding before a 
                self-regulatory organization, any statement 
                which was at the time, and in the light of the 
                circumstances under which it was made, false or 
                misleading with respect to any material fact, 
                or has omitted to state in any such 
                application, report, or proceeding any material 
                fact which is required to be stated therein.
          (40) The term ``financial responsibility rules'' 
        means the rules and regulations of the Commission or 
        the rules and regulations prescribed by any self-
        regulatory organization relating to financial 
        responsibility and related practices which are 
        designated by the Commission, by rule or regulation, to 
        be financial responsibility rules.
          (41) The term ``mortgage related security'' means a 
        security that meets standards of credit-worthiness as 
        established by the Commission, and either:
                  (A) represents ownership of one or more 
                promissory notes or certificates of interest or 
                participation in such notes (including any 
                rights designed to assure servicing of, or the 
                receipt or timeliness of receipt by the holders 
                of such notes, certificates, or participations 
                of amounts payable under, such notes, 
                certificates, or participations), which notes:
                          (i) are directly secured by a first 
                        lien on a single parcel of real estate, 
                        including stock allocated to a dwelling 
                        unit in a residential cooperative 
                        housing corporation, upon which is 
                        located a dwelling or mixed residential 
                        and commercial structure, on a 
                        residential manufactured home as 
                        defined in section 603(6) of the 
                        National Manufactured Housing 
                        Construction and Safety Standards Act 
                        of 1974, whether such manufactured home 
                        is considered real or personal property 
                        under the laws of the State in which it 
                        is to be located, or on one or more 
                        parcels of real estate upon which is 
                        located one or more commercial 
                        structures; and
                          (ii) were originated by a savings and 
                        loan association, savings bank, 
                        commercial bank, credit union, 
                        insurance company, or similar 
                        institution which is supervised and 
                        examined by a Federal or State 
                        authority, or by a mortgage approved by 
                        the Secretary of Housing and Urban 
                        Development pursuant to sections 203 
                        and 211 of the National Housing Act, 
                        or, where such notes involve a lien on 
                        the manufactured home, by any such 
                        institution or by any financial 
                        institution approved for insurance by 
                        the Secretary of Housing and Urban 
                        Development pursuant to section 2 of 
                        the National Housing Act; or
                  (B) is secured by one or more promissory 
                notes or certificates of interest or 
                participations in such notes (with or without 
                recourse to the issuer thereof) and, by its 
                terms, provides for payments of principal in 
                relation to payments, or reasonable projections 
                of payments, on notes meeting the requirements 
                of subparagraphs (A) (i) and (ii) or 
                certificates of interest or participations in 
                promissory notes meeting such requirements.
        For the purpose of this paragraph, the term 
        ``promissory note'', when used in connection with a 
        manufactured home, shall also include a loan, advance, 
        or credit sale as evidence by a retail installment 
        sales contract or other instrument.
          (42) The term ``government securities'' means--
                  (A) securities which are direct obligations 
                of, or obligations guaranteed as to principal 
                or interest by, the United States;
                  (B) securities which are issued or guaranteed 
                by the Tennessee Valley Authority or by 
                corporations in which the United States has a 
                direct or indirect interest and which are 
                designated by the Secretary of the Treasury for 
                exemption as necessary or appropriate in the 
                public interest or for the protection of 
                investors;
                  (C) securities issued or guaranteed as to 
                principal or interest by any corporation the 
                securities of which are designated, by statute 
                specifically naming such corporation, to 
                constitute exempt securities within the meaning 
                of the laws administered by the Commission;
                  (D) for purposes of sections 15C and 17A, any 
                put, call, straddle, option, or privilege on a 
                security described in subparagraph (A), (B), or 
                (C) other than a put, call, straddle, option, 
                or privilege--
                          (i) that is traded on one or more 
                        national securities exchanges; or
                          (ii) for which quotations are 
                        disseminated through an automated 
                        quotation system operated by a 
                        registered securities association; or
                  (E) for purposes of sections 15, 15C, and 17A 
                as applied to a bank, a qualified Canadian 
                government obligation as defined in section 
                5136 of the Revised Statutes of the United 
                States.
          (43) The term ``government securities broker'' means 
        any person regularly engaged in the business of 
        effecting transactions in government securities for the 
        account of others, but does not include--
                  (A) any corporation the securities of which 
                are government securities under subparagraph 
                (B) or (C) of paragraph (42) of this 
                subsection; or
                  (B) any person registered with the Commodity 
                Futures Trading Commission, any contract market 
                designated by the Commodity Futures Trading 
                Commission, such contract market's affiliated 
                clearing organization, or any floor trader on 
                such contract market, solely because such 
                person effects transactions in government 
                securities that the Commission, after 
                consultation with the Commodity Futures Trading 
                Commission, has determined by rule or order to 
                be incidental to such person's futures-related 
                business.
          (44) The term ``government securities dealer'' means 
        any person engaged in the business of buying and 
        selling government securities for his own account, 
        through a broker or otherwise, but does not include--
                  (A) any person insofar as he buys or sells 
                such securities for his own account, either 
                individually or in some fiduciary capacity, but 
                not as a part of a regular business;
                  (B) any corporation the securities of which 
                are government securities under subparagraph 
                (B) or (C) of paragraph (42) of this 
                subsection;
                  (C) any bank, unless the bank is engaged in 
                the business of buying and selling government 
                securities for its own account other than in a 
                fiduciary capacity, through a broker or 
                otherwise; or
                  (D) any person registered with the Commodity 
                Futures Trading Commission, any contract market 
                designated by the Commodity Futures Trading 
                Commission, such contract market's affiliated 
                clearing organization, or any floor trader on 
                such contract market, solely because such 
                person effects transactions in government 
                securities that the Commission, after 
                consultation with the Commodity Futures Trading 
                Commission, has determined by rule or order to 
                be incidental to such person's futures-related 
                business.
          (45) The term ``person associated with a government 
        securities broker or government securities dealer'' 
        means any partner, officer, director, or branch manager 
        of such government securities broker or government 
        securities dealer (or any person occupying a similar 
        status or performing similar functions), and any other 
        employee of such government securities broker or 
        government securities dealer who is engaged in the 
        management, direction, supervision, or performance of 
        any activities relating to government securities, and 
        any person directly or indirectly controlling, 
        controlled by, or under common control with such 
        government securities broker or government securities 
        dealer.
          (46) The term ``financial institution'' means--
                  (A) a bank (as defined in paragraph (6) of 
                this subsection);
                  (B) a foreign bank (as such term is used in 
                the International Banking Act of 1978); and
                  (C) a savings association (as defined in 
                section 3(b) of the Federal Deposit Insurance 
                Act) the deposits of which are insured by the 
                Federal Deposit Insurance Corporation.
          (47) The term ``securities laws'' means the 
        Securities Act of 1933 (15 U.S.C. 77a et seq.), the 
        Securities Exchange Act of 1934 (15 U.S.C. 78a et 
        seq.), the Sarbanes-Oxley Act of 2002, the Trust 
        Indenture Act of 1939 (15 U.S.C. 77aaa et seq.), the 
        Investment Company Act of 1940 (15 U.S.C. 80a-1 et 
        seq.), the Investment Advisers Act of 1940 (15 U.S.C. 
        80b et seq.), and the Securities Investor Protection 
        Act of 1970 (15 U.S.C. 78aaa et seq.).
          (48) The term ``registered broker or dealer'' means a 
        broker or dealer registered or required to register 
        pursuant to section 15 or 15B of this title, except 
        that in paragraph (3) of this subsection and sections 6 
        and 15A the term means such a broker or dealer and a 
        government securities broker or government securities 
        dealer registered or required to register pursuant to 
        section 15C(a)(1)(A) of this title.
          (49) The terms ``person associated with a transfer 
        agent'' and ``associated person of a transfer agent'' 
        mean any person (except an employee whose functions are 
        solely clerical or ministerial) directly engaged in the 
        management, direction, supervision, or performance of 
        any of the transfer agent's activities with respect to 
        transfer agent functions, and any person directly or 
        indirectly controlling such activities or controlled by 
        the transfer agent in connection with such activities.
          (50) The term ``foreign securities authority'' means 
        any foreign government, or any governmental body or 
        regulatory organization empowered by a foreign 
        government to administer or enforce its laws as they 
        relate to securities matters.
          (51)(A) The term ``penny stock'' means any equity 
        security other than a security that is--
                  (i) registered or approved for registration 
                and traded on a national securities exchange 
                that meets such criteria as the Commission 
                shall prescribe by rule or regulation for 
                purposes of this paragraph;
                  (ii) authorized for quotation on an automated 
                quotation system sponsored by a registered 
                securities association, if such system (I) was 
                established and in operation before January 1, 
                1990, and (II) meets such criteria as the 
                Commission shall prescribe by rule or 
                regulation for purposes of this paragraph;
                  (iii) issued by an investment company 
                registered under the Investment Company Act of 
                1940;
                  (iv) excluded, on the basis of exceeding a 
                minimum price, net tangible assets of the 
                issuer, or other relevant criteria, from the 
                definition of such term by rule or regulation 
                which the Commission shall prescribe for 
                purposes of this paragraph; or
                  (v) exempted, in whole or in part, 
                conditionally or unconditionally, from the 
                definition of such term by rule, regulation, or 
                order prescribed by the Commission.
          (B) The Commission may, by rule, regulation, or 
        order, designate any equity security or class of equity 
        securities described in clause (i) or (ii) of 
        subparagraph (A) as within the meaning of the term 
        ``penny stock'' if such security or class of securities 
        is traded other than on a national securities exchange 
        or through an automated quotation system described in 
        clause (ii) of subparagraph (A).
          (C) In exercising its authority under this paragraph 
        to prescribe rules, regulations, and orders, the 
        Commission shall determine that such rule, regulation, 
        or order is consistent with the public interest and the 
        protection of investors.
          (52) The term ``foreign financial regulatory 
        authority'' means any (A) foreign securities authority, 
        (B) other governmental body or foreign equivalent of a 
        self-regulatory organization empowered by a foreign 
        government to administer or enforce its laws relating 
        to the regulation of fiduciaries, trusts, commercial 
        lending, insurance, trading in contracts of sale of a 
        commodity for future delivery, or other instruments 
        traded on or subject to the rules of a contract market, 
        board of trade, or foreign equivalent, or other 
        financial activities, or (C) membership organization a 
        function of which is to regulate participation of its 
        members in activities listed above.
          (53)(A) The term ``small business related security'' 
        means a security that meets standards of credit-
        worthiness as established by the Commission, and 
        either--
                  (i) represents an interest in 1 or more 
                promissory notes or leases of personal property 
                evidencing the obligation of a small business 
                concern and originated by an insured depository 
                institution, insured credit union, insurance 
                company, or similar institution which is 
                supervised and examined by a Federal or State 
                authority, or a finance company or leasing 
                company; or
                  (ii) is secured by an interest in 1 or more 
                promissory notes or leases of personal property 
                (with or without recourse to the issuer or 
                lessee) and provides for payments of principal 
                in relation to payments, or reasonable 
                projections of payments, on notes or leases 
                described in clause (i).
          (B) For purposes of this paragraph--
                  (i) an ``interest in a promissory note or a 
                lease of personal property'' includes ownership 
                rights, certificates of interest or 
                participation in such notes or leases, and 
                rights designed to assure servicing of such 
                notes or leases, or the receipt or timely 
                receipt of amounts payable under such notes or 
                leases;
                  (ii) the term ``small business concern'' 
                means a business that meets the criteria for a 
                small business concern established by the Small 
                Business Administration under section 3(a) of 
                the Small Business Act;
                  (iii) the term ``insured depository 
                institution'' has the same meaning as in 
                section 3 of the Federal Deposit Insurance Act; 
                and
                  (iv) the term ``insured credit union'' has 
                the same meaning as in section 101 of the 
                Federal Credit Union Act.
          (54) Qualified investor.--
                  (A) Definition.--Except as provided in 
                subparagraph (B), for purposes of this title, 
                the term ``qualified investor'' means--
                          (i) any investment company registered 
                        with the Commission under section 8 of 
                        the Investment Company Act of 1940;
                          (ii) any issuer eligible for an 
                        exclusion from the definition of 
                        investment company pursuant to section 
                        3(c)(7) of the Investment Company Act 
                        of 1940;
                          (iii) any bank (as defined in 
                        paragraph (6) of this subsection), 
                        savings association (as defined in 
                        section 3(b) of the Federal Deposit 
                        Insurance Act), broker, dealer, 
                        insurance company (as defined in 
                        section 2(a)(13) of the Securities Act 
                        of 1933), or business development 
                        company (as defined in section 2(a)(48) 
                        of the Investment Company Act of 1940);
                          (iv) any small business investment 
                        company licensed by the United States 
                        Small Business Administration under 
                        section 301 (c) or (d) of the Small 
                        Business Investment Act of 1958;
                          (v) any State sponsored employee 
                        benefit plan, or any other employee 
                        benefit plan, within the meaning of the 
                        Employee Retirement Income Security Act 
                        of 1974, other than an individual 
                        retirement account, if the investment 
                        decisions are made by a plan fiduciary, 
                        as defined in section 3(21) of that 
                        Act, which is either a bank, savings 
                        and loan association, insurance 
                        company, or registered investment 
                        adviser;
                          (vi) any trust whose purchases of 
                        securities are directed by a person 
                        described in clauses (i) through (v) of 
                        this subparagraph;
                          (vii) any market intermediary exempt 
                        under section 3(c)(2) of the Investment 
                        Company Act of 1940;
                          (viii) any associated person of a 
                        broker or dealer other than a natural 
                        person;
                          (ix) any foreign bank (as defined in 
                        section 1(b)(7) of the International 
                        Banking Act of 1978);
                          (x) the government of any foreign 
                        country;
                          (xi) any corporation, company, or 
                        partnership that owns and invests on a 
                        discretionary basis, not less than 
                        $25,000,000 in investments;
                          (xii) any natural person who owns and 
                        invests on a discretionary basis, not 
                        less than $25,000,000 in investments;
                          (xiii) any government or political 
                        subdivision, agency, or instrumentality 
                        of a government who owns and invests on 
                        a discretionary basis not less than 
                        $50,000,000 in investments; or
                          (xiv) any multinational or 
                        supranational entity or any agency or 
                        instrumentality thereof.
                  (B) Altered thresholds for asset-backed 
                securities and loan participations.--For 
                purposes of section 3(a)(5)(C)(iii) of this 
                title and section 206(a)(5) of the Gramm-Leach-
                Bliley Act, the term ``qualified investor'' has 
                the meaning given such term by subparagraph (A) 
                of this paragraph except that clauses (xi) and 
                (xii) shall be applied by substituting 
                ``$10,000,000'' for ``$25,000,000''.
                  (C) Additional authority.--The Commission 
                may, by rule or order, define a ``qualified 
                investor'' as any other person, taking into 
                consideration such factors as the financial 
                sophistication of the person, net worth, and 
                knowledge and experience in financial matters.
          (55)(A) The term ``security future'' means a contract 
        of sale for future delivery of a single security or of 
        a narrow-based security index, including any interest 
        therein or based on the value thereof, except an 
        exempted security under section 3(a)(12) of this title 
        as in effect on the date of the enactment of the 
        Futures Trading Act of 1982 (other than any municipal 
        security as defined in section 3(a)(29) as in effect on 
        the date of the enactment of the Futures Trading Act of 
        1982). The term ``security future'' does not include 
        any agreement, contract, or transaction excluded from 
        the Commodity Exchange Act under section 2(c), 2(d), 
        2(f), or 2(g) of the Commodity Exchange Act (as in 
        effect on the date of the enactment of the Commodity 
        Futures Modernization Act of 2000) or title IV of the 
        Commodity Futures Modernization Act of 2000.
          (B) The term ``narrow-based security index'' means an 
        index--
                  (i) that has 9 or fewer component securities;
                  (ii) in which a component security comprises 
                more than 30 percent of the index's weighting;
                  (iii) in which the five highest weighted 
                component securities in the aggregate comprise 
                more than 60 percent of the index's weighting; 
                or
                  (iv) in which the lowest weighted component 
                securities comprising, in the aggregate, 25 
                percent of the index's weighting have an 
                aggregate dollar value of average daily trading 
                volume of less than $50,000,000 (or in the case 
                of an index with 15 or more component 
                securities, $30,000,000), except that if there 
                are two or more securities with equal weighting 
                that could be included in the calculation of 
                the lowest weighted component securities 
                comprising, in the aggregate, 25 percent of the 
                index's weighting, such securities shall be 
                ranked from lowest to highest dollar value of 
                average daily trading volume and shall be 
                included in the calculation based on their 
                ranking starting with the lowest ranked 
                security.
          (C) Notwithstanding subparagraph (B), an index is not 
        a narrow-based security index if--
                  (i)(I) it has at least nine component 
                securities;
                  (II) no component security comprises more 
                than 30 percent of the index's weighting; and
                  (III) each component security is--
                          (aa) registered pursuant to section 
                        12 of the Securities Exchange Act of 
                        1934;
                          (bb) one of 750 securities with the 
                        largest market capitalization; and
                          (cc) one of 675 securities with the 
                        largest dollar value of average daily 
                        trading volume;
                  (ii) a board of trade was designated as a 
                contract market by the Commodity Futures 
                Trading Commission with respect to a contract 
                of sale for future delivery on the index, 
                before the date of the enactment of the 
                Commodity Futures Modernization Act of 2000;
                  (iii)(I) a contract of sale for future 
                delivery on the index traded on a designated 
                contract market or registered derivatives 
                transaction execution facility for at least 30 
                days as a contract of sale for future delivery 
                on an index that was not a narrow-based 
                security index; and
                  (II) it has been a narrow-based security 
                index for no more than 45 business days over 3 
                consecutive calendar months;
                  (iv) a contract of sale for future delivery 
                on the index is traded on or subject to the 
                rules of a foreign board of trade and meets 
                such requirements as are jointly established by 
                rule or regulation by the Commission and the 
                Commodity Futures Trading Commission;
                  (v) no more than 18 months have passed since 
                the date of the enactment of the Commodity 
                Futures Modernization Act of 2000 and--
                          (I) it is traded on or subject to the 
                        rules of a foreign board of trade;
                          (II) the offer and sale in the United 
                        States of a contract of sale for future 
                        delivery on the index was authorized 
                        before the date of the enactment of the 
                        Commodity Futures Modernization Act of 
                        2000; and
                          (III) the conditions of such 
                        authorization continue to be met; or
                  (vi) a contract of sale for future delivery 
                on the index is traded on or subject to the 
                rules of a board of trade and meets such 
                requirements as are jointly established by 
                rule, regulation, or order by the Commission 
                and the Commodity Futures Trading Commission.
          (D) Within 1 year after the enactment of the 
        Commodity Futures Modernization Act of 2000, the 
        Commission and the Commodity Futures Trading Commission 
        jointly shall adopt rules or regulations that set forth 
        the requirements under clause (iv) of subparagraph (C).
          (E) An index that is a narrow-based security index 
        solely because it was a narrow-based security index for 
        more than 45 business days over 3 consecutive calendar 
        months pursuant to clause (iii) of subparagraph (C) 
        shall not be a narrow-based security index for the 3 
        following calendar months.
          (F) For purposes of subparagraphs (B) and (C) of this 
        paragraph--
                  (i) the dollar value of average daily trading 
                volume and the market capitalization shall be 
                calculated as of the preceding 6 full calendar 
                months; and
                  (ii) the Commission and the Commodity Futures 
                Trading Commission shall, by rule or 
                regulation, jointly specify the method to be 
                used to determine market capitalization and 
                dollar value of average daily trading volume.
          (56) The term ``security futures product'' means a 
        security future or any put, call, straddle, option, or 
        privilege on any security future.
          (57)(A) The term ``margin'', when used with respect 
        to a security futures product, means the amount, type, 
        and form of collateral required to secure any extension 
        or maintenance of credit, or the amount, type, and form 
        of collateral required as a performance bond related to 
        the purchase, sale, or carrying of a security futures 
        product.
          (B) The terms ``margin level'' and ``level of 
        margin'', when used with respect to a security futures 
        product, mean the amount of margin required to secure 
        any extension or maintenance of credit, or the amount 
        of margin required as a performance bond related to the 
        purchase, sale, or carrying of a security futures 
        product.
          (C) The terms ``higher margin level'' and ``higher 
        level of margin'', when used with respect to a security 
        futures product, mean a margin level established by a 
        national securities exchange registered pursuant to 
        section 6(g) that is higher than the minimum amount 
        established and in effect pursuant to section 
        7(c)(2)(B).
          (58) Audit committee.--The term ``audit committee'' 
        means--
                  (A) a committee (or equivalent body) 
                established by and amongst the board of 
                directors of an issuer for the purpose of 
                overseeing the accounting and financial 
                reporting processes of the issuer and audits of 
                the financial statements of the issuer; and
                  (B) if no such committee exists with respect 
                to an issuer, the entire board of directors of 
                the issuer.
          (59) Registered public accounting firm.--The term 
        ``registered public accounting firm'' has the same 
        meaning as in section 2 of the Sarbanes-Oxley Act of 
        2002.
          (60) Credit rating.--The term ``credit rating'' means 
        an assessment of the creditworthiness of an obligor as 
        an entity or with respect to specific securities or 
        money market instruments.
          (61) Credit rating agency.--The term ``credit rating 
        agency'' means any person--
                  (A) engaged in the business of issuing credit 
                ratings on the Internet or through another 
                readily accessible means, for free or for a 
                reasonable fee, but does not include a 
                commercial credit reporting company;
                  (B) employing either a quantitative or 
                qualitative model, or both, to determine credit 
                ratings; and
                  (C) receiving fees from either issuers, 
                investors, or other market participants, or a 
                combination thereof.
          (62) Nationally recognized statistical rating 
        organization.--The term ``nationally recognized 
        statistical rating organization'' means a credit rating 
        agency that--
                  (A) issues credit ratings certified by 
                qualified institutional buyers, in accordance 
                with section 15E(a)(1)(B)(ix), with respect 
                to--
                          (i) financial institutions, brokers, 
                        or dealers;
                          (ii) insurance companies;
                          (iii) corporate issuers;
                          (iv) issuers of asset-backed 
                        securities (as that term is defined in 
                        section 1101(c) of part 229 of title 
                        17, Code of Federal Regulations, as in 
                        effect on the date of enactment of this 
                        paragraph);
                          (v) issuers of government securities, 
                        municipal securities, or securities 
                        issued by a foreign government; or
                          (vi) a combination of one or more 
                        categories of obligors described in any 
                        of clauses (i) through (v); and
                  (B) is registered under section 15E.
          (63) Person associated with a nationally recognized 
        statistical rating organization.--The term ``person 
        associated with'' a nationally recognized statistical 
        rating organization means any partner, officer, 
        director, or branch manager of a nationally recognized 
        statistical rating organization (or any person 
        occupying a similar status or performing similar 
        functions), any person directly or indirectly 
        controlling, controlled by, or under common control 
        with a nationally recognized statistical rating 
        organization, or any employee of a nationally 
        recognized statistical rating organization.
          (64) Qualified institutional buyer.--The term 
        ``qualified institutional buyer'' has the meaning given 
        such term in section 230.144A(a) of title 17, Code of 
        Federal Regulations, or any successor thereto.
           (79) Asset-backed security.--The term ``asset-backed 
        security''--
                  (A) means a fixed-income or other security 
                collateralized by any type of self-liquidating 
                financial asset (including a loan, a lease, a 
                mortgage, or a secured or unsecured receivable) 
                that allows the holder of the security to 
                receive payments that depend primarily on cash 
                flow from the asset, including--
                          (i) a collateralized mortgage 
                        obligation;
                          (ii) a collateralized debt 
                        obligation;
                          (iii) a collateralized bond 
                        obligation;
                          (iv) a collateralized debt obligation 
                        of asset-backed securities;
                          (v) a collateralized debt obligation 
                        of collateralized debt obligations; and
                          (vi) a security that the Commission, 
                        by rule, determines to be an asset-
                        backed security for purposes of this 
                        section; and
                  (B) does not include a security issued by a 
                finance subsidiary held by the parent company 
                or a company controlled by the parent company, 
                if none of the securities issued by the finance 
                subsidiary are held by an entity that is not 
                controlled by the parent company.
          (65) Eligible contract participant.--The term 
        ``eligible contract participant'' has the same meaning 
        as in section 1a of the Commodity Exchange Act (7 
        U.S.C. 1a).
          (66) Major swap participant.--The term ``major swap 
        participant'' has the same meaning as in section 1a of 
        the Commodity Exchange Act (7 U.S.C. 1a).
          (67) Major security-based swap participant.--
                  (A) In general.--The term ``major security-
                based swap participant'' means any person--
                          (i) who is not a security-based swap 
                        dealer; and
                          (ii)(I) who maintains a substantial 
                        position in security-based swaps for 
                        any of the major security-based swap 
                        categories, as such categories are 
                        determined by the Commission, excluding 
                        both positions held for hedging or 
                        mitigating commercial risk and 
                        positions maintained by any employee 
                        benefit plan (or any contract held by 
                        such a plan) as defined in paragraphs 
                        (3) and (32) of section 3 of the 
                        Employee Retirement Income Security Act 
                        of 1974 (29 U.S.C. 1002) for the 
                        primary purpose of hedging or 
                        mitigating any risk directly associated 
                        with the operation of the plan;
                          (II) whose outstanding security-based 
                        swaps create substantial counterparty 
                        exposure that could have serious 
                        adverse effects on the financial 
                        stability of the United States banking 
                        system or financial markets; or
                          (III) that is a financial entity 
                        that--
                                  (aa) is highly leveraged 
                                relative to the amount of 
                                capital such entity holds and 
                                that is not subject to capital 
                                requirements established by an 
                                appropriate Federal banking 
                                agency; and
                                  (bb) maintains a substantial 
                                position in outstanding 
                                security-based swaps in any 
                                major security-based swap 
                                category, as such categories 
                                are determined by the 
                                Commission.
                  (B) Definition of substantial position.--For 
                purposes of subparagraph (A), the Commission 
                shall define, by rule or regulation, the term 
                ``substantial position'' at the threshold that 
                the Commission determines to be prudent for the 
                effective monitoring, management, and oversight 
                of entities that are systemically important or 
                can significantly impact the financial system 
                of the United States. In setting the definition 
                under this subparagraph, the Commission shall 
                consider the person's relative position in 
                uncleared as opposed to cleared security-based 
                swaps and may take into consideration the value 
                and quality of collateral held against 
                counterparty exposures.
                  (C) Scope of designation.--For purposes of 
                subparagraph (A), a person may be designated as 
                a major security-based swap participant for 1 
                or more categories of security-based swaps 
                without being classified as a major security-
                based swap participant for all classes of 
                security-based swaps.
          (68) Security-based swap.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the term ``security-based 
                swap'' means any agreement, contract, or 
                transaction that--
                          (i) is a swap, as that term is 
                        defined under section 1a of the 
                        Commodity Exchange Act (without regard 
                        to paragraph (47)(B)(x) of such 
                        section); and
                          (ii) is based on--
                                  (I) an index that is a 
                                narrow-based security index, 
                                including any interest therein 
                                or on the value thereof;
                                  (II) a single security or 
                                loan, including any interest 
                                therein or on the value 
                                thereof; or
                                  (III) the occurrence, 
                                nonoccurrence, or extent of the 
                                occurrence of an event relating 
                                to a single issuer of a 
                                security or the issuers of 
                                securities in a narrow-based 
                                security index, provided that 
                                such event directly affects the 
                                financial statements, financial 
                                condition, or financial 
                                obligations of the issuer.
                  (B) Rule of construction regarding master 
                agreements.--The term ``security-based swap'' 
                shall be construed to include a master 
                agreement that provides for an agreement, 
                contract, or transaction that is a security-
                based swap pursuant to subparagraph (A), 
                together with all supplements to any such 
                master agreement, without regard to whether the 
                master agreement contains an agreement, 
                contract, or transaction that is not a 
                security-based swap pursuant to subparagraph 
                (A), except that the master agreement shall be 
                considered to be a security-based swap only 
                with respect to each agreement, contract, or 
                transaction under the master agreement that is 
                a security-based swap pursuant to subparagraph 
                (A).
                  (C) Exclusions.--The term ``security-based 
                swap'' does not include any agreement, 
                contract, or transaction that meets the 
                definition of a security-based swap only 
                because such agreement, contract, or 
                transaction references, is based upon, or 
                settles through the transfer, delivery, or 
                receipt of an exempted security under paragraph 
                (12), as in effect on the date of enactment of 
                the Futures Trading Act of 1982 (other than any 
                municipal security as defined in paragraph (29) 
                as in effect on the date of enactment of the 
                Futures Trading Act of 1982), unless such 
                agreement, contract, or transaction is of the 
                character of, or is commonly known in the trade 
                as, a put, call, or other option.
                  (D) Mixed swap.--The term ``security-based 
                swap'' includes any agreement, contract, or 
                transaction that is as described in 
                subparagraph (A) and also is based on the value 
                of 1 or more interest or other rates, 
                currencies, commodities, instruments of 
                indebtedness, indices, quantitative measures, 
                other financial or economic interest or 
                property of any kind (other than a single 
                security or a narrow-based security index), or 
                the occurrence, non-occurrence, or the extent 
                of the occurrence of an event or contingency 
                associated with a potential financial, 
                economic, or commercial consequence (other than 
                an event described in subparagraph 
                (A)(ii)(III)).
                  (E) Rule of construction regarding use of the 
                term index.--The term ``index'' means an index 
                or group of securities, including any interest 
                therein or based on the value thereof.
          (69) Swap.--The term ``swap'' has the same meaning as 
        in section 1a of the Commodity Exchange Act (7 U.S.C. 
        1a).
          (70) Person associated with a security-based swap 
        dealer or major security-based swap participant.--
                  (A) In general.--The term ``person associated 
                with a security-based swap dealer or major 
                security-based swap participant'' or 
                ``associated person of a security-based swap 
                dealer or major security-based swap 
                participant'' means--
                          (i) any partner, officer, director, 
                        or branch manager of such security-
                        based swap dealer or major security-
                        based swap participant (or any person 
                        occupying a similar status or 
                        performing similar functions);
                          (ii) any person directly or 
                        indirectly controlling, controlled by, 
                        or under common control with such 
                        security-based swap dealer or major 
                        security-based swap participant; or
                          (iii) any employee of such security-
                        based swap dealer or major security-
                        based swap participant.
                  (B) Exclusion.--Other than for purposes of 
                section 15F(l)(2), the term ``person associated 
                with a security-based swap dealer or major 
                security-based swap participant'' or 
                ``associated person of a security-based swap 
                dealer or major security-based swap 
                participant'' does not include any person 
                associated with a security-based swap dealer or 
                major security-based swap participant whose 
                functions are solely clerical or ministerial.
          (71) Security-based swap dealer.--
                  (A) In general.--The term ``security-based 
                swap dealer'' means any person who--
                          (i) holds themself out as a dealer in 
                        security-based swaps;
                          (ii) makes a market in security-based 
                        swaps;
                          (iii) regularly enters into security-
                        based swaps with counterparties as an 
                        ordinary course of business for its own 
                        account; or
                          (iv) engages in any activity causing 
                        it to be commonly known in the trade as 
                        a dealer or market maker in security-
                        based swaps.
                  (B) Designation by type or class.--A person 
                may be designated as a security-based swap 
                dealer for a single type or single class or 
                category of security-based swap or activities 
                and considered not to be a security-based swap 
                dealer for other types, classes, or categories 
                of security-based swaps or activities.
                  (C) Exception.--The term ``security-based 
                swap dealer'' does not include a person that 
                enters into security-based swaps for such 
                person's own account, either individually or in 
                a fiduciary capacity, but not as a part of 
                regular business.
                  (D) De minimis exception.--The Commission 
                shall exempt from designation as a security-
                based swap dealer an entity that engages in a 
                de minimis quantity of security-based swap 
                dealing in connection with transactions with or 
                on behalf of its customers. The Commission 
                shall promulgate regulations to establish 
                factors with respect to the making of any 
                determination to exempt.
          (72) Appropriate federal banking agency.--The term 
        ``appropriate Federal banking agency'' has the same 
        meaning as in section 3(q) of the Federal Deposit 
        Insurance Act (12 U.S.C. 1813(q)).
          (73) Board.--The term ``Board'' means the Board of 
        Governors of the Federal Reserve System.
          (74) Prudential regulator.--The term ``prudential 
        regulator'' has the same meaning as in section 1a of 
        the Commodity Exchange Act (7 U.S.C. 1a).
          (75) Security-based swap data repository.--The term 
        ``security-based swap data repository'' means any 
        person that collects and maintains information or 
        records with respect to transactions or positions in, 
        or the terms and conditions of, security-based swaps 
        entered into by third parties for the purpose of 
        providing a centralized recordkeeping facility for 
        security-based swaps.
          (76) Swap dealer.--The term ``swap dealer'' has the 
        same meaning as in section 1a of the Commodity Exchange 
        Act (7 U.S.C. 1a).
          (77) Security-based swap execution facility.--The 
        term ``security-based swap execution facility'' means a 
        trading system or platform in which multiple 
        participants have the ability to execute or trade 
        security-based swaps by accepting bids and offers made 
        by multiple participants in the facility or system, 
        through any means of interstate commerce, including any 
        trading facility, that--
                  (A) facilitates the execution of security-
                based swaps between persons; and
                  (B) is not a national securities exchange.
          (78) Security-based swap agreement.--
                  (A) In general.--For purposes of sections 9, 
                10, 16, 20, and 21A of this Act, and section 17 
                of the Securities Act of 1933 (15 U.S.C. 77q), 
                the term ``security-based swap agreement'' 
                means a swap agreement as defined in section 
                206A of the Gramm-Leach-Bliley Act (15 U.S.C. 
                78c note) of which a material term is based on 
                the price, yield, value, or volatility of any 
                security or any group or index of securities, 
                or any interest therein.
                  (B) Exclusions.--The term ``security-based 
                swap agreement'' does not include any security-
                based swap.
          (80) Emerging growth company.--The term ``emerging 
        growth company'' means an issuer that had total annual 
        gross revenues of less than $1,000,000,000 (as such 
        amount is indexed for inflation every 5 years by the 
        Commission to reflect the change in the Consumer Price 
        Index for All Urban Consumers published by the Bureau 
        of Labor Statistics, setting the threshold to the 
        nearest 1,000,000) during its most recently completed 
        fiscal year. An issuer that is an emerging growth 
        company as of the first day of that fiscal year shall 
        continue to be deemed an emerging growth company until 
        the earliest of--
                  (A) the last day of the fiscal year of the 
                issuer during which it had total annual gross 
                revenues of $1,000,000,000 (as such amount is 
                indexed for inflation every 5 years by the 
                Commission to reflect the change in the 
                Consumer Price Index for All Urban Consumers 
                published by the Bureau of Labor Statistics, 
                setting the threshold to the nearest 1,000,000) 
                or more;
                  (B) the last day of the fiscal year of the 
                issuer following the fifth anniversary of the 
                date of the first sale of common equity 
                securities of the issuer pursuant to an 
                effective registration statement under the 
                Securities Act of 1933;
                  (C) the date on which such issuer has, during 
                the previous 3-year period, issued more than 
                $1,000,000,000 in non-convertible debt; or
                  (D) the date on which such issuer is deemed 
                to be a ``large accelerated filer'', as defined 
                in section 240.12b-2 of title 17, Code of 
                Federal Regulations, or any successor thereto.
          [(80)] (81) Funding portal.--The term ``funding 
        portal'' means any person acting as an intermediary in 
        a transaction involving the offer or sale of securities 
        for the account of others, solely pursuant to section 
        4(6) of the Securities Act of 1933 (15 U.S.C. 77d(6)), 
        that does not--
                  (A) offer investment advice or 
                recommendations;
                  (B) solicit purchases, sales, or offers to 
                buy the securities offered or displayed on its 
                website or portal;
                  (C) compensate employees, agents, or other 
                persons for such solicitation or based on the 
                sale of securities displayed or referenced on 
                its website or portal;
                  (D) hold, manage, possess, or otherwise 
                handle investor funds or securities; or
                  (E) engage in such other activities as the 
                Commission, by rule, determines appropriate.
          (82) Bank secrecy act.--The term ``Bank Secrecy Act'' 
        means--
                  (A) section 21 of the Federal Deposit 
                Insurance Act (12 U.S.C. 1829b);
                  (B) chapter 2 of title I of Public Law 91-508 
                (12 U.S.C. 1951 et seq.); and
                  (C) subchapter II of chapter 53 of title 31, 
                United States Code.
          (83) Digital asset broker.--The term ``digital asset 
        broker''--
                  (A) means any person engaged in the business 
                of effecting transactions in restricted digital 
                assets for the account of others; and
                  (B) does not include a blockchain protocol or 
                a person or group of persons solely because of 
                their development of a blockchain protocol.
          (84) Digital asset custodian.--The term ``digital 
        asset custodian'' means an entity in the business of 
        providing custodial or safekeeping services for 
        restricted digital assets.
          (85) Digital asset dealer.--The term ``digital asset 
        dealer''--
                  (A) means any person engaged in the business 
                of buying and selling restricted digital assets 
                for such person's own account through a broker 
                or otherwise; and
                  (B) does not include--
                          (i) a person that buys or sells 
                        restricted digital assets for such 
                        person's own account, either 
                        individually or in a fiduciary 
                        capacity, but not as a part of a 
                        regular business; or
                          (ii) a blockchain protocol or a 
                        person or group of persons solely 
                        because of their development of a 
                        blockchain protocol.
          (86) Digital asset trading system.--The term 
        ``digital asset trading system''--
                  (A) means any organization, association, 
                person, or group of persons, whether 
                incorporated or unincorporated, that 
                constitutes, maintains, or provides a market 
                place or facilities for bringing together 
                purchasers and sellers of restricted digital 
                assets or for otherwise performing with respect 
                to digital assets the functions commonly 
                performed by a stock exchange within the 
                meaning of section 240.3b-16 of title 17, Code 
                of Federal Regulations, as in effect on the 
                date of enactment of this paragraph; and
                  (B) does not include a blockchain protocol or 
                a person or group of persons solely because of 
                their development of a blockchain protocol.
          (87) Mixed digital asset transaction.--The term 
        ``mixed digital asset transaction'' means an agreement, 
        contract, or transaction involving a restricted digital 
        asset and a digital commodity.
          (88) Notice-registered digital asset clearing 
        agency.--The term ``notice-registered digital asset 
        clearing agency'' means a clearing agency that has 
        registered with the Commission pursuant to section 
        17A(b)(9).
          (89) Additional digital asset-related terms.--
                  (A) Securities act of 1933.--The terms 
                ``affiliated person'', ``blockchain system'', 
                ``decentralized governance system'', 
                ``decentralized network'', ``digital asset'', 
                ``digital asset issuer'', ``digital asset 
                maturity date'', ``end user distribution'', 
                ``functional network'', ``mixed digital asset 
                transaction'', ``permitted payment 
                stablecoin'', ``related person'', ``restricted 
                digital asset'', and ``source code'' have the 
                meaning given those terms, respectively, under 
                section 2(a) of the Securities Act of 1933 (15 
                U.S.C. 77b(a)).
                  (B) Commodity exchange act.--The terms 
                ``digital commodity'', ``digital commodity 
                broker'', ``digital commodity dealer'', and 
                ``digital commodity exchange'' have the meaning 
                given those terms, respectively, under section 
                1a of the Commodity Exchange Act (7 U.S.C. 1a).
  (b) The Commission and the Board of Governors of the Federal 
Reserve System, as to matters within their respective 
jurisdictions, shall have power by rules and regulations to 
define technical, trade, accounting, and other terms used in 
this title, consistently with the provisions and purposes of 
this title.
  (c) No provision of this title shall apply to, or be deemed 
to include, any executive department or independent 
establishment of the United States, or any lending agency which 
is wholly owned, directly or indirectly, by the United States, 
or any officer, agent, or employee of any such department, 
establishment, or agency, acting in the course of his official 
duty as such, unless such provision makes specific reference to 
such department, establishment, or agency.
  (d) No issuer of municipal securities or officer or employee 
thereof acting in the course of his official duties as such 
shall be deemed to be a ``broker'', ``dealer'', or ``municipal 
securities dealer'' solely by reason of buying, selling, or 
effecting transactions in the issuer's securities.
  (e) Charitable Organizations.--
          (1) Exemption.--Notwithstanding any other provision 
        of this title, but subject to paragraph (2) of this 
        subsection, a charitable organization, as defined in 
        section 3(c)(10)(D) of the Investment Company Act of 
        1940, or any trustee, director, officer, employee, or 
        volunteer of such a charitable organization acting 
        within the scope of such person's employment or duties 
        with such organization, shall not be deemed to be a 
        ``broker'', ``dealer'', ``municipal securities 
        broker'', ``municipal securities dealer'', ``government 
        securities broker'', or ``government securities 
        dealer'' for purposes of this title solely because such 
        organization or person buys, holds, sells, or trades in 
        securities for its own account in its capacity as 
        trustee or administrator of, or otherwise on behalf of 
        or for the account of--
                  (A) such a charitable organization;
                  (B) a fund that is excluded from the 
                definition of an investment company under 
                section 3(c)(10)(B) of the Investment Company 
                Act of 1940; or
                  (C) a trust or other donative instrument 
                described in section 3(c)(10)(B) of the 
                Investment Company Act of 1940, or the settlors 
                (or potential settlors) or beneficiaries of any 
                such trust or other instrument.
          (2) Limitation on compensation.--The exemption 
        provided under paragraph (1) shall not be available to 
        any charitable organization, or any trustee, director, 
        officer, employee, or volunteer of such a charitable 
        organization, unless each person who, on or after 90 
        days after the date of enactment of this subsection, 
        solicits donations on behalf of such charitable 
        organization from any donor to a fund that is excluded 
        from the definition of an investment company under 
        section 3(c)(10)(B) of the Investment Company Act of 
        1940, is either a volunteer or is engaged in the 
        overall fund raising activities of a charitable 
        organization and receives no commission or other 
        special compensation based on the number or the value 
        of donations collected for the fund.
  (f) Consideration of Promotion of Efficiency, Competition, 
and Capital Formation.--Whenever pursuant to this title the 
Commission is engaged in rulemaking, or in the review of a rule 
of a self-regulatory organization, and is required to consider 
or determine whether an action is necessary or appropriate in 
the public interest, the Commission shall also consider, in 
addition to the protection of investors, whether the action 
will promote efficiency, competition, and capital formation.
  (g) Church Plans.--No church plan described in section 414(e) 
of the Internal Revenue Code of 1986, no person or entity 
eligible to establish and maintain such a plan under the 
Internal Revenue Code of 1986, no company or account that is 
excluded from the definition of an investment company under 
section 3(c)(14) of the Investment Company Act of 1940, and no 
trustee, director, officer or employee of or volunteer for such 
plan, company, account, person, or entity, acting within the 
scope of that person's employment or activities with respect to 
such plan, shall be deemed to be a ``broker'', ``dealer'', 
``municipal securities broker'', ``municipal securities 
dealer'', ``government securities broker'', ``government 
securities dealer'', ``clearing agency'', or ``transfer agent'' 
for purposes of this title--
          (1) solely because such plan, company, person, or 
        entity buys, holds, sells, trades in, or transfers 
        securities or acts as an intermediary in making 
        payments in connection with transactions in securities 
        for its own account in its capacity as trustee or 
        administrator of, or otherwise on behalf of, or for the 
        account of, any church plan, company, or account that 
        is excluded from the definition of an investment 
        company under section 3(c)(14) of the Investment 
        Company Act of 1940; and
          (2) if no such person or entity receives a commission 
        or other transaction-related sales compensation in 
        connection with any activities conducted in reliance on 
        the exemption provided by this subsection.
  (h) Limited Exemption for Funding Portals.--
          (1) In general.--The Commission shall, by rule, 
        exempt, conditionally or unconditionally, a registered 
        funding portal from the requirement to register as a 
        broker or dealer under section 15(a)(1), provided that 
        such funding portal--
                  (A) remains subject to the examination, 
                enforcement, and other rulemaking authority of 
                the Commission;
                  (B) is a member of a national securities 
                association registered under section 15A; and
                  (C) is subject to such other requirements 
                under this title as the Commission determines 
                appropriate under such rule.
          (2) National securities association membership.--For 
        purposes of sections 15(b)(8) and 15A, the term 
        ``broker or dealer'' includes a funding portal and the 
        term ``registered broker or dealer'' includes a 
        registered funding portal, except to the extent that 
        the Commission, by rule, determines otherwise, provided 
        that a national securities association shall only 
        examine for and enforce against a registered funding 
        portal rules of such national securities association 
        written specifically for registered funding portals.

           *       *       *       *       *       *       *


                   securities and exchange commission

  Sec. 4. (a) There is hereby established a Securities and 
Exchange Commission (hereinafter referred to as the 
``Commission'') to be composed of five commissioners to be 
appointed by the President by and with the advice and consent 
of the Senate. Not more than three of such commissioners shall 
be members of the same political party, and in making 
appointments members of different political parties shall be 
appointed alternately as nearly as may be practicable. No 
commissioner shall engage in any other business, vocation, or 
employment than that of serving as commissioner, nor shall any 
commissioner participate, directly or indirectly, in any stock-
market operations or transactions of a character subject to 
regulation by the Commission pursuant to this title. Each 
commissioner shall hold office for a term of five years and 
until his successor is appointed and has qualified, except that 
he shall not so continue to serve beyond the expiration of the 
next session of Congress subsequent to the expiration of said 
fixed term of office, and except (1) any commissioner appointed 
to fill a vacancy occurring prior to the expiration of the term 
for which his predecessor was appointed shall be appointed for 
the remainder of such term, and (2) the terms of office of the 
commissioners first taking office after the enactment of this 
title shall expire as designated by the President at the time 
of nomination, one at the end of one year, one at the end of 
two years, one at the end of three years, one at the end of 
four years, and one at the end of five years, after the date of 
the enactment of this title.
  (b) Appointment and Compensation of Staff and Leasing 
Authority.--
          (1) Appointment and compensation.--The Commission 
        shall appoint and compensate officers, attorneys, 
        economists, examiners, and other employees in 
        accordance with section 4802 of title 5, United States 
        Code.
          (2) Reporting of information.--In establishing and 
        adjusting schedules of compensation and benefits for 
        officers, attorneys, economists, examiners, and other 
        employees of the Commission under applicable provisions 
        of law, the Commission shall inform the heads of the 
        agencies referred to under section 1206 of the 
        Financial Institutions Reform, Recovery, and 
        Enforcement Act of 1989 (12 U.S.C. 1833b) and Congress 
        of such compensation and benefits and shall seek to 
        maintain comparability with such agencies regarding 
        compensation and benefits.
          (3) Leasing authority.--Nothwithstanding any other 
        provision of law, the Commission is authorized to enter 
        directly into leases for real property for office, 
        meeting, storage, and such other space as is necessary 
        to carry out its functions, and shall be exempt from 
        any General Services Administration space management 
        regulations or directives.
  (c) Notwithstanding any other provision of law, in accordance 
with regulations which the Commission shall prescribe to 
prevent conflicts of interest, the Commission may accept 
payment and reimbursement, in cash or in kind, from non-Federal 
agencies, organizations, and individuals for travel, 
subsistence, and other necessary expenses incurred by 
Commission members and employees in attending meetings and 
conferences concerning the functions or activities of the 
Commission. Any payment or reimbursement accepted shall be 
credited to the appropriated funds of the Commission. The 
amount of travel, subsistence, and other necessary expenses for 
members and employees paid or reimbursed under this subsection 
may exceed per diem amounts established in official travel 
regulations, but the Commission may include in its regulations 
under this subsection a limitation on such amounts.
  (d) Notwithstanding any other provision of law, former 
employers of participants in the Commission's professional 
fellows programs may pay such participants their actual 
expenses for relocation to Washington, District of Columbia, to 
facilitate their participation in such programs, and program 
participants may accept such payments.
  (e) Notwithstanding any other provision of law, whenever any 
fee is required to be paid to the Commission pursuant to any 
provision of the securities laws or any other law, the 
Commission may provide by rule that such fee shall be paid in a 
manner other than in cash and the Commission may also specify 
the time that such fee shall be determined and paid relative to 
the filing of any statement or document with the Commission.
  (f) Reimbursement of Expenses for Assisting Foreign 
Securities Authorities.--Notwithstanding any other provision of 
law, the Commission may accept payment and reimbursement, in 
cash or in kind, from a foreign securities authority, or made 
on behalf of such authority, for necessary expenses incurred by 
the Commission, its members, and employees in carrying out any 
investigation pursuant to section 21(a)(2) of this title or in 
providing any other assistance to a foreign securities 
authority. Any payment or reimbursement accepted shall be 
considered a reimbursement to the appropriated funds of the 
Commission.
  (g) Office of the Investor Advocate.--
          (1) Office established.--There is established within 
        the Commission the Office of the Investor Advocate (in 
        this subsection referred to as the ``Office'').
          (2) Investor advocate.--
                  (A) In general.--The head of the Office shall 
                be the Investor Advocate, who shall--
                          (i) report directly to the Chairman; 
                        and
                          (ii) be appointed by the Chairman, in 
                        consultation with the Commission, from 
                        among individuals having experience in 
                        advocating for the interests of 
                        investors in securities and investor 
                        protection issues, from the perspective 
                        of investors.
                  (B) Compensation.--The annual rate of pay for 
                the Investor Advocate shall be equal to the 
                highest rate of annual pay for other senior 
                executives who report to the Chairman of the 
                Commission.
                  (C) Limitation on service.--An individual who 
                serves as the Investor Advocate may not be 
                employed by the Commission--
                          (i) during the 2-year period ending 
                        on the date of appointment as Investor 
                        Advocate; or
                          (ii) during the 5-year period 
                        beginning on the date on which the 
                        person ceases to serve as the Investor 
                        Advocate.
          (3) Staff of office.--The Investor Advocate, after 
        consultation with the Chairman of the Commission, may 
        retain or employ independent counsel, research staff, 
        and service staff, as the Investor Advocate deems 
        necessary to carry out the functions, powers, and 
        duties of the Office.
          (4) Functions of the investor advocate.--The Investor 
        Advocate shall--
                  (A) assist retail investors in resolving 
                significant problems such investors may have 
                with the Commission or with self-regulatory 
                organizations;
                  (B) identify areas in which investors would 
                benefit from changes in the regulations of the 
                Commission or the rules of self-regulatory 
                organizations;
                  (C) identify problems that investors have 
                with financial service providers and investment 
                products;
                  (D) analyze the potential impact on investors 
                of--
                          (i) proposed regulations of the 
                        Commission; and
                          (ii) proposed rules of self-
                        regulatory organizations registered 
                        under this title; and
                  (E) to the extent practicable, propose to the 
                Commission changes in the regulations or orders 
                of the Commission and to Congress any 
                legislative, administrative, or personnel 
                changes that may be appropriate to mitigate 
                problems identified under this paragraph and to 
                promote the interests of investors.
          (5) Access to documents.--The Commission shall ensure 
        that the Investor Advocate has full access to the 
        documents of the Commission and any self-regulatory 
        organization, as necessary to carry out the functions 
        of the Office.
          (6) Annual reports.--
                  (A) Report on objectives.--
                          (i) In general.--Not later than June 
                        30 of each year after 2010, the 
                        Investor Advocate shall submit to the 
                        Committee on Banking, Housing, and 
                        Urban Affairs of the Senate and the 
                        Committee on Financial Services of the 
                        House of Representatives a report on 
                        the objectives of the Investor Advocate 
                        for the following fiscal year.
                          (ii) Contents.--Each report required 
                        under clause (i) shall contain full and 
                        substantive analysis and explanation.
                  (B) Report on activities.--
                          (i) In general.--Not later than 
                        December 31 of each year after 2010, 
                        the Investor Advocate shall submit to 
                        the Committee on Banking, Housing, and 
                        Urban Affairs of the Senate and the 
                        Committee on Financial Services of the 
                        House of Representatives a report on 
                        the activities of the Investor Advocate 
                        during the immediately preceding fiscal 
                        year.
                          (ii) Contents.--Each report required 
                        under clause (i) shall include--
                                  (I) appropriate statistical 
                                information and full and 
                                substantive analysis;
                                  (II) information on steps 
                                that the Investor Advocate has 
                                taken during the reporting 
                                period to improve investor 
                                services and the responsiveness 
                                of the Commission and self-
                                regulatory organizations to 
                                investor concerns;
                                  (III) a summary of the most 
                                serious problems encountered by 
                                investors during the reporting 
                                period;
                                  (IV) an inventory of the 
                                items described in subclause 
                                (III) that includes--
                                          (aa) identification 
                                        of any action taken by 
                                        the Commission or the 
                                        self-regulatory 
                                        organization and the 
                                        result of such action;
                                          (bb) the length of 
                                        time that each item has 
                                        remained on such 
                                        inventory; and
                                          (cc) for items on 
                                        which no action has 
                                        been taken, the reasons 
                                        for inaction, and an 
                                        identification of any 
                                        official who is 
                                        responsible for such 
                                        action;
                                  (V) recommendations for such 
                                administrative and legislative 
                                actions as may be appropriate 
                                to resolve problems encountered 
                                by investors; and
                                  (VI) any other information, 
                                as determined appropriate by 
                                the Investor Advocate.
                          (iii) Independence.--Each report 
                        required under this paragraph shall be 
                        provided directly to the Committees 
                        listed in clause (i) without any prior 
                        review or comment from the Commission, 
                        any commissioner, any other officer or 
                        employee of the Commission, or the 
                        Office of Management and Budget.
                          (iv) Confidentiality.--No report 
                        required under clause (i) may contain 
                        confidential information.
          (7) Regulations.--The Commission shall, by 
        regulation, establish procedures requiring a formal 
        response to all recommendations submitted to the 
        Commission by the Investor Advocate, not later than 3 
        months after the date of such submission.
          (8) Ombudsman.--
                  (A) Appointment.--Not later than 180 days 
                after the date on which the first Investor 
                Advocate is appointed under paragraph 
                (2)(A)(i), the Investor Advocate shall appoint 
                an Ombudsman, who shall report directly to the 
                Investor Advocate.
                  (B) Duties.--The Ombudsman appointed under 
                subparagraph (A) shall--
                          (i) act as a liaison between the 
                        Commission and any retail investor in 
                        resolving problems that retail 
                        investors may have with the Commission 
                        or with self-regulatory organizations;
                          (ii) review and make recommendations 
                        regarding policies and procedures to 
                        encourage persons to present questions 
                        to the Investor Advocate regarding 
                        compliance with the securities laws; 
                        and
                          (iii) establish safeguards to 
                        maintain the confidentiality of 
                        communications between the persons 
                        described in clause (ii) and the 
                        Ombudsman.
                  (C) Limitation.--In carrying out the duties 
                of the Ombudsman under subparagraph (B), the 
                Ombudsman shall utilize personnel of the 
                Commission to the extent practicable. Nothing 
                in this paragraph shall be construed as 
                replacing, altering, or diminishing the 
                activities of any ombudsman or similar office 
                of any other agency.
                  (D) Report.--The Ombudsman shall submit a 
                semiannual report to the Investor Advocate that 
                describes the activities and evaluates the 
                effectiveness of the Ombudsman during the 
                preceding year. The Investor Advocate shall 
                include the reports required under this section 
                in the reports required to be submitted by the 
                Inspector Advocate under paragraph (6).
  (h) Examiners.--
          (1) Division of trading and markets.--The Division of 
        Trading and Markets of the Commission, or any successor 
        organizational unit, shall have a staff of examiners 
        who shall--
                  (A) perform compliance inspections and 
                examinations of entities under the jurisdiction 
                of that Division; and
                  (B) report to the Director of that Division.
          (2) Division of investment management.--The Division 
        of Investment Management of the Commission, or any 
        successor organizational unit, shall have a staff of 
        examiners who shall--
                  (A) perform compliance inspections and 
                examinations of entities under the jurisdiction 
                of that Division; and
                  (B) report to the Director of that Division.
  (i) Securities and Exchange Commission Reserve Fund.--
          (1) Reserve fund established.--There is established 
        in the Treasury of the United States a separate fund, 
        to be known as the ``Securities and Exchange Commission 
        Reserve Fund'' (referred to in this subsection as the 
        ``Reserve Fund'').
          (2) Reserve fund amounts.--
                  (A) In general.--Except as provided in 
                subparagraph (B), any registration fees 
                collected by the Commission under section 6(b) 
                of the Securities Act of 1933 (15 U.S.C. 
                77f(b)) or section 24(f) of the Investment 
                Company Act of 1940 (15 U.S.C. 80a-24(f)) shall 
                be deposited into the Reserve Fund.
                  (B) Limitations.--For any 1 fiscal year--
                          (i) the amount deposited in the Fund 
                        may not exceed $50,000,000; and
                          (ii) the balance in the Fund may not 
                        exceed $100,000,000.
                  (C) Excess fees.--Any amounts in excess of 
                the limitations described in subparagraph (B) 
                that the Commission collects from registration 
                fees under section 6(b) of the Securities Act 
                of 1933 (15 U.S.C. 77f(b)) or section 24(f) of 
                the Investment Company Act of 1940 (15 U.S.C. 
                80a-24(f)) shall be deposited in the General 
                Fund of the Treasury of the United States and 
                shall not be available for obligation by the 
                Commission.
          (3) Use of amounts in reserve fund.--The Commission 
        may obligate amounts in the Reserve Fund, not to exceed 
        a total of $100,000,000 in any 1 fiscal year, as the 
        Commission determines is necessary to carry out the 
        functions of the Commission. Any amounts in the reserve 
        fund shall remain available until expended. Not later 
        than 10 days after the date on which the Commission 
        obligates amounts under this paragraph, the Commission 
        shall notify Congress of the date, amount, and purpose 
        of the obligation.
          (4) Rule of construction.--Amounts collected and 
        deposited in the Reserve Fund shall not be construed to 
        be Government funds or appropriated monies and shall 
        not be subject to apportionment for the purpose of 
        chapter 15 of title 31, United States Code, or under 
        any other authority.
  (j) Office of the Advocate for Small Business Capital 
Formation.--
          (1) Office established.--There is established within 
        the Commission the Office of the Advocate for Small 
        Business Capital Formation (hereafter in this 
        subsection referred to as the ``Office'').
          (2) Advocate for small business capital formation.--
                  (A) In general.--The head of the Office shall 
                be the Advocate for Small Business Capital 
                Formation, who shall--
                          (i) report directly to the 
                        Commission; and
                          (ii) be appointed by the Commission, 
                        from among individuals having 
                        experience in advocating for the 
                        interests of small businesses and 
                        encouraging small business capital 
                        formation.
                  (B) Compensation.--The annual rate of pay for 
                the Advocate for Small Business Capital 
                Formation shall be equal to the highest rate of 
                annual pay for other senior executives who 
                report directly to the Commission.
                  (C) No current employee of the commission.--
                An individual may not be appointed as the 
                Advocate for Small Business Capital Formation 
                if the individual is currently employed by the 
                Commission.
          (3) Staff of office.--The Advocate for Small Business 
        Capital Formation, after consultation with the 
        Commission, may retain or employ independent counsel, 
        research staff, and service staff, as the Advocate for 
        Small Business Capital Formation determines to be 
        necessary to carry out the functions of the Office.
          (4) Functions of the advocate for small business 
        capital formation.--The Advocate for Small Business 
        Capital Formation shall--
                  (A) assist small businesses and small 
                business investors in resolving significant 
                problems such businesses and investors may have 
                with the Commission or with self-regulatory 
                organizations;
                  (B) identify areas in which small businesses 
                and small business investors would benefit from 
                changes in the regulations of the Commission or 
                the rules of self-regulatory organizations;
                  (C) identify problems that small businesses 
                have with securing access to capital, including 
                any unique challenges to minority-owned small 
                businesses, women-owned small businesses, and 
                small businesses affected by hurricanes or 
                other natural disasters;
                  (D) analyze the potential impact on small 
                businesses and small business investors of--
                          (i) proposed regulations of the 
                        Commission that are likely to have a 
                        significant economic impact on small 
                        businesses and small business capital 
                        formation; and
                          (ii) proposed rules that are likely 
                        to have a significant economic impact 
                        on small businesses and small business 
                        capital formation of self-regulatory 
                        organizations registered under this 
                        title;
                  (E) conduct outreach to small businesses and 
                small business investors, including through 
                regional roundtables, in order to solicit views 
                on relevant capital formation issues;
                  (F) to the extent practicable, propose to the 
                Commission changes in the regulations or orders 
                of the Commission and to Congress any 
                legislative, administrative, or personnel 
                changes that may be appropriate to mitigate 
                problems identified under this paragraph and to 
                promote the interests of small businesses and 
                small business investors;
                  (G) consult with the Investor Advocate on 
                proposed recommendations made under 
                subparagraph (F); and
                  (H) advise the Investor Advocate on issues 
                related to small businesses and small business 
                investors.
          (5) Access to documents.--The Commission shall ensure 
        that the Advocate for Small Business Capital Formation 
        has full access to the documents and information of the 
        Commission and any self-regulatory organization, as 
        necessary to carry out the functions of the Office.
          (6) Annual report on activities.--
                  (A) In general.--Not later than December 31 
                of each year after 2015, the Advocate for Small 
                Business Capital Formation shall submit to the 
                Committee on Banking, Housing, and Urban 
                Affairs of the Senate and the Committee on 
                Financial Services of the House of 
                Representatives a report on the activities of 
                the Advocate for Small Business Capital 
                Formation during the immediately preceding 
                fiscal year.
                  (B) Contents.--Each report required under 
                subparagraph (A) shall include--
                          (i) appropriate statistical 
                        information and full and substantive 
                        analysis;
                          (ii) information on steps that the 
                        Advocate for Small Business Capital 
                        Formation has taken during the 
                        reporting period to improve small 
                        business services and the 
                        responsiveness of the Commission and 
                        self-regulatory organizations to small 
                        business and small business investor 
                        concerns;
                          (iii) a summary of the most serious 
                        issues encountered by small businesses 
                        and small business investors, including 
                        any unique issues encountered by 
                        minority-owned small businesses, women-
                        owned small businesses, and small 
                        businesses affected by hurricanes or 
                        other natural disasters and their 
                        investors, during the reporting period;
                          (iv) an inventory of the items 
                        summarized under clause (iii) 
                        (including items summarized under such 
                        clause for any prior reporting period 
                        on which no action has been taken or 
                        that have not been resolved to the 
                        satisfaction of the Advocate for Small 
                        Business Capital Formation as of the 
                        beginning of the reporting period 
                        covered by the report) that includes--
                                  (I) identification of any 
                                action taken by the Commission 
                                or the self-regulatory 
                                organization and the result of 
                                such action;
                                  (II) the length of time that 
                                each item has remained on such 
                                inventory; and
                                  (III) for items on which no 
                                action has been taken, the 
                                reasons for inaction, and an 
                                identification of any official 
                                who is responsible for such 
                                action;
                          (v) recommendations for such changes 
                        to the regulations, guidance and orders 
                        of the Commission and such legislative 
                        actions as may be appropriate to 
                        resolve problems with the Commission 
                        and self-regulatory organizations 
                        encountered by small businesses and 
                        small business investors and to 
                        encourage small business capital 
                        formation; and
                          (vi) any other information, as 
                        determined appropriate by the Advocate 
                        for Small Business Capital Formation.
                  (C) Confidentiality.--No report required by 
                subparagraph (A) may contain confidential 
                information.
                  (D) Independence.--Each report required under 
                subparagraph (A) shall be provided directly to 
                the committees of Congress listed in such 
                subparagraph without any prior review or 
                comment from the Commission, any commissioner, 
                any other officer or employee of the 
                Commission, or the Office of Management and 
                Budget.
          (7) Regulations.--The Commission shall establish 
        procedures requiring a formal response to all 
        recommendations submitted to the Commission by the 
        Advocate for Small Business Capital Formation, not 
        later than 3 months after the date of such submission.
          (8) Government-business forum on small business 
        capital formation.--The Advocate for Small Business 
        Capital Formation shall be responsible for planning, 
        organizing, and executing the annual Government-
        Business Forum on Small Business Capital Formation 
        described in section 503 of the Small Business 
        Investment Incentive Act of 1980 (15 U.S.C. 80c-1).
          (9) Rule of construction.--Nothing in this subsection 
        may be construed as replacing or reducing the 
        responsibilities of the Investor Advocate with respect 
        to small business investors.
  (k) Open Data Publication.--All public data assets published 
by the Commission under the securities laws and the Dodd-Frank 
Wall Street Reform and Consumer Protection Act (Public Law 111-
203; 124 Stat. 1376) shall be--
          (1) made available as an open Government data asset 
        (as defined in section 3502 of title 44, United States 
        Code);
          (2) freely available for download;
          (3) rendered in a human-readable format; and
          (4) accessible via application programming interface 
        where appropriate.
  (l) Strategic Hub for Innovation and Financial Technology.--
          (1) Office established.--There is established within 
        the Commission the Strategic Hub for Innovation and 
        Financial Technology (referred to in this section as 
        the ``FinHub'').
          (2) Purposes.--The purposes of FinHub are as follows:
                  (A) To assist in shaping the approach of the 
                Commission to technological advancements in the 
                financial industry.
                  (B) To examine financial technology 
                innovations within capital markets, market 
                participants, and investors.
                  (C) To coordinate the response of the 
                Commission to emerging technologies in 
                financial, regulatory, and supervisory systems.
          (3) Director of finhub.--FinHub shall have a Director 
        who shall be appointed by the Commission, from among 
        individuals having experience in both emerging 
        technologies and Federal securities law and serve at 
        the pleasure of the Commission. The Director shall 
        report directly to the Commission and perform such 
        functions and duties as the Commission may prescribe.
          (4) Responsibilities.--FinHub shall--
                  (A) foster responsible technological 
                innovation and fair competition within the 
                Commission, including around financial 
                technology, regulatory technology, and 
                supervisory technology;
                  (B) provide internal education and training 
                to the Commission regarding financial 
                technology;
                  (C) advise the Commission regarding financial 
                technology that would serve the Commission's 
                oversight functions;
                  (D) analyze technological advancements and 
                the impact of regulatory requirements on 
                financial technology companies;
                  (E) advise the Commission with respect to 
                rulemakings or other agency or staff action 
                regarding financial technology;
                  (F) provide businesses working in emerging 
                financial technology fields with information on 
                the Commission, its rules and regulations; and
                  (G) encourage firms working in emerging 
                technology fields to engage with the Commission 
                and obtain feedback from the Commission on 
                potential regulatory issues.
          (5) Access to documents.--The Commission shall ensure 
        that FinHub has full access to the documents and 
        information of the Commission and any self-regulatory 
        organization, as necessary to carry out the functions 
        of FinHub.
          (6) Report to congress.--
                  (A) In general.--Not later than October 31 of 
                each year after 2024, FinHub shall submit to 
                the Committee on Banking, Housing, and Urban 
                Affairs of the Senate and the Committee on 
                Financial Services of the House of 
                Representatives a report on the activities of 
                FinHub during the immediately preceding fiscal 
                year.
                  (B) Contents.--Each report required under 
                subparagraph (A) shall include--
                          (i) the total number of persons that 
                        met with FinHub;
                          (ii) the total number of market 
                        participants FinHub met with, including 
                        the classification of those 
                        participants;
                          (iii) a summary of general issues 
                        discussed during meetings with persons;
                          (iv) information on steps FinHub has 
                        taken to improve Commission services, 
                        including responsiveness to the 
                        concerns of persons;
                          (v) recommendations--
                                  (I) with respect to the 
                                regulations of the Commission 
                                and the guidance and orders of 
                                the Commission; and
                                  (II) for such legislative 
                                actions as the FinHub 
                                determines appropriate; and
                          (vi) any other information, as 
                        determined appropriate by the Director 
                        of FinHub.
                  (C) Confidentiality.--A report under 
                subparagraph (A) may not contain confidential 
                information.
          (7) Systems of records.--
                  (A) In general.--The Commission shall 
                establish a detailed system of records (as 
                defined under section 552a of title 5, United 
                States Code) to assist FinHub in communicating 
                with interested parties.
                  (B) Entities covered by the system.--Entities 
                covered by the system required under 
                subparagraph (A) include entities or persons 
                submitting requests or inquiries and other 
                information to Commission through FinHub.
                  (C) Security and storage of records.--FinHub 
                shall store--
                          (i) electronic records--
                                  (I) in the system required 
                                under subparagraph (A); or
                                  (II) on the secure network or 
                                other electronic medium, such 
                                as encrypted hard drives or 
                                back-up media, of the 
                                Commission; and
                          (ii) paper records in secure 
                        facilities.
          (8) Effective date.--This subsection shall take 
        effect on the date that is 180 days after the date of 
        the enactment of this subsection.

           *       *       *       *       *       *       *


                     national securities exchanges

  Sec. 6. (a) An exchange may be registered as a national 
securities exchange under the terms and conditions hereinafter 
provided in this section and in accordance with the provisions 
of section 19(a) of this title, by filing with the Commission 
an application for registration in such form as the Commission, 
by rule, may prescribe containing the rules of the exchange and 
such other information and documents as the Commission, by 
rule, may prescribe as necessary or appropriate in the public 
interest or for the protection of investors.
  (b) An exchange shall not be registered as a national 
securities exchange unless the Commission determines that--
          (1) Such exchange is so organized and has the 
        capacity to be able to carry out the purposes of this 
        title and to comply, and (subject to any rule or order 
        of the Commission pursuant to section 17(d) or 19(g)(2) 
        of this title) to enforce compliance by its members and 
        persons associated with its members, with the 
        provisions of this title, the rules and regulations 
        thereunder, and the rules of the exchange.
          (2) Subject to the provisions of subsection (c) of 
        this section, the rules of the exchange provide that 
        any registered broker or dealer or natural person 
        associated with a registered broker or dealer may 
        become a member of such exchange and any person may 
        become associated with a member thereof.
          (3) The rules of the exchange assure a fair 
        representation of its members in the selection of its 
        directors and administration of its affairs and provide 
        that one or more directors shall be representative of 
        issuers and investors and not be associated with a 
        member of the exchange, broker, or dealer.
          (4) The rules of the exchange provide for the 
        equitable allocation of reasonable dues, fees, and 
        other charges among its members and issuers and other 
        persons using its facilities.
          (5) The rules of the exchange are designed to prevent 
        fraudulent and manipulative acts and practices, to 
        promote just and equitable principles of trade, to 
        foster cooperation and coordination with persons 
        engaged in regulating, clearing, settling, processing 
        information with respect to, and facilitating 
        transactions in securities, to remove impediments to 
        and perfect the mechanism of a free and open market and 
        a national market system, and, in general, to protect 
        investors and the public interest; and are not designed 
        to permit unfair discrimination between customers, 
        issuers, brokers, or dealers, or to regulate by virtue 
        of any authority conferred by this title matters not 
        related to the purposes of this title or the 
        administration of the exchange.
          (6) The rules of the exchange provide that (subject 
        to any rule or order of the Commission pursuant to 
        section 17(d) or 19(g)(2) of this title) its members 
        and persons associated with its members shall be 
        appropriately disciplined for violation of the 
        provisions of this title, the rules or regulations 
        thereunder, or the rules of the exchange, by expulsion, 
        suspension, limitation of activities, functions, and 
        operations, fine, censure, being suspended or barred 
        from being associated with a member, or any other 
        fitting sanction.
          (7) The rules of the exchange are in accordance with 
        the provisions of subsection (d) of this section, and 
        in general, provide a fair procedure for the 
        disciplining of members and persons associated with 
        members, the denial of membership to any person seeking 
        membership therein, the barring of any person from 
        becoming associated with a member thereof, and the 
        prohibition or limitation by the exchange of any person 
        with respect to access to services offered by the 
        exchange or a member thereof.
          (8) The rules of the exchange do not impose any 
        burden on competition not necessary or appropriate in 
        furtherance of the purposes of this title.
          (9)(A) The rules of the exchange prohibit the listing 
        of any security issued in a limited partnership rollup 
        transaction (as such term is defined in paragraphs (4) 
        and (5) of section 14(h)), unless such transaction was 
        conducted in accordance with procedures designed to 
        protect the rights of limited partners, including--
                  (i) the right of dissenting limited partners 
                to one of the following:
                          (I) an appraisal and compensation;
                          (II) retention of a security under 
                        substantially the same terms and 
                        conditions as the original issue;
                          (III) approval of the limited 
                        partnership rollup transaction by not 
                        less than 75 percent of the outstanding 
                        securities of each of the participating 
                        limited partnerships;
                          (IV) the use of a committee of 
                        limited partners that is independent, 
                        as determined in accordance with rules 
                        prescribed by the exchange, of the 
                        general partner or sponsor, that has 
                        been approved by a majority of the 
                        outstanding units of each of the 
                        participating limited partnerships, and 
                        that has such authority as is necessary 
                        to protect the interest of limited 
                        partners, including the authority to 
                        hire independent advisors, to negotiate 
                        with the general partner or sponsor on 
                        behalf of the limited partners, and to 
                        make a recommendation to the limited 
                        partners with respect to the proposed 
                        transaction; or
                          (V) other comparable rights that are 
                        prescribed by rule by the exchange and 
                        that are designed to protect dissenting 
                        limited partners;
                  (ii) the right not to have their voting power 
                unfairly reduced or abridged;
                  (iii) the right not to bear an unfair portion 
                of the costs of a proposed limited partnership 
                rollup transaction that is rejected; and
                  (iv) restrictions on the conversion of 
                contingent interests or fees into non-
                contingent interests or fees and restrictions 
                on the receipt of a non-contingent equity 
                interest in exchange for fees for services 
                which have not yet been provided.
          (B) As used in this paragraph, the term ``dissenting 
        limited partner'' means a person who, on the date on 
        which soliciting material is mailed to investors, is a 
        holder of a beneficial interest in a limited 
        partnership that is the subject of a limited 
        partnership rollup transaction, and who casts a vote 
        against the transaction and complies with procedures 
        established by the exchange, except that for purposes 
        of an exchange or tender offer, such person shall file 
        an objection in writing under the rules of the exchange 
        during the period during which the offer is 
        outstanding.
          (10)(A) The rules of the exchange prohibit any member 
        that is not the beneficial owner of a security 
        registered under section 12 from granting a proxy to 
        vote the security in connection with a shareholder vote 
        described in subparagraph (B), unless the beneficial 
        owner of the security has instructed the member to vote 
        the proxy in accordance with the voting instructions of 
        the beneficial owner.
          (B) A shareholder vote described in this subparagraph 
        is a shareholder vote with respect to the election of a 
        member of the board of directors of an issuer, 
        executive compensation, or any other significant 
        matter, as determined by the Commission, by rule, and 
        does not include a vote with respect to the uncontested 
        election of a member of the board of directors of any 
        investment company registered under the Investment 
        Company Act of 1940 (15 U.S.C. 80b-1 et seq.).
          (C) Nothing in this paragraph shall be construed to 
        prohibit a national securities exchange from 
        prohibiting a member that is not the beneficial owner 
        of a security registered under section 12 from granting 
        a proxy to vote the security in connection with a 
        shareholder vote not described in subparagraph (A).
  (c)(1) A national securities exchange shall deny membership 
to (A) any person, other than a natural person, which is not a 
registered broker or dealer or (B) any natural person who is 
not, or is not associated with, a registered broker or dealer.
  (2) A national securities exchange may, and in cases in which 
the Commission, by order, directs as necessary or appropriate 
in the public interest or for the protection of investors 
shall, deny membership to any registered broker or dealer or 
natural person associated with a registered broker or dealer, 
and bar from becoming associated with a member any person, who 
is subject to a statutory disqualification. A national 
securities exchange shall file notice with the Commission not 
less than thirty days prior to admitting any person to 
membership or permitting any person to become associated with a 
member, if the exchange knew, or in the exercise of reasonable 
care should have known, that such person was subject to a 
statutory disqualification. The notice shall be in such form 
and contain such information as the Commission, by rule, may 
prescribe as necessary or appropriate in the public interest or 
for the protection of investors.
  (3)(A) A national securities exchange may deny membership to, 
or condition the membership of, a registered broker or dealer 
if (i) such broker or dealer does not meet such standards of 
financial responsibility or operational capability or such 
broker or dealer or any natural person associated with such 
broker or dealer does not meet such standards of training, 
experience, and competence as are prescribed by the rules of 
the exchange or (ii) such broker or dealer or person associated 
with such broker or dealer has engaged and there is a 
reasonable likelihood he may again engage in acts or practices 
inconsistent with just and equitable principles of trade. A 
national securities exchange may examine and verify the 
qualifications of an applicant to become a member and the 
natural persons associated with such an applicant in accordance 
with procedures established by the rules of the exchange.
  (B) A national securities exchange may bar a natural person 
from becoming a member or associated with a member, or 
condition the membership of a natural person or association of 
a natural person with a member, if such natural person (i) does 
not meet such standards of training, experience, and competence 
as are prescribed by the rules of the exchange or (ii) has 
engaged and there is a reasonable likelihood he may again 
engage in acts or practices inconsistent with just and 
equitable principles of trade. A national securities exchange 
may examine and verify the qualifications of an applicant to 
become a person associated with a member in accordance with 
procedures established by the rules of the exchange and require 
any person associated with a member, or any class of such 
persons, to be registered with the exchange in accordance with 
procedures so established.
  (C) A national securities exchange may bar any person from 
becoming associated with a member if such person does not agree 
(i) to supply the exchange with such information with respect 
to its relationship and dealings with the member as may be 
specified in the rules of the exchange and (ii) to permit the 
examination of its books and records to verify the accuracy of 
any information so supplied.
  (4) A national securities exchange may limit (A) the number 
of members of the exchange and (B) the number of members and 
designated representatives of members permitted to effect 
transactions on the floor of the exchange without the services 
of another person acting as broker: Provided, however, That no 
national securities exchange shall have the authority to 
decrease the number of memberships in such exchange, or the 
number of members and designated representatives of members 
permitted to effect transactions on the floor of such exchange 
without the services of another person acting as broker, below 
such number in effect on May 1, 1975, or the date such exchange 
was registered with the Commission, whichever is later: And 
provided further, That the Commission, in accordance with the 
provisions of section 19(c) of this title, may amend the rules 
of any national securities exchange to increase (but not to 
decrease) or to remove any limitation on the number of 
memberships in such exchange or the number of members or 
designated representatives of members permitted to effect 
transactions on the floor of the exchange without the services 
of another person acting as broker, if the Commission finds 
that such limitation imposes a burden on competition not 
necessary or appropriate in furtherance of the purposes of this 
title.
  (d)(1) In any proceeding by a national securities exchange to 
determine whether a member or person associated with a member 
should be disciplined (other than a summary proceeding pursuant 
to paragraph (3) of this subsection), the exchange shall bring 
specific charges, notify such member or person of, and give him 
an opportunity to defend against, such charges, and keep a 
record. A determination by the exchange to impose a 
disciplinary sanction shall be supported by a statement setting 
forth--
          (A) any act or practice in which such member or 
        person associated with a member has been found to have 
        engaged, or which such member or person has been found 
        to have omitted;
          (B) the specific provision of this title, the rules 
        or regulations thereunder, or the rules of the exchange 
        which any such act or practice, or omission to act, is 
        deemed to violate; and
          (C) the sanction imposed and the reasons therefor.
  (2) In any proceeding by a national securities exchange to 
determine whether a person shall be denied membership, barred 
from becoming associated with a member, or prohibited or 
limited with respect to access to services offered by the 
exchange or a member thereof (other than a summary proceeding 
pursuant to paragraph (3) of this subsection), the exchange 
shall notify such person of, and give him an opportunity to be 
heard upon, the specific grounds for denial, bar, or 
prohibition or limitation under consideration and keep a 
record. A determination by the exchange to deny membership, bar 
a person from becoming associated with a member, or prohibit or 
limit a person with respect to access to services offered by 
the exchange or a member thereof shall be supported by a 
statement setting forth the specific grounds on which the 
denial, bar, or prohibition or limitation is based.
  (3) A national securities exchange may summarily (A) suspend 
a member or person associated with a member who has been and is 
expelled or suspended from any self-regulatory organization or 
barred or suspended from being associated with a member of any 
self-regulatory organization, (B) suspend a member who is in 
such financial or operating difficulty that the exchange 
determines and so notifies the Commission that the member 
cannot be permitted to continue to do business as a member with 
safety to investors, creditors, other members, or the exchange, 
or (C) limit or prohibit any person with respect to access to 
services offered by the exchange if subparagraph (A) or (B) of 
this paragraph is applicable to such person or, in the case of 
a person who is not a member, if the exchange determines that 
such person does not meet the qualification requirements or 
other prerequisites for such access and such person cannot be 
permitted to continue to have such access with safety to 
investors, creditors, members, or the exchange. Any person 
aggrieved by any such summary action shall be promptly afforded 
an opportunity for a hearing by the exchange in accordance with 
the provisions of paragraph (1) or (2) of this subsection. The 
Commission, by order, may stay any such summary action on its 
own motion or upon application by any person aggrieved thereby, 
if the Commission determines summarily or after notice and 
opportunity for hearing (which hearing may consist solely of 
the submission of affidavits or presentation of oral arguments) 
that such stay is consistent with the public interest and the 
protection of investors.
  (e)(1) On and after the date of enactment of the Securities 
Acts Amendments of 1975, no national securities exchange may 
impose any schedule or fix rates of commissions, allowances, 
discounts, or other fees to be charged by its members: 
Provided, however, That until May 1, 1976, the preceding 
provisions of this paragraph shall not prohibit any such 
exchange from imposing or fixing any schedule of commissions, 
allowances, discounts, or other fees to be charged by its 
members for acting as broker on the floor of the exchange or as 
odd-lot dealer: And provided further, That the Commission, in 
accordance with the provisions of section 19(b) of this title 
as modified by the provisions of paragraph (3) of this 
subsection, may--
          (A) permit a national securities exchange, by rule, 
        to impose a reasonable schedule or fix reasonable rates 
        of commissions, allowances, discounts, or other fees to 
        be charged by its members for effecting transactions on 
        such exchange prior to November 1, 1976, if the 
        Commission finds that such schedule or fixed rates of 
        commissions, allowances, discounts, or other fees are 
        in the public interest; and
          (B) permit a national securities exchange, by rule, 
        to impose a schedule or fix rates of commissions, 
        allowances, discounts, or other fees to be charged by 
        its members for effecting transactions on such exchange 
        after November 1, 1976, if the Commission finds that 
        such schedule or fixed rates of commissions, 
        allowances, discounts, or other fees (i) are reasonable 
        in relation to the costs of providing the service for 
        which such fees are charged (and the Commission 
        publishes the standards employed in adjudging 
        reasonableness) and (ii) do not impose any burden on 
        competition not necessary or appropriate in furtherance 
        of the purposes of this title, taking into 
        consideration the competitive effects of permitting 
        such schedule or fixed rates weighed against the 
        competitive effects of other lawful actions which the 
        Commission is authorized to take under this title.
  (2) Notwithstanding the provisions of section 19(c) of this 
title, the Commission, by rule, may abrogate any exchange rule 
which imposes a schedule or fixes rates of commissions, 
allowances, discounts, or other fees, if the Commission 
determines that such schedule or fixed rates are no longer 
reasonable, in the public interest, or necessary to accomplish 
the purposes of this title.
  (3)(A) Before approving or disapproving any proposed rule 
change submitted by a national securities exchange which would 
impose a schedule or fix rates of commissions, allowances, 
discounts, or other fees to be charged by its members for 
effecting transactions on such exchange, the Commission shall 
afford interested persons (i) an opportunity for oral 
presentation of data, views, and arguments and (ii) with 
respect to any such rule concerning transactions effected after 
November 1, 1976, if the Commission determines there are 
disputed issues of material fact, to present such rebuttal 
submissions and to conduct (or have conducted under 
subparagraph (B) of this paragraph) such cross-examination as 
the Commission determines to be appropriate and required for 
full disclosure and proper resolution of such disputed issues 
of material fact.
  (B) The Commission shall prescribe rules and make rulings 
concerning any proceeding in accordance with subparagraph (A) 
of this paragraph designed to avoid unnecessary costs or delay. 
Such rules or rulings may (i) impose reasonable time limits on 
each interested person's oral presentations, and (ii) require 
any cross-examination to which a person may be entitled under 
subparagraph (A) of this paragraph to be conducted by the 
Commission on behalf of that person in such manner as the 
Commission determines to be appropriate and required for full 
disclosure and proper resolution of disputed issues of material 
fact.
  (C)(i) If any class of persons, the members of which are 
entitled to conduct (or have conducted) cross-examination under 
subparagraphs (A) and (B) of this paragraph and which have, in 
the view of the Commission, the same or similar interests in 
the proceeding, cannot agree upon a single representative of 
such interests for purposes of cross-examination, the 
Commission may make rules and rulings specifying the manner in 
which such interests shall be represented and such cross-
examination conducted.
  (ii) No member of any class of persons with respect to which 
the Commission has specified the manner in which its interests 
shall be represented pursuant to clause (i) of this 
subparagraph shall be denied, pursuant to such clause (i), the 
opportunity to conduct (or have conducted) cross-examination as 
to issues affecting his particular interests if he satisfies 
the Commission that he has made a reasonable and good faith 
effort to reach agreement upon group representation and there 
are substantial and relevant issues which would not be 
presented adequately by group representation.
  (D) A transcript shall be kept of any oral presentation and 
cross-examination.
  (E) In addition to the bases specified in subsection 25(a), a 
reviewing Court may set aside an order of the Commission under 
section 19(b) approving an exchange rule imposing a schedule or 
fixing rates of commissions, allowances, discounts, or other 
fees, if the Court finds--
          (1) a Commission determination under subparagraph (A) 
        of this paragraph that an interested person is not 
        entitled to conduct cross-examination or make rebuttal 
        submissions, or
          (2) a Commission rule or ruling under subparagraph 
        (B) of this paragraph limiting the petitioner's cross-
        examination or rebuttal submissions,
                                has precluded full disclosure 
                                and proper resolution of 
                                disputed issues of material 
                                fact which were necessary for 
                                fair determination by the 
                                Commission.
  (f) The Commission, by rule or order, as it deems necessary 
or appropriate in the public interest and for the protection of 
investors, to maintain fair and orderly markets, or to assure 
equal regulation, may require--
          (1) any person not a member or a designated 
        representative of a member of a national securities 
        exchange effecting transactions on such exchange 
        without the services of another person acting as a 
        broker, or
          (2) any broker or dealer not a member of a national 
        securities exchange effecting transactions on such 
        exchange on a regular basis,
to comply with such rules of such exchange as the Commission 
may specify.
  (g) Notice Registration of Security Futures Product 
Exchanges.--
          (1) Registration required.--An exchange that lists or 
        trades security futures products may register as a 
        national securities exchange solely for the purposes of 
        trading security futures products if--
                  (A) the exchange is a board of trade, as that 
                term is defined by the Commodity Exchange Act 
                (7 U.S.C. 1a(2)), that has been designated a 
                contract market by the Commodity Futures 
                Trading Commission and such designation is not 
                suspended by order of the Commodity Futures 
                Trading Commission; and
                  (B) such exchange does not serve as a market 
                place for transactions in securities other 
                than--
                          (i) security futures products; or
                          (ii) futures on exempted securities 
                        or groups or indexes of securities or 
                        options thereon that have been 
                        authorized under section 2(a)(1)(C) of 
                        the Commodity Exchange Act.
          (2) Registration by notice filing.--
                  (A) Form and content.--An exchange required 
                to register only because such exchange lists or 
                trades security futures products may register 
                for purposes of this section by filing with the 
                Commission a written notice in such form as the 
                Commission, by rule, may prescribe containing 
                the rules of the exchange and such other 
                information and documents concerning such 
                exchange, comparable to the information and 
                documents required for national securities 
                exchanges under section 6(a), as the 
                Commission, by rule, may prescribe as necessary 
                or appropriate in the public interest or for 
                the protection of investors. If such exchange 
                has filed documents with the Commodity Futures 
                Trading Commission, to the extent that such 
                documents contain information satisfying the 
                Commission's informational requirements, copies 
                of such documents may be filed with the 
                Commission in lieu of the required written 
                notice.
                  (B) Immediate effectiveness.--Such 
                registration shall be effective 
                contemporaneously with the submission of 
                notice, in written or electronic form, to the 
                Commission, except that such registration shall 
                not be effective if such registration would be 
                subject to suspension or revocation.
                  (C) Termination.--Such registration shall be 
                terminated immediately if any of the conditions 
                for registration set forth in this subsection 
                are no longer satisfied.
          (3) Public availability.--The Commission shall 
        promptly publish in the Federal Register an 
        acknowledgment of receipt of all notices the Commission 
        receives under this subsection and shall make all such 
        notices available to the public.
          (4) Exemption of exchanges from specified 
        provisions.--
                  (A) Transaction exemptions.--An exchange that 
                is registered under paragraph (1) of this 
                subsection shall be exempt from, and shall not 
                be required to enforce compliance by its 
                members with, and its members shall not, solely 
                with respect to those transactions effected on 
                such exchange in security futures products, be 
                required to comply with, the following 
                provisions of this title and the rules 
                thereunder:
                          (i) Subsections (b)(2), (b)(3), 
                        (b)(4), (b)(7), (b)(9), (c), (d), and 
                        (e) of this section.
                          (ii) Section 8.
                          (iii) Section 11.
                          (iv) Subsections (d), (f), and (k) of 
                        section 17.
                          (v) Subsections (a), (f), and (h) of 
                        section 19.
                  (B) Rule change exemptions.--An exchange that 
                registered under paragraph (1) of this 
                subsection shall also be exempt from submitting 
                proposed rule changes pursuant to section 19(b) 
                of this title, except that--
                          (i) such exchange shall file proposed 
                        rule changes related to higher margin 
                        levels, fraud or manipulation, 
                        recordkeeping, reporting, listing 
                        standards, or decimal pricing for 
                        security futures products, sales 
                        practices for security futures products 
                        for persons who effect transactions in 
                        security futures products, or rules 
                        effectuating such exchange's obligation 
                        to enforce the securities laws pursuant 
                        to section 19(b)(7);
                          (ii) such exchange shall file 
                        pursuant to sections 19(b)(1) and 
                        19(b)(2) proposed rule changes related 
                        to margin, except for changes resulting 
                        in higher margin levels; and
                          (iii) such exchange shall file 
                        pursuant to section 19(b)(1) proposed 
                        rule changes that have been abrogated 
                        by the Commission pursuant to section 
                        19(b)(7)(C).
          (5) Trading in security futures products.--
                  (A) In general.--Subject to subparagraph (B), 
                it shall be unlawful for any person to execute 
                or trade a security futures product until the 
                later of--
                          (i) 1 year after the date of the 
                        enactment of the Commodity Futures 
                        Modernization Act of 2000; or
                          (ii) such date that a futures 
                        association registered under section 17 
                        of the Commodity Exchange Act has met 
                        the requirements set forth in section 
                        15A(k)(2) of this title.
                  (B) Principal-to-principal transactions.--
                Notwithstanding subparagraph (A), a person may 
                execute or trade a security futures product 
                transaction if--
                          (i) the transaction is entered into--
                                  (I) on a principal-to-
                                principal basis between parties 
                                trading for their own accounts 
                                or as described in section 
                                1a(18)(B)(ii) of the Commodity 
                                Exchange Act; and
                                  (II) only between eligible 
                                contract participants (as 
                                defined in subparagraphs (A), 
                                (B)(ii), and (C) of such 
                                section 1a(18)) at the time at 
                                which the persons enter into 
                                the agreement, contract, or 
                                transaction; and
                          (ii) the transaction is entered into 
                        on or after the later of--
                                  (I) 8 months after the date 
                                of the enactment of the 
                                Commodity Futures Modernization 
                                Act of 2000; or
                                  (II) such date that a futures 
                                association registered under 
                                section 17 of the Commodity 
                                Exchange Act has met the 
                                requirements set forth in 
                                section 15A(k)(2) of this 
                                title.
  (h) Trading in Security Futures Products.--
          (1) Trading on exchange or association required.--It 
        shall be unlawful for any person to effect transactions 
        in security futures products that are not listed on a 
        national securities exchange or a national securities 
        association registered pursuant to section 15A(a).
          (2) Listing standards required.--Except as otherwise 
        provided in paragraph (7), a national securities 
        exchange or a national securities association 
        registered pursuant to section 15A(a) may trade only 
        security futures products that (A) conform with listing 
        standards that such exchange or association files with 
        the Commission under section 19(b) and (B) meet the 
        criteria specified in section 2(a)(1)(D)(i) of the 
        Commodity Exchange Act.
          (3) Requirements for listing standards and conditions 
        for trading.--Such listing standards shall--
                  (A) except as otherwise provided in a rule, 
                regulation, or order issued pursuant to 
                paragraph (4), require that any security 
                underlying the security future, including each 
                component security of a narrow-based security 
                index, be registered pursuant to section 12 of 
                this title;
                  (B) require that if the security futures 
                product is not cash settled, the market on 
                which the security futures product is traded 
                have arrangements in place with a registered 
                clearing agency for the payment and delivery of 
                the securities underlying the security futures 
                product;
                  (C) be no less restrictive than comparable 
                listing standards for options traded on a 
                national securities exchange or national 
                securities association registered pursuant to 
                section 15A(a) of this title;
                  (D) except as otherwise provided in a rule, 
                regulation, or order issued pursuant to 
                paragraph (4), require that the security future 
                be based upon common stock and such other 
                equity securities as the Commission and the 
                Commodity Futures Trading Commission jointly 
                determine appropriate;
                  (E) require that the security futures product 
                is cleared by a clearing agency that has in 
                place provisions for linked and coordinated 
                clearing with other clearing agencies that 
                clear security futures products, which permits 
                the security futures product to be purchased on 
                one market and offset on another market that 
                trades such product;
                  (F) require that only a broker or dealer 
                subject to suitability rules comparable to 
                those of a national securities association 
                registered pursuant to section 15A(a) effect 
                transactions in the security futures product;
                  (G) require that the security futures product 
                be subject to the prohibition against dual 
                trading in section 4j of the Commodity Exchange 
                Act (7 U.S.C. 6j) and the rules and regulations 
                thereunder or the provisions of section 11(a) 
                of this title and the rules and regulations 
                thereunder, except to the extent otherwise 
                permitted under this title and the rules and 
                regulations thereunder;
                  (H) require that trading in the security 
                futures product not be readily susceptible to 
                manipulation of the price of such security 
                futures product, nor to causing or being used 
                in the manipulation of the price of any 
                underlying security, option on such security, 
                or option on a group or index including such 
                securities;
                  (I) require that procedures be in place for 
                coordinated surveillance among the market on 
                which the security futures product is traded, 
                any market on which any security underlying the 
                security futures product is traded, and other 
                markets on which any related security is traded 
                to detect manipulation and insider trading;
                  (J) require that the market on which the 
                security futures product is traded has in place 
                audit trails necessary or appropriate to 
                facilitate the coordinated surveillance 
                required in subparagraph (I);
                  (K) require that the market on which the 
                security futures product is traded has in place 
                procedures to coordinate trading halts between 
                such market and any market on which any 
                security underlying the security futures 
                product is traded and other markets on which 
                any related security is traded; and
                  (L) require that the margin requirements for 
                a security futures product comply with the 
                regulations prescribed pursuant to section 
                7(c)(2)(B), except that nothing in this 
                subparagraph shall be construed to prevent a 
                national securities exchange or national 
                securities association from requiring higher 
                margin levels for a security futures product 
                when it deems such action to be necessary or 
                appropriate.
          (4) Authority to modify certain listing standard 
        requirements.--
                  (A) Authority to modify.--The Commission and 
                the Commodity Futures Trading Commission, by 
                rule, regulation, or order, may jointly modify 
                the listing standard requirements specified in 
                subparagraph (A) or (D) of paragraph (3) to the 
                extent such modification fosters the 
                development of fair and orderly markets in 
                security futures products, is necessary or 
                appropriate in the public interest, and is 
                consistent with the protection of investors.
                  (B) Authority to grant exemptions.--The 
                Commission and the Commodity Futures Trading 
                Commission, by order, may jointly exempt any 
                person from compliance with the listing 
                standard requirement specified in subparagraph 
                (E) of paragraph (3) to the extent such 
                exemption fosters the development of fair and 
                orderly markets in security futures products, 
                is necessary or appropriate in the public 
                interest, and is consistent with the protection 
                of investors.
          (5) Requirements for other persons trading security 
        future products.--It shall be unlawful for any person 
        (other than a national securities exchange or a 
        national securities association registered pursuant to 
        section 15A(a)) to constitute, maintain, or provide a 
        marketplace or facilities for bringing together 
        purchasers and sellers of security future products or 
        to otherwise perform with respect to security future 
        products the functions commonly performed by a stock 
        exchange as that term is generally understood, unless a 
        national securities association registered pursuant to 
        section 15A(a) or a national securities exchange of 
        which such person is a member--
                  (A) has in place procedures for coordinated 
                surveillance among such person, the market 
                trading the securities underlying the security 
                future products, and other markets trading 
                related securities to detect manipulation and 
                insider trading;
                  (B) has rules to require audit trails 
                necessary or appropriate to facilitate the 
                coordinated surveillance required in 
                subparagraph (A); and
                  (C) has rules to require such person to 
                coordinate trading halts with markets trading 
                the securities underlying the security future 
                products and other markets trading related 
                securities.
          (6) Deferral of options on security futures 
        trading.--No person shall offer to enter into, enter 
        into, or confirm the execution of any put, call, 
        straddle, option, or privilege on a security future, 
        except that, after 3 years after the date of the 
        enactment of this subsection, the Commission and the 
        Commodity Futures Trading Commission may by order 
        jointly determine to permit trading of puts, calls, 
        straddles, options, or privileges on any security 
        future authorized to be traded under the provisions of 
        this Act and the Commodity Exchange Act.
          (7) Deferral of linked and coordinated clearing.--
                  (A) Notwithstanding paragraph (2), until the 
                compliance date, a national securities exchange 
                or national securities association registered 
                pursuant to section 15A(a) may trade a security 
                futures product that does not--
                          (i) conform with any listing standard 
                        promulgated to meet the requirement 
                        specified in subparagraph (E) of 
                        paragraph (3); or
                          (ii) meet the criterion specified in 
                        section 2(a)(1)(D)(i)(IV) of the 
                        Commodity Exchange Act.
                  (B) The Commission and the Commodity Futures 
                Trading Commission shall jointly publish in the 
                Federal Register a notice of the compliance 
                date no later than 165 days before the 
                compliance date.
                  (C) For purposes of this paragraph, the term 
                ``compliance date'' means the later of--
                          (i) 180 days after the end of the 
                        first full calendar month period in 
                        which the average aggregate comparable 
                        share volume for all security futures 
                        products based on single equity 
                        securities traded on all national 
                        securities exchanges, any national 
                        securities associations registered 
                        pursuant to section 15A(a), and all 
                        other persons equals or exceeds 10 
                        percent of the average aggregate 
                        comparable share volume of options on 
                        single equity securities traded on all 
                        national securities exchanges and any 
                        national securities associations 
                        registered pursuant to section 15A(a); 
                        or
                          (ii) 2 years after the date on which 
                        trading in any security futures product 
                        commences under this title.
  (i) Consistent with this title, each national securities 
exchange registered pursuant to subsection (a) of this section 
shall issue such rules as are necessary to avoid duplicative or 
conflicting rules applicable to any broker or dealer registered 
with the Commission pursuant to section 15(b) (except paragraph 
(11) thereof), that is also registered with the Commodity 
Futures Trading Commission pursuant to section 4f(a) of the 
Commodity Exchange Act (except paragraph (2) thereof), with 
respect to the application of--
          (1) rules of such national securities exchange of the 
        type specified in section 15(c)(3)(B) involving 
        security futures products; and
          (2) similar rules of national securities exchanges 
        registered pursuant to section 6(g) and national 
        securities associations registered pursuant to section 
        15A(k) involving security futures products.
  (j) Procedures and Rules for Security Future Products.--A 
national securities exchange registered pursuant to subsection 
(a) shall implement the procedures specified in section 
6(h)(5)(A) of this title and adopt the rules specified in 
subparagraphs (B) and (C) of section 6(h)(5) of this title not 
later than 8 months after the date of receipt of a request from 
an alternative trading system for such implementation and 
rules.
  (k)(1) To the extent necessary or appropriate in the public 
interest, to promote fair competition, and consistent with the 
promotion of market efficiency, innovation, and expansion of 
investment opportunities, the protection of investors, and the 
maintenance of fair and orderly markets, the Commission and the 
Commodity Futures Trading Commission shall jointly issue such 
rules, regulations, or orders as are necessary and appropriate 
to permit the offer and sale of a security futures product 
traded on or subject to the rules of a foreign board of trade 
to United States persons.
  (2) The rules, regulations, or orders adopted under paragraph 
(1) shall take into account, as appropriate, the nature and 
size of the markets that the securities underlying the security 
futures product reflect.
  (l) Security-based Swaps.--It shall be unlawful for any 
person to effect a transaction in a security-based swap with or 
for a person that is not an eligible contract participant, 
unless such transaction is effected on a national securities 
exchange registered pursuant to subsection (b).
  (m) Digital Asset Trading System.--
          (1) In general.--It shall be unlawful for any digital 
        asset trading system to make use of the mails or any 
        means or instrumentality of interstate commerce within 
        or subject to the jurisdiction of the United States to 
        effect any transaction in a restricted digital asset, 
        unless such digital asset trading system is registered 
        with the Commission.
          (2) Application.--A person desiring to register as a 
        digital asset trading system shall submit to the 
        Commission an application in such form and containing 
        such information as the Commission may require for the 
        purpose of making the determinations required for 
        approval.
          (3) Exemptions.--A digital asset trading system that 
        offers or seeks to offer at least one restricted 
        digital asset shall not be required to register under 
        this section (and subparagraph (A) shall not apply to 
        such digital asset trading system) if the trading 
        system satisfies any exemption contained on a list of 
        exemptions prepared by the Commission to be as close as 
        practicable to those exemptions set forth in section 
        240.3b-16(b) of title 17, Code of Federal Regulations, 
        applicable to the definition of an exchange.
          (4) Additional registrations.--
                  (A) With the commission.--
                          (i) In general.--A registered digital 
                        asset trading system shall be permitted 
                        to maintain any other registration with 
                        the Commission relating to the other 
                        activities of the registered digital 
                        asset trading system, including as a--
                                  (I) national securities 
                                exchange;
                                  (II) broker;
                                  (III) dealer;
                                  (IV) alternative trading 
                                system, pursuant to part 242 of 
                                title 17, Code of Federal 
                                Regulations, as in effect on 
                                the date of enactment of this 
                                subsection;
                                  (V) digital asset broker; or
                                  (VI) digital asset dealer.
                          (ii) Rulemaking.--The Commission 
                        shall prescribe rules for an entity 
                        with multiple registrations described 
                        under subparagraph (A) to exempt the 
                        entity from duplicative, conflicting, 
                        or unduly burdensome provisions of this 
                        Act and the rules under this Act, to 
                        the extent such an exemption would 
                        protect investors, maintain fair, 
                        orderly, and efficient markets, and 
                        facilitate capital formation.
                  (B) With the commodity futures trading 
                commission.--A registered digital asset trading 
                system shall be permitted to maintain a 
                registration with the Commodity Futures Trading 
                Commission as a digital commodity exchange to 
                offer contracts of sale for digital 
                commodities.

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

  (a) Holding of Customer Assets.--
          (1) In general.--A digital asset trading system shall 
        hold customer money, assets, and property in a manner 
        to minimize the risk of loss to the customer or 
        unreasonable delay in the access to the money, assets, 
        and property of the customer.
          (2) Qualified digital asset custodian required.--A 
        digital asset trading system shall hold customer 
        restricted digital assets described in paragraph (1) 
        with a qualified digital asset custodian described 
        under section 6B.
          (3) Custody prohibited.--A digital asset trading 
        system, in its capacity as such, may not hold custody 
        of customer money, assets, or property.
  (b) Rulemaking.--The Commission shall prescribe rules for 
digital asset trading systems relating to the following:
          (1) Notice.--Notice to the Commission of the initial 
        operation of a digital asset trading system or any 
        material change to the operation of the digital asset 
        trading system.
          (2) Order display.--The thresholds at which a digital 
        asset trading system is required to display the orders 
        of the digital asset trading system, and the manner of 
        such display.
          (3) Fair access.--The thresholds at which a digital 
        asset trading system is required to have policies 
        regarding providing fair access to the digital asset 
        trading system.
          (4) Capacity, integrity, and security of automated 
        systems.--Policies and procedures reasonably designed 
        to ensure the capacity, integrity, and security of the 
        digital asset trading system, taking into account the 
        particular nature of digital asset trading systems.
          (5) Examinations, inspections, and investigations.--
        The examination and inspection of the premises, 
        systems, and records of the digital asset trading 
        system by the Commission or by a self-regulatory 
        organization of which such digital asset trading system 
        is a member.
          (6) Recordkeeping.--The making, keeping current, and 
        preservation of records related to trading activity on 
        the digital asset trading system.
          (7) Reporting.--The reporting of transactions in 
        digital assets that occur through the digital asset 
        trading system.
          (8) Procedures.--The establishment of adequate 
        written safeguards and written procedures to protect 
        confidential trading information.
  (c) Name Requirement.--A digital asset trading system may not 
use the word ``exchange'' in the name of the digital asset 
trading system, unless the digital asset trading system--
          (1) is operated by a registered national securities 
        exchange; and
          (2) is clearly indicated as being provided outside of 
        the system's capacity as a national securities 
        exchange.
  (d) Treatment Under the Bank Secrecy Act.--A digital asset 
trading system shall be treated as a financial institution for 
purposes of the Bank Secrecy Act.

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

  (a) In General.--A digital asset custodian is a qualified 
digital asset custodian if the digital asset custodian complies 
with the requirements of this section.
  (b) Supervision Requirement.--
          (1) In general.--A digital asset custodian shall--
                  (A) be subject to adequate supervision and 
                appropriate regulation by--
                          (i) the Board of Governors of the 
                        Federal Reserve System;
                          (ii) the Comptroller of the Currency;
                          (iii) the Federal Deposit Insurance 
                        Corporation;
                          (iv) the Commodity Futures Trading 
                        Commission;
                          (v) the Securities and Exchange 
                        Commission;
                          (vi) a State bank supervisor (within 
                        the meaning of section 3 of the Federal 
                        Deposit Insurance Act); or
                          (vii) an appropriate foreign 
                        governmental authority in the home 
                        country of the digital asset custodian; 
                        and
                  (B) not be prohibited by the applicable 
                supervisor from engaging in an activity with 
                respect to the custody and safekeeping of 
                digital assets.
          (2) Adequate supervision and appropriate 
        regulation.--For purposes of paragraph (1), the terms 
        ``adequate supervision'' and ``appropriate regulation'' 
        mean such minimum standards for supervision and 
        regulation as are reasonably necessary to protect the 
        digital assets of customers of an entity registered 
        with the Commission, including minimum standards 
        relating to--
                  (A) accessibility of customer assets;
                  (B) financial resources;
                  (C) risk management requirements;
                  (D) governance arrangements;
                  (E) fitness standards for officers and 
                directors;
                  (F) recordkeeping;
                  (G) information sharing; and
                  (H) conflicts of interest.
          (3) Deemed compliance.--A digital asset custodian 
        shall be deemed to be subject to adequate supervision 
        and appropriate regulation, if--
                  (A) it is supervised by an agency described 
                under any of clauses (i) through (v) of 
                paragraph (1)(A); or
                  (B) it is a bank supervised by a State bank 
                supervisor (within the meaning of section 3 of 
                the Federal Deposit Insurance Act).
          (4) Rulemaking with respect to definitions.--For 
        purposes of this subsection, the Commission may, by 
        rule, further define the terms ``adequate supervision'' 
        and ``appropriate regulation'' as necessary in the 
        public interest, as appropriate for the protection of 
        investors, and consistent with the purposes of this 
        Act.
  (c) Information Sharing.--Each digital asset custodian shall 
periodically share of information with the Commission, as the 
Commission determines by rule to be reasonably necessary to 
effectuate any of the provisions, or to accomplish any of the 
purposes, of this Act.

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

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

           *       *       *       *       *       *       *


      regulation of the use of manipulative and deceptive devices

  Sec. 10. It shall be unlawful for any person, directly or 
indirectly, by the use of any means or instrumentality of 
interstate commerce or of the mails, or of any facility of any 
national securities exchange--
          (a)(1) To effect a short sale, or to use or employ 
        any stop-loss order in connection with the purchase or 
        sale, of any security other than a government security, 
        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) Paragraph (1) of this subsection shall not apply to 
security futures products.
          (b) To use or employ, in connection with the purchase 
        or sale of any security registered on a national 
        securities exchange or any security not so registered, 
        or any securities-based swap agreement 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.
          (c)(1) To effect, accept, or facilitate a transaction 
        involving the loan or borrowing of securities 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) Nothing in paragraph (1) may be construed 
                to limit the authority of the appropriate 
                Federal banking agency (as defined in section 
                3(q) of the Federal Deposit Insurance Act (12 
                U.S.C. 1813(q))), the National Credit Union 
                Administration, or any other Federal department 
                or agency having a responsibility under Federal 
                law to prescribe rules or regulations 
                restricting transactions involving the loan or 
                borrowing of securities in order to protect the 
                safety and soundness of a financial institution 
                or to protect the financial system from 
                systemic risk.
          (d) 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 to security-based swap agreements to the same 
        extent as they apply to securities. 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 
        security-based swap agreements to the same extent as 
        they apply to securities.
          (e)(1) Rules promulgated under subsection (b) that 
        prohibit fraud, manipulation, or insider trading (but 
        not rules imposing or specifying reporting or 
        recordkeeping requirements, procedures, or standards as 
        prophylactic measures against fraud, manipulation, or 
        insider trading), and judicial precedents decided under 
        subsection (b) and rules promulgated thereunder that 
        prohibit fraud, manipulation, or insider trading, shall 
        apply to permitted payment stablecoins with respect to 
        those circumstances in which the permitted payment 
        stablecoins are brokered, traded, or custodied by a 
        broker, dealer, digital asset broker, or digital asset 
        dealer or through an alternative trading system or 
        digital asset trading platform to the same extent as 
        they apply to securities.
                  (2) Judicial precedents decided under section 
                17(a) of the Securities Act of 1933 and 
                sections 9, 15, 16, 20, and 21A of this title, 
                and judicial precedents decided under 
                applicable rules promulgated under such 
                sections, shall apply to permitted payment 
                stablecoins with respect to those circumstances 
                in which the permitted payment stablecoins are 
                brokered, traded, or custodied by a digital 
                asset broker, digital asset dealer, or digital 
                asset trading system to the same extent as they 
                apply to securities.
                  (3) Nothing in this subsection may be 
                construed to provide the Commission authority 
                to make any rule, regulation, requirement, or 
                obligation on a permitted payment stablecoin 
                issuer regarding the operations of a permitted 
                payment stablecoin issuer or a permitted 
                payment stablecoin, including any aspect of the 
                operation of a permitted payment stablecoin 
                issuer or permitted payment stablecoin.

           *       *       *       *       *       *       *


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

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

           *       *       *       *       *       *       *


                registration requirements for securities

  Sec. 12. (a) It shall be unlawful for any member, broker, or 
dealer to effect any transaction in any security (other than an 
exempted security) on a national securities exchange unless a 
registration is effective as to such security for such exchange 
in accordance with the provisions of this title and the rules 
and regulations thereunder. The provisions of this subsection 
shall not apply in respect of a security futures product traded 
on a national securities exchange.
  (b) A security may be registered on a national securities 
exchange by the issuer filing an application with the exchange 
(and filing with the Commission such duplicate originals 
thereof as the Commission may require), which application shall 
contain--
          (1) Such information, in such detail, as to the 
        issuer and any person directly or indirectly 
        controlling or controlled by, or under direct or 
        indirect common control with, the issuer, and any 
        guarantor of the security as to principal or interest 
        or both, as the Commission may by rules and regulations 
        require, as necessary or appropriate in the public 
        interest or for the protection of investors, in respect 
        of the following:
                  (A) the organization, financial structures, 
                and nature of the business;
                  (B) the terms, position, rights, and 
                privileges of the different classes of 
                securities outstanding;
                  (C) the terms on which their securities are 
                to be, and during the preceding three years 
                have been, offered to the public or otherwise;
                  (D) the directors, officers, and 
                underwriters, and each security holder of 
                record holding more than 10 per centum of any 
                class of any equity security of the issuer 
                (other than an exempted security), their 
                remuneration and their interests in the 
                securities of, and their material contracts 
                with, the issuer and any person directly or 
                indirectly controlling or controlled by, or 
                under direct or indirect common control with, 
                the issuer;
                  (E) remuneration to others than directors and 
                officers exceeding $20,000 per annum;
                  (F) bonus and profit-sharing arrangements;
                  (G) management and service contracts;
                  (H) options existing or to be created in 
                respect of their securities;
                  (I) material contracts, not made in the 
                ordinary course of business, which are to be 
                executed in whole or in part at or after the 
                filing of the application or which were made 
                not more than two years before such filing, and 
                every material patent or contract for a 
                material patent right shall be deemed a 
                material contract;
                  (J) balance sheets for not more than the 
                three preceding fiscal years, certified if 
                required by the rules and regulations of the 
                Commission by a registered public accounting 
                firm;
                  (K) profit and loss statements for not more 
                than the three preceding fiscal years, 
                certified if required by the rules and 
                regulations of the Commission by a registered 
                public accounting firm; and
                  (L) any further financial statements which 
                the Commission may deem necessary or 
                appropriate for the protection of investors.
          (2) Such copies of articles of incorporation, bylaws, 
        trust indentures, or corresponding documents by 
        whatever name known, underwriting arrangements, and 
        other similar documents of, and voting trust agreements 
        with respect to, the issuer and any person directly or 
        indirectly controlling or controlled by, or under 
        direct or indirect common control with, the issuer as 
        the Commission may require as necessary or appropriate 
        for the proper protection of investors and to insure 
        fair dealing in the security.
          (3) Such copies of material contracts, referred to in 
        paragraph (1)(I) above, as the Commission may require 
        as necessary or appropriate for the proper protection 
        of investors and to insure fair dealing in the 
        security.
  (c) If in the judgment of the Commission any information 
required under subsection (b) of this section is inapplicable 
to any specified class or classes of issuers, the Commission 
shall require in lieu thereof the submission of such other 
information of comparable character as it may deem applicable 
to such class of issuers.
  (d) If the exchange authorities certify to the Commission 
that the security has been approved by the exchange for listing 
and registration, the registration shall become effective 
thirty days after the receipt of such certification by the 
Commission or within such shorter period of time as the 
Commission may determine. A security registered with a national 
securities exchange may be withdrawn or stricken from listing 
and registration in accordance with the rules of the exchange 
and, upon such terms as the Commission may deem necessary to 
impose for the protection of investors, upon application by the 
issuer or the exchange to the Commission; whereupon the issuer 
shall be relieved from further compliance with the provisions 
of this section and section 13 of this title and any rules or 
regulations under such sections as to the securities so 
withdrawn or stricken. An unissued security may be registered 
only in accordance with such rules and regulations as the 
Commission may prescribe as necessary or appropriate in the 
public interest or for the protection of investors.
  (e) Notwithstanding the foregoing provisions of this section, 
the Commission may by such rules and regulations as it deems 
necessary or appropriate in the public interest or for the 
protection of investors permit securities listed on any 
exchange at the time the registration of such exchange as a 
national securities exchange becomes effective, to be 
registered for a period ending not later than July 1, 1935, 
without complying with the provisions of this section.
  (f)(1)(A) Notwithstanding the preceding subsections of this 
section, any national securities exchange, in accordance with 
the requirements of this subsection and the rules hereunder, 
may extend unlisted trading privileges to--
          (i) any security that is listed and registered on a 
        national securities exchange, subject to subparagraph 
        (B); and
          (ii) any security that is otherwise registered 
        pursuant to this section, or that would be required to 
        be so registered except for the exemption from 
        registration provided in subparagraph (B) or (G) of 
        subsection (g)(2), subject to subparagraph (E) of this 
        paragraph.
  (B) A national securities exchange may not extend unlisted 
trading privileges to a security described in subparagraph 
(A)(i) during such interval, if any, after the commencement of 
an initial public offering of such security, as is or may be 
required pursuant to subparagraph (C).
  (C) Not later than 180 days after the date of enactment of 
the Unlisted Trading Privileges Act of 1994, the Commission 
shall prescribe, by rule or regulation, the duration of the 
interval referred to in subparagraph (B), if any, as the 
Commission determines to be necessary or appropriate for the 
maintenance of fair and orderly markets, the protection of 
investors and the public interest, or otherwise in furtherance 
of the purposes of this title. Until the earlier of the 
effective date of such rule or regulation or 240 days after 
such date of enactment, such interval shall begin at the 
opening of trading on the day on which such security commences 
trading on the national securities exchange with which such 
security is registered and end at the conclusion of the next 
day of trading.
  (D) The Commission may prescribe, by rule or regulation such 
additional procedures or requirements for extending unlisted 
trading privileges to any security as the Commission deems 
necessary or appropriate for the maintenance of fair and 
orderly markets, the protection of investors and the public 
interest, or otherwise in furtherance of the purposes of this 
title.
  (E) No extension of unlisted trading privileges to securities 
described in subparagraph (A)(ii) may occur except pursuant to 
a rule, regulation, or order of the Commission approving such 
extension or extensions. In promulgating such rule or 
regulation or in issuing such order, the Commission--
          (i) shall find that such extension or extensions of 
        unlisted trading privileges is consistent with the 
        maintenance of fair and orderly markets, the protection 
        of investors and the public interest, and otherwise in 
        furtherance of the purposes of this title;
          (ii) shall take account of the public trading 
        activity in such securities, the character of such 
        trading, the impact of such extension on the existing 
        markets for such securities, and the desirability of 
        removing impediments to and the progress that has been 
        made toward the development of a national market 
        system; and
          (iii) shall not permit a national securities exchange 
        to extend unlisted trading privileges to such 
        securities if any rule of such national securities 
        exchange would unreasonably impair the ability of a 
        dealer to solicit or effect transactions in such 
        securities for its own account, or would unreasonably 
        restrict competition among dealers in such securities 
        or between such dealers acting in the capacity of 
        market makers who are specialists and such dealers who 
        are not specialists.
  (F) An exchange may continue to extend unlisted trading 
privileges in accordance with this paragraph only if the 
exchange and the subject security continue to satisfy the 
requirements for eligibility under this paragraph, including 
any rules and regulations issued by the Commission pursuant to 
this paragraph, except that unlisted trading privileges may 
continue with regard to securities which had been admitted on 
such exchange prior to July 1, 1964, notwithstanding the 
failure to satisfy such requirements. If unlisted trading 
privileges in a security are discontinued pursuant to this 
subparagraph, the exchange shall cease trading in that 
security, unless the exchange and the subject security 
thereafter satisfy the requirements of this paragraph and the 
rules issued hereunder.
  (G) For purposes of this paragraph--
          (i) a security is the subject of an initial public 
        offering if--
                  (I) the offering of the subject security is 
                registered under the Securities Act of 1933; 
                and
                  (II) the issuer of the security, immediately 
                prior to filing the registration statement with 
                respect to the offering, was not subject to the 
                reporting requirements of section 13 or 15(d) 
                of this title; and
          (ii) an initial public offering of such security 
        commences at the opening of trading on the day on which 
        such security commences trading on the national 
        securities exchange with which such security is 
        registered.
  (2)(A) At any time within 60 days of commencement of trading 
on an exchange of a security pursuant to unlisted trading 
privileges, the Commission may summarily suspend such unlisted 
trading privileges on the exchange. Such suspension shall not 
be reviewable under section 25 of this title and shall not be 
deemed to be a final agency action for purposes of section 704 
of title 5, United States Code. Upon such suspension--
          (i) the exchange shall cease trading in the security 
        by the close of business on the date of such 
        suspension, or at such time as the Commission may 
        prescribe by rule or order for the maintenance of fair 
        and orderly markets, the protection of investors and 
        the public interest, or otherwise in furtherance of the 
        purposes of this title; and
          (ii) if the exchange seeks to extend unlisted trading 
        privileges to the security, the exchange shall file an 
        application to reinstate its ability to do so with the 
        Commission pursuant to such procedures as the 
        Commission may prescribe by rule or order for the 
        maintenance of fair and orderly markets, the protection 
        of investors and the public interest, or otherwise in 
        furtherance of the purposes of this title.
  (B) A suspension under subparagraph (A) shall remain in 
effect until the Commission, by order, grants approval of an 
application to reinstate, as described in subparagraph (A)(ii).
  (C) A suspension under subparagraph (A) shall not affect the 
validity or force of an extension of unlisted trading 
privileges in effect prior to such suspension.
  (D) The Commission shall not approve an application by a 
national securities exchange to reinstate its ability to extend 
unlisted trading privileges to a security unless the Commission 
finds, after notice and opportunity for hearing, that the 
extension of unlisted trading privileges pursuant to such 
application is consistent with the maintenance of fair and 
orderly markets, the protection of investors and the public 
interest, and otherwise in furtherance of the purposes of this 
title. If the application is made to reinstate unlisted trading 
privileges to a security described in paragraph (1)(A)(ii), the 
Commission--
          (i) shall take account of the public trading activity 
        in such security, the character of such trading, the 
        impact of such extension on the existing markets for 
        such a security, and the desirability of removing 
        impediments to and the progress that has been made 
        toward the development of a national market system; and
          (ii) shall not grant any such application if any rule 
        of the national securities exchange making application 
        under this subsection would unreasonably impair the 
        ability of a dealer to solicit or effect transactions 
        in such security for its own account, or would 
        unreasonably restrict competition among dealers in such 
        security or between such dealers acting in the capacity 
        of marketmakers who are specialists and such dealers 
        who are not specialists.
  (3) Notwithstanding paragraph (2), the Commission shall by 
rules and regulations suspend unlisted trading privileges in 
whole or in part for any or all classes of securities for a 
period not exceeding twelve months, if it deems such suspension 
necessary or appropriate in the public interest or for the 
protection of investors or to prevent evasion of the purposes 
of this title.
  (4) On the application of the issuer of any security for 
which unlisted trading privileges on any exchange have been 
continued or extended pursuant to this subsection, or of any 
broker or dealer who makes or creates a market for such 
security, or of any other person having a bona fide interest in 
the question of termination or suspension of such unlisted 
trading privileges, or on its own motion, the Commission shall 
by order terminate, or suspend for a period not exceeding 
twelve months, such unlisted trading privileges for such 
security if the Commission finds, after appropriate notice and 
opportunity for hearing, that such termination or suspension is 
necessary or appropriate in the public interest or for the 
protection of investors.
  (5) In any proceeding under this subsection in which 
appropriate notice and opportunity for hearing are required, 
notice of not less than ten days to the applicant in such 
proceeding, to the issuer of the security involved, to the 
exchange which is seeking to continue or extend or has 
continued or extended unlisted trading privileges for such 
security, and to the exchange, if any, on which such security 
is listed and registered, shall be deemed adequate notice, and 
any broker or dealer who makes or creates a market for such 
security, and any other person having a bona fide interest in 
such proceeding, shall upon application be entitled to be 
heard.
  (6) Any security for which unlisted trading privileges are 
continued or extended pursuant to this subsection shall be 
deemed to be registered on a national securities exchange 
within the meaning of this title. The powers and duties of the 
Commission under this title shall be applicable to the rules of 
an exchange in respect to any such security. The Commission 
may, by such rules and regulations as it deems necessary or 
appropriate in the public interest or for the protection of 
investors, either unconditionally or upon specified terms and 
conditions, or for stated periods, exempt such securities from 
the operation of any provision of section 13, 14, or 16 of this 
title.
  (g)(1) Every issuer which is engaged in interstate commerce, 
or in a business affecting interstate commerce, or whose 
securities are traded by use of the mails or any means or 
instrumentality of interstate commerce shall--
          (A) within 120 days after the last day of its first 
        fiscal year ended on which the issuer has total assets 
        exceeding $10,000,000 and a class of equity security 
        (other than an exempted security) held of record by 
        either--
          (i) 2,000 persons, or
          (ii) 500 persons who are not accredited investors (as 
        such term is defined by the Commission), and
          (B) in the case of an issuer that is a bank, a 
        savings and loan holding company (as defined in section 
        10 of the Home Owners' Loan Act), or a bank holding 
        company, as such term is defined in section 2 of the 
        Bank Holding Company Act of 1956 (12 U.S.C. 1841), not 
        later than 120 days after the last day of its first 
        fiscal year ended after the effective date of this 
        subsection, on which the issuer has total assets 
        exceeding $10,000,000 and a class of equity security 
        (other than an exempted security) held of record by 
        2,000 or more persons,
register such security by filing with the Commission a 
registration statement (and such copies thereof as the 
Commission may require) with respect to such security 
containing such information and documents as the Commission may 
specify comparable to that which is required in an application 
to register a security pursuant to subsection (b) of this 
section. Each such registration statement shall become 
effective sixty days after filing with the Commission or within 
such shorter period as the Commission may direct. Until such 
registration statement becomes effective it shall not be deemed 
filed for the purposes of section 18 of this title. Any issuer 
may register any class of equity security not required to be 
registered by filing a registration statement pursuant to the 
provisions of this paragraph. The Commission is authorized to 
extend the date upon which any issuer or class of issuers is 
required to register a security pursuant to the provisions of 
this paragraph.
  (2) The provisions of this subsection shall not apply in 
respect of--
          (A) any security listed and registered on a national 
        securities exchange.
          (B) any security issued by an investment company 
        registered pursuant to section 8 of the Investment 
        Company Act of 1940.
          (C) any security, other than permanent stock, 
        guaranty stock, permanent reserve stock, or any similar 
        certificate evidencing nonwithdrawable capital, issued 
        by a savings and loan association, building and loan 
        association, cooperative bank, homestead association, 
        or similar institution, which is supervised and 
        examined by State or Federal authority having 
        supervision over any such institution.
          (D) any security of an issuer organized and operated 
        exclusively for religious, educational, benevolent, 
        fraternal, charitable, or reformatory purposes and not 
        for pecuniary profit, and no part of the net earnings 
        of which inures to the benefit of any private 
        shareholder or individual; or any security of a fund 
        that is excluded from the definition of an investment 
        company under section 3(c)(10)(B) of the Investment 
        Company Act of 1940.
          (E) any security of an issuer which is a 
        ``cooperative association'' as defined in the 
        Agricultural Marketing Act, approved June 15, 1929, as 
        amended, or a federation of such cooperative 
        associations, if such federation possesses no greater 
        powers or purposes than cooperative associations so 
        defined.
          (F) any security issued by a mutual or cooperative 
        organization which supplies a commodity or service 
        primarily for the benefit of its members and operates 
        not for pecuniary profit, but only if the security is 
        part of a class issuable only to persons who purchase 
        commodities or services from the issuer, the security 
        is transferable only to a successor in interest or 
        occupancy of premises serviced or to be served by the 
        issuer, and no dividends are payable to the holder of 
        the security.
          (G) any security issued by an insurance company if 
        all of the following conditions are met:
                  (i) Such insurance company is required to and 
                does file an annual statement with the 
                Commissioner of Insurance (or other officer or 
                agency performing a similar function) of its 
                domiciliary State, and such annual statement 
                conforms to that prescribed by the National 
                Association of Insurance Commissioners or in 
                the determination of such State commissioner, 
                officer or agency substantially conforms to 
                that so prescribed.
                  (ii) Such insurance company is subject to 
                regulation by its domiciliary State of proxies, 
                consents, or authorizations in respect of 
                securities issued by such company and such 
                regulation conforms to that prescribed by the 
                National Association of Insurance 
                Commissioners.
                  (iii) After July 1, 1966, the purchase and 
                sales of securities issued by such insurance 
                company by beneficial owners, directors, or 
                officers of such company are subject to 
                regulation (including reporting) by its 
                domiciliary State substantially in the manner 
                provided in section 16 of this title.
          (H) any interest or participation in any collective 
        trust funds maintained by a bank or in a separate 
        account maintained by an insurance company which 
        interest or participation is issued in connection with 
        (i) a stock-bonus, pension, or profit-sharing plan 
        which meets the requirements for qualification under 
        section 401 of the Internal Revenue Code of 1954, (ii) 
        an annuity plan which meets the requirements for 
        deduction of the employer's contribution under section 
        404(a)(2) of such Code, or (iii) a church plan, 
        company, or account that is excluded from the 
        definition of an investment company under section 
        3(c)(14) of the Investment Company Act of 1940.
  (3) The Commission may by rules or regulations or, on its own 
motion, after notice and opportunity for hearing, by order, 
exempt from this subsection any security of a foreign issuer, 
including any certificate of deposit for such a security, if 
the Commission finds that such exemption is in the public 
interest and is consistent with the protection of investors.
  (4) Registration of any class of security pursuant to this 
subsection shall be terminated ninety days, or such shorter 
period as the Commission may determine, after the issuer files 
a certification with the Commission that the number of holders 
of record of such class of security is reduced to less than 300 
persons, or, in the case of a bank, a savings and loan holding 
company (as defined in section 10 of the Home Owners' Loan 
Act), or a bank holding company, as such term is defined in 
section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 
1841), 1,200 persons persons. The Commission shall after notice 
and opportunity for hearing deny termination of registration if 
it finds that the certification is untrue. Termination of 
registration shall be deferred pending final determination on 
the question of denial.
  (5) For the purposes of this subsection the term ``class'' 
shall include all securities of an issuer which are of 
substantially similar character and the holders of which enjoy 
substantially similar rights and privileges. The Commission may 
for the purpose of this subsection define by rules and 
regulations the terms ``total assets'' and ``held of record'' 
as it deems necessary or appropriate in the public interest or 
for the protection of investors in order to prevent 
circumvention of the provisions of this subsection. For 
purposes of this subsection, a security futures product shall 
not be considered a class of equity security of the issuer of 
the securities underlying the security futures product. For 
purposes of determining whether an issuer is required to 
register a security with the Commission pursuant to paragraph 
(1), the definition of ``held of record'' shall not include 
securities held by persons who received the securities pursuant 
to an employee compensation plan in transactions exempted from 
the registration requirements of section 5 of the Securities 
Act of 1933.
          (6) Exclusion for persons holding certain 
        securities.--The Commission shall, by rule, exempt, 
        conditionally or unconditionally, securities acquired 
        pursuant to an offering made [under section 4(6)] under 
        section 4(a)(6) or 4(a)(8) of the Securities Act of 
        1933 from the provisions of this subsection.
  (h) The Commission may by rules and regulations, or upon 
application of an interested person, by order, after notice and 
opportunity for hearing, exempt in whole or in part any issuer 
or class of issuers from the provisions of subsection (g) of 
this section or from section 13, 14, or 15(d) or may exempt 
from section 16 any officer, director, or beneficial owner of 
securities of any issuer, any security of which is required to 
be registered pursuant to subsection (g) hereof, upon such 
terms and conditions and for such period as it deems necessary 
or appropriate, if the Commission finds, by reason of the 
number of public investors, amount of trading interest in the 
securities, the nature and extent of the activities of the 
issuer, income or assets of the issuer, or otherwise, that such 
action is not inconsistent with the public interest or the 
protection of investors. The Commission may, for the purposes 
of any of the above-mentioned sections or subsections of this 
title, classify issuers and prescribe requirements appropriate 
for each such class.
  (i) In respect of any securities issued by banks and savings 
associations the deposits of which are insured in accordance 
with the Federal Deposit Insurance Act, the powers, functions, 
and duties vested in the Commission to administer and enforce 
sections 10A(m), 12, 13, 14(a), 14(c), 14(d), 14(f), and 16 of 
this Act, and sections 302, 303, 304, 306, 401(b), 404, 406, 
and 407 of the Sarbanes-Oxley Act of 2002, (1) with respect to 
national banks and Federal savings associations, the accounts 
of which are insured by the Federal Deposit Insurance 
Corporation are vested in the Comptroller of the Currency, (2) 
with respect to all other member banks of the Federal Reserve 
System are vested in the Board of Governors of the Federal 
Reserve System, and (3) with respect to all other insured banks 
and State savings associations, the accounts of which are 
insured by the Federal Deposit Insurance Corporation, are 
vested in the Federal Deposit Insurance Corporation. The 
Comptroller of the Currency, the Board of Governors of the 
Federal Reserve System, and the Federal Deposit Insurance 
Corporation shall have the power to make such rules and 
regulations as may be necessary for the execution of the 
functions vested in them as provided in this subsection. In 
carrying out their responsibilities under this subsection, the 
agencies named in the first sentence of this subsection shall 
issue substantially similar regulations to regulations and 
rules issued by the Commission under sections 10A(m), 12, 13, 
14(a), 14(c), 14(d), 14(f) and 16 of this Act, and sections 
302, 303, 304, 306, 401(b), 404, 406, and 407 of the Sarbanes-
Oxley Act of 2002, unless they find that implementation of 
substantially similar regulations with respect to insured banks 
and insured institutions are not necessary or appropriate in 
the public interest or for protection of investors, and publish 
such findings, and the detailed reasons therefor, in the 
Federal Register. Such regulations of the above-named agencies, 
or the reasons for failure to publish such substantially 
similar regulations to those of the Commission, shall be 
published in the Federal Register within 120 days of the date 
of enactment of this subsection, and, thereafter, within 60 
days of any changes made by the Commission in its relevant 
regulations and rules.
  (j) The Commission is authorized, by order, as it deems 
necessary or appropriate for the protection of investors to 
deny, to suspend the effective date of, to suspend for a period 
not exceeding twelve months, or to revoke the registration of a 
security, if the Commission finds, on the record after notice 
and opportunity for hearing, that the issuer of such security 
has failed to comply with any provision of this title or the 
rules and regulations thereunder. No member of a national 
securities exchange, broker, or dealer shall make use of the 
mails or any means or instrumentality of interstate commerce to 
effect any transaction in, or to induce the purchase or sale 
of, any security the registration of which has been and is 
suspended or revoked pursuant to the preceding sentence.
  (k) Trading Suspensions; Emergency Authority.--
          (1) Trading suspensions.--If in its opinion the 
        public interest and the protection of investors so 
        require, the Commission is authorized by order--
                  (A) summarily to suspend trading in any 
                security (other than an exempted security) for 
                a period not exceeding 10 business days, and
                  (B) summarily to suspend all trading on any 
                national securities exchange or otherwise, in 
                securities other than exempted securities, for 
                a period not exceeding 90 calendar days.
        The action described in subparagraph (B) shall not take 
        effect unless the Commission notifies the President of 
        its decision and the President notifies the Commission 
        that the President does not disapprove of such 
        decision. If the actions described in subparagraph (A) 
        or (B) involve a security futures product, the 
        Commission shall consult with and consider the views of 
        the Commodity Futures Trading Commission.
          (2) Emergency orders.--
                  (A) In general.--The Commission, in an 
                emergency, may by order summarily take such 
                action to alter, supplement, suspend, or impose 
                requirements or restrictions with respect to 
                any matter or action subject to regulation by 
                the Commission or a self-regulatory 
                organization under the securities laws, as the 
                Commission determines is necessary in the 
                public interest and for the protection of 
                investors--
                          (i) to maintain or restore fair and 
                        orderly securities markets (other than 
                        markets in exempted securities);
                          (ii) to ensure prompt, accurate, and 
                        safe clearance and settlement of 
                        transactions in securities (other than 
                        exempted securities); or
                          (iii) to reduce, eliminate, or 
                        prevent the substantial disruption by 
                        the emergency of--
                                  (I) securities markets (other 
                                than markets in exempted 
                                securities), investment 
                                companies, or any other 
                                significant portion or segment 
                                of such markets; or
                                  (II) the transmission or 
                                processing of securities 
                                transactions (other than 
                                transactions in exempted 
                                securities).
                  (B) Effective period.--An order of the 
                Commission under this paragraph shall continue 
                in effect for the period specified by the 
                Commission, and may be extended. Except as 
                provided in subparagraph (C), an order of the 
                Commission under this paragraph may not 
                continue in effect for more than 10 business 
                days, including extensions.
                  (C) Extension.--An order of the Commission 
                under this paragraph may be extended to 
                continue in effect for more than 10 business 
                days if, at the time of the extension, the 
                Commission finds that the emergency still 
                exists and determines that the continuation of 
                the order beyond 10 business days is necessary 
                in the public interest and for the protection 
                of investors to attain an objective described 
                in clause (i), (ii), or (iii) of subparagraph 
                (A). In no event shall an order of the 
                Commission under this paragraph continue in 
                effect for more than 30 calendar days.
                  (D) Security futures.--If the actions 
                described in subparagraph (A) involve a 
                security futures product, the Commission shall 
                consult with and consider the views of the 
                Commodity Futures Trading Commission.
                  (E) Exemption.--In exercising its authority 
                under this paragraph, the Commission shall not 
                be required to comply with the provisions of--
                          (i) section 19(c); or
                          (ii) section 553 of title 5, United 
                        States Code.
          (3) Termination of emergency actions by president.--
        The President may direct that action taken by the 
        Commission under paragraph (1)(B) or paragraph (2) of 
        this subsection shall not continue in effect.
          (4) Compliance with orders.--No member of a national 
        securities exchange, broker, or dealer shall make use 
        of the mails or any means or instrumentality of 
        interstate commerce to effect any transaction in, or to 
        induce the purchase or sale of, any security in 
        contravention of an order of the Commission under this 
        subsection unless such order has been stayed, modified, 
        or set aside as provided in paragraph (5) of this 
        subsection or has ceased to be effective upon direction 
        of the President as provided in paragraph (3).
          (5) Limitations on review of orders.--An order of the 
        Commission pursuant to this subsection shall be subject 
        to review only as provided in section 25(a) of this 
        title. Review shall be based on an examination of all 
        the information before the Commission at the time such 
        order was issued. The reviewing court shall not enter a 
        stay, writ of mandamus, or similar relief unless the 
        court finds, after notice and hearing before a panel of 
        the court, that the Commission's action is arbitrary, 
        capricious, an abuse of discretion, or otherwise not in 
        accordance with law.
          (6) Consultation.--Prior to taking any action 
        described in paragraph (1)(B), the Commission shall 
        consult with and consider the views of the Secretary of 
        the Treasury, the Board of Governors of the Federal 
        Reserve System, and the Commodity Futures Trading 
        Commission, unless such consultation is impracticable 
        in light of the emergency.
          (7) Definition.--For purposes of this subsection, the 
        term ``emergency'' means--
                  (A) a major market disturbance characterized 
                by or constituting--
                          (i) sudden and excessive fluctuations 
                        of securities prices generally, or a 
                        substantial threat thereof, that 
                        threaten fair and orderly markets; or
                          (ii) a substantial disruption of the 
                        safe or efficient operation of the 
                        national system for clearance and 
                        settlement of transactions in 
                        securities, or a substantial threat 
                        thereof; or
                  (B) a major disturbance that substantially 
                disrupts, or threatens to substantially 
                disrupt--
                          (i) the functioning of securities 
                        markets, investment companies, or any 
                        other significant portion or segment of 
                        the securities markets; or
                          (ii) the transmission or processing 
                        of securities transactions.
  (l) It shall be unlawful for an issuer, any class of whose 
securities is registered pursuant to this section or would be 
required to be so registered except for the exemption from 
registration provided by subsection (g)(2)(B) or (g)(2)(G) of 
this section, by the use of any means or instrumentality of 
interstate commerce, or of the mails, to issue, either 
originally or upon transfer, any of such securities in a form 
or with a format which contravenes such rules and regulations 
as the Commission may prescribe as necessary or appropriate for 
the prompt and accurate clearance and settlement of 
transactions in securities. The provisions of this subsection 
shall not apply to variable annuity contracts or variable life 
policies issued by an insurance company or its separate 
accounts.

           *       *       *       *       *       *       *


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

  (a) Registration.--
          (1) In general.--It shall be unlawful for any digital 
        asset broker or digital asset dealer (other than a 
        natural person associated with a digital asset broker 
        or digital asset dealer, and other than such a digital 
        asset broker or digital asset dealer whose business is 
        exclusively intrastate and who does not make use of any 
        facility of a digital asset trading platform) to make 
        use of the mails or any means or instrumentality of 
        interstate commerce to effect any transactions in, or 
        to induce or attempt to induce the purchase or sale of, 
        any restricted digital asset unless such digital asset 
        broker or digital asset dealer is registered in 
        accordance with this section.
          (2) Application.--A person desiring to register as a 
        digital asset broker or digital asset dealer shall 
        submit to the Commission an application in such form 
        and containing such information as the Commission may 
        require for the purpose of making the determinations 
        required for approval.
  (b) National Securities Association Membership.--
          (1) In general.--A digital asset broker or digital 
        asset dealer may not register or maintain registration 
        under this section unless such digital asset broker or 
        digital asset dealer is a member of a national 
        securities association registered under section 15A.
          (2) Treatment under section 15a.--
                  (A) In general.--For purposes of section 
                15A--
                          (i) the term ``broker'' includes a 
                        digital asset broker;
                          (ii) the term ``dealer'' includes a 
                        digital asset dealer; and
                          (iii) the term ``security'' includes 
                        a restricted digital asset.
                  (B) Clarification.--Notwithstanding 
                subparagraph (A), a national securities 
                association shall only examine for and enforce 
                against a digital asset broker and digital 
                asset dealer rules of such national securities 
                association written specifically for digital 
                asset brokers and a digital asset dealers.
          (3) Exception.--A digital asset broker or digital 
        asset dealer may register under this section without 
        obtaining membership in a national securities 
        association until the end of the 360-day period 
        beginning on the date the first national securities 
        association adopts rules to admit digital asset brokers 
        or digital asset dealers as members.
  (c) Additional Registrations With the Commission.--
          (1) In general.--A registered digital asset broker or 
        registered digital asset dealer shall be permitted to 
        maintain any other registration with the Commission 
        relating to the other activities of the registered 
        digital asset broker or registered digital asset 
        dealer, including as--
                  (A) a national securities exchange;
                  (B) a broker;
                  (C) a dealer;
                  (D) an alternative trading system, pursuant 
                to part 242 of title 17, Code of Federal 
                Regulations, as in effect on the date of 
                enactment of this section; or
                  (E) a digital asset trading system.
          (2) Rulemaking.--The Commission shall prescribe rules 
        for an entity with multiple registrations described 
        under paragraph (1) to exempt the entity from 
        duplicative, conflicting, or unduly burdensome 
        provisions of this Act and the rules under this Act, to 
        the extent such an exemption would protect investors, 
        maintain fair, orderly, and efficient markets, and 
        facilitate capital formation.
          (3) Self-regulatory organizations.--The Commission 
        shall require any self-regulatory organization with a 
        registered digital asset broker or registered digital 
        asset dealer as a member to provide such rules as may 
        be necessary to further compliance with this section, 
        protect investors, maintain fair, orderly, and 
        efficient markets, and facilitate capital formation.
  (d) Additional Registrations With the Commodity Futures 
Trading Commission.--A registered digital asset broker or 
registered digital asset dealer shall be permitted to maintain 
a registration with the Commodity Futures Trading Commission as 
a digital commodity broker or digital commodity dealer, to list 
or trade contracts of sale for digital commodities.
  (e) Anti-fraud.--No digital asset broker or digital asset 
dealer shall make use of the mails or any means or 
instrumentality of interstate commerce to effect any 
transaction in, or to induce or attempt to induce the purchase 
or sale of, any restricted digital asset by means of any 
manipulative, deceptive, or other fraudulent device or 
contrivance.
  (f) Holding of Customer Assets.--
          (1) In general.--A digital asset broker or digital 
        asset dealer shall hold customer money, assets, and 
        property in a manner to minimize the risk of loss to 
        the customer or unreasonable delay in the access to the 
        money, assets, and property of the customer.
          (2) Qualified digital asset custodian required.--A 
        digital asset broker or digital asset dealer shall hold 
        customer restricted digital assets described in 
        paragraph (1) with a qualified digital asset custodian 
        described under section 6B.
          (3) Segregation of funds.--
                  (A) In general.--A digital asset broker or 
                digital asset dealer shall treat and deal with 
                all money, assets, and property held for a 
                customer of the digital asset broker or digital 
                asset dealer, or that accrues to a customer as 
                a result of trading in restricted digital 
                assets, as belonging to the customer.
                  (B) Commingling prohibited.--Money, assets, 
                and property of a customer described in 
                subparagraph (A) shall be separately accounted 
                for and shall not be commingled with the funds 
                of the digital asset broker or digital asset 
                dealer or be used to margin, secure, or 
                guarantee any trades of any person other than 
                the customer of the digital asset broker or 
                digital asset dealer for whom the same are 
                held.
          (4) Exceptions.--
                  (A) Use of funds.--
                          (i) In general.--Notwithstanding 
                        paragraph (3), money, assets, and 
                        property of customers of a digital 
                        asset broker or digital asset dealer 
                        described in paragraph (3) may be 
                        maintained and deposited in the same 
                        account or accounts with any bank, 
                        trust company, or qualified digital 
                        asset custodian described under section 
                        6B, if the money, assets, and property 
                        remain segregated from the money, 
                        assets, and property of the digital 
                        asset broker or digital asset dealer.
                          (ii) Withdrawal.--Notwithstanding 
                        paragraph (3), such share of the money, 
                        assets, and property described in 
                        paragraph (3) as in the normal course 
                        of business shall be necessary to 
                        transfer, adjust, or settle a 
                        restricted digital asset transaction 
                        pursuant to a customer's instruction 
                        (standing or otherwise) may be 
                        withdrawn and applied to such purposes, 
                        including the withdrawal and payment of 
                        commissions, brokerage, interest, 
                        taxes, storage, and other charges 
                        lawfully accruing in connection with a 
                        restricted digital asset transaction.
                          (iii) Commission action.--In 
                        accordance with such terms and 
                        conditions as the Commission may 
                        prescribe by rule, regulation, or 
                        order, any money, assets, or property 
                        of a customer of a digital asset broker 
                        or digital asset dealer described in 
                        paragraph (3) may be commingled and 
                        deposited as provided in this section 
                        with any other money, assets, or 
                        property received by the digital asset 
                        broker or digital asset dealer and 
                        required by the Commission to be 
                        separately accounted for and treated 
                        and dealt with as belonging to the 
                        customer of the digital asset broker or 
                        digital asset dealer.
                  (B) Participation in blockchain services.--
                          (i) In general.--A customer shall 
                        have the right to waive the 
                        restrictions in paragraph (3) for any 
                        unit of a digital asset to be used 
                        under clause (ii), by affirmatively 
                        electing, in writing to the digital 
                        asset broker or digital asset dealer, 
                        to waive the restrictions.
                          (ii) Use of funds.--Customer digital 
                        assets removed from segregation under 
                        clause (i) may be pooled and used by 
                        the digital asset broker or digital 
                        asset dealer or its designee to provide 
                        a blockchain service for a blockchain 
                        system to which the unit of the digital 
                        asset removed from segregation under 
                        clause (i) relates.
                          (iii) Limitations.--The Commission 
                        may, by rule, establish notice and 
                        disclosure requirements, and any other 
                        limitations and rules related to the 
                        waiving of any restrictions under this 
                        subparagraph that are reasonably 
                        necessary to protect customers.
                          (iv) Blockchain service defined.--In 
                        this subparagraph, the term 
                        ``blockchain service'' means any 
                        activity relating to validating 
                        transactions on a blockchain system, 
                        providing security for a blockchain 
                        system, or other similar activity 
                        required for the ongoing operation of a 
                        blockchain system.
          (5) Further limitations.--No person shall treat or 
        deal with a restricted digital asset held on behalf of 
        any customer pursuant to paragraph (3) by utilizing any 
        unit of such restricted digital asset to participate in 
        a blockchain service (as defined in paragraph 
        (4)(B)(iv)) or a decentralized governance system 
        associated with the restricted digital asset or the 
        blockchain system to which the restricted digital asset 
        relates in any manner other than that which is 
        expressly directed by the customer from which such unit 
        of a restricted digital asset was received.
  (g) Capital Requirements.--
          (1) In general.--Each registered digital asset broker 
        and registered digital asset dealer shall meet such 
        minimum capital requirements as the Commission may 
        prescribe to ensure that the digital asset broker or 
        digital asset dealer is able to--
                  (A) conduct an orderly wind-down of the 
                activities of the digital asset broker or 
                digital asset dealer; and
                  (B) fulfill the customer obligations of the 
                digital asset broker or digital asset dealer.
          (2) Calculation.--For purposes of any Commission rule 
        or order adopted under this section or any 
        interpretation thereof regulating a digital asset 
        broker or digital asset dealer's financial 
        responsibility obligations and capital requirements, a 
        registered digital asset broker or digital asset dealer 
        that maintains control of customer digital assets in a 
        manner that satisfies the rules issued by the 
        Commission under subsection (f)(2) shall not be 
        required to include the value of such digital assets as 
        assets or liabilities of the digital asset broker or 
        digital asset dealer.
          (3) Coordination of capital requirements.--
                  (A) Commission rule.--The Commission shall, 
                by rule, provide appropriate offsets to any 
                applicable capital requirement for a person 
                with multiple registrations, including as a 
                broker, dealer, digital asset broker, or 
                digital asset dealer.
                  (B) Joint rule.--The Commission and the 
                Commodity Futures Trading Commission shall 
                jointly, by rule, provide appropriate offsets 
                to any applicable capital requirement for a 
                person with multiple registrations, including 
                as a digital asset broker, digital asset 
                dealer, digital asset trading system, digital 
                commodity broker, digital commodity dealer, or 
                digital commodity exchange.
  (h) Reporting and Recordkeeping.--Each registered digital 
asset broker and digital asset dealer--
          (1) shall make such reports as are required by the 
        Commission by rule or regulation regarding the 
        transactions, positions, and financial condition of the 
        digital asset broker or digital asset dealer;
          (2) shall keep books and records in such form and 
        manner and for such period as may be prescribed by the 
        Commission by rule or regulation; and
          (3) shall keep the books and records open to 
        inspection and examination by any representative of the 
        Commission.
  (i) Treatment Under the Bank Secrecy Act.--A digital asset 
broker and a digital asset dealer shall be treated as a 
financial institution for purposes of the Bank Secrecy Act.

SEC. 15I. EXCLUSION FOR ANCILLARY ACTIVITIES.

  (a) In General.--Notwithstanding any other provision of this 
Act, a person shall not be subject to this Act and the 
regulations thereunder solely based on the person undertaking 
any ancillary activities.
  (b) Exceptions.--Subsection (a) shall not be construed to 
apply to the anti-fraud and anti-manipulation authorities of 
the Commission.
  (c) Ancillary Activities Defined.--In this section, the term 
``ancillary activities'' means any of the following activities 
related to the operation of a blockchain system:
          (1) Compiling network transactions, operating or 
        participating in a liquidity pool, relaying, searching, 
        sequencing, validating, or acting in a similar capacity 
        with respect to a digital asset.
          (2) Providing computational work, operating a node, 
        or procuring, offering, or utilizing network bandwidth, 
        or other similar incidental services with respect to a 
        digital asset.
          (3) Providing a user-interface that enables a user to 
        read and access data about a blockchain system, send 
        messages, or otherwise interact with a blockchain 
        system.
          (4) Developing, publishing, constituting, 
        administering, maintaining, or otherwise distributing a 
        blockchain system.
          (5) Developing, publishing, constituting, 
        administering, maintaining, or otherwise distributing 
        software or systems that create or deploy a hardware or 
        software wallet or other system facilitating an 
        individual user's own personal ability to keep, 
        safeguard, or custody the user's digital assets or 
        related private keys.

           *       *       *       *       *       *       *


national system for clearance and settlement of securities transactions

  Sec. 17A. (a)(1) The Congress finds that--
          (A) The prompt and accurate clearance and settlement 
        of securities transactions, including the transfer of 
        record ownership and the safeguarding of securities and 
        funds related thereto, are necessary for the protection 
        of investors and persons facilitating transactions by 
        and acting on behalf of investors.
          (B) Inefficient procedures for clearance and 
        settlement impose unnecessary costs on investors and 
        persons facilitating transactions by and acting on 
        behalf of investors.
          (C) New data processing and communications techniques 
        create the opportunity for more efficient, effective, 
        and safe procedures for clearance and settlement.
          (D) The linking of all clearance and settlement 
        facilities and the development of uniform standards and 
        procedures for clearance and settlement will reduce 
        unnecessary costs and increase the protection of 
        investors and persons facilitating transactions by and 
        acting on behalf of investors.
  (2)(A) The Commission is directed, therefore, having due 
regard for the public interest, the protection of investors, 
the safeguarding of securities and funds, and maintenance of 
fair competition among brokers and dealers, clearing agencies, 
and transfer agents, to use its authority under this title--
          (i) to facilitate the establishment of a national 
        system for the prompt and accurate clearance and 
        settlement of transactions in securities (other than 
        exempt securities); and
          (ii) to facilitate the establishment of linked or 
        coordinated facilities for clearance and settlement of 
        transactions in securities, securities options, 
        contracts of sale for future delivery and options 
        thereon, and commodity options;
in accordance with the findings and to carry out the objectives 
set forth in paragraph (1) of this subsection.
  (B) The Commission shall use its authority under this title 
to assure equal regulation under this title of registered 
clearing agencies and registered transfer agents. In carrying 
out its responsibilities set forth in subparagraph (A)(ii) of 
this paragraph, the Commission shall coordinate with the 
Commodity Futures Trading Commission and consult with the Board 
of Governors of the Federal Reserve System.
  (b)(1) Except as otherwise provided in this section, it shall 
be unlawful for any clearing agency (other than a notice-
registered digital asset clearing agency), unless registered in 
accordance with this subsection, directly or indirectly, to 
make use of the mails or any means or instrumentality of 
interstate commerce to perform the functions of a clearing 
agency with respect to any security (other than an exempted 
security). The Commission, by rule or order, upon its own 
motion or upon application, may conditionally or 
unconditionally exempt any clearing agency or security or any 
class of clearing agencies or securities from any provisions of 
this section or the rules or regulations thereunder, if the 
Commission finds that such exemption is consistent with the 
public interest, the protection of investors, and the purposes 
of this section, including the prompt and accurate clearance 
and settlement of securities transactions and the safeguarding 
of securities and funds. A clearing agency or transfer agent 
shall not perform the functions of both a clearing agency and a 
transfer agent unless such clearing agency or transfer agent is 
registered in accordance with this subsection and subsection 
(c) of this section.
  (2) A clearing agency may be registered under the terms and 
conditions hereinafter provided in this subsection and in 
accordance with the provisions of section 19(a) of this title, 
by filing with the Commission an application for registration 
in such form as the Commission, by rule, may prescribe 
containing the rules of the clearing agency and such other 
information and documents as the Commission, by rule, may 
prescribe as necessary or appropriate in the public interest or 
for the prompt and accurate clearance and settlement of 
securities transactions.
  (3) A clearing agency shall not be registered unless the 
Commission determines that--
          (A) Such clearing agency is so organized and has the 
        capacity to be able to facilitate the prompt and 
        accurate clearance and settlement of securities 
        transactions and derivative agreements, contracts, and 
        transactions for which it is responsible, to safeguard 
        securities and funds in its custody or control or for 
        which it is responsible, to comply with the provisions 
        of this title and the rules and regulations thereunder, 
        to enforce (subject to any rule or order of the 
        Commission pursuant to section 17(d) or 19(g)(2) of 
        this title) compliance by its participants with the 
        rules of the clearing agency, and to carry out the 
        purposes of this section.
          (B) Subject to the provisions of paragraph (4) of 
        this subsection, the rules of the clearing agency 
        provide that any (i) registered broker or dealer, (ii) 
        other registered clearing agency, (iii) registered 
        investment company, (iv) bank, (v) insurance company, 
        or (vi) other person or class of persons as the 
        Commission, by rule, may from time to time designate as 
        appropriate to the development of a national system or 
        the prompt and accurate clearance and settlement of 
        securities transactions may become a participant in 
        such clearing agency.
          (C) The rules of the clearing agency assure a fair 
        representation of its shareholders (or members) and 
        participants in the selection of its directors and 
        administration of its affairs. (The Commission may 
        determine that the representation of participants is 
        fair if they are afforded a reasonable opportunity to 
        acquire voting stock of the clearing agency, directly 
        or indirectly, in reasonable proportion to their use of 
        such clearing agency.)
          (D) The rules of the clearing agency provide for the 
        equitable allocation of reasonable dues, fees, and 
        other charges among its participants.
          (E) The rules of the clearing agency do not impose 
        any schedule of prices, or fix rates or other fees, for 
        services rendered by its participants.
          (F) The rules of the clearing agency are designed to 
        promote the prompt and accurate clearance and 
        settlement of securities transactions and, to the 
        extent applicable, derivative agreements, contracts, 
        and transactions, to assure the safeguarding of 
        securities and funds which are in the custody or 
        control of the clearing agency or for which it is 
        responsible, to foster cooperation and coordination 
        with persons engaged in the clearance and settlement of 
        securities transactions, to remove impediments to and 
        perfect the mechanism of a national system for the 
        prompt and accurate clearance and settlement of 
        securities transactions, and, in general, to protect 
        investors and the public interest; and are not designed 
        to permit unfair discrimination in the admission of 
        participants or among participants in the use of the 
        clearing agency, or to regulate by virtue of any 
        authority conferred by this title matters not related 
        to the purposes of this section or the administration 
        of the clearing agency.
          (G) The rules of the clearing agency provide that 
        (subject to any rule or order of the Commission 
        pursuant to section 17(d) or 19(g)(2) of this title) 
        its participants shall be appropriately disciplined for 
        violation of any provision of the rules of the clearing 
        agency by expulsion, suspension, limitation of 
        activities, functions, and operations, fine, censure, 
        or any other fitting sanction.
          (H) The rules of the clearing agency are in 
        accordance with the provisions of paragraph (5) of this 
        subsection, and, in general, provide a fair procedure 
        with respect to the disciplining of participants, the 
        denial of participation to any persons seeking 
        participation therein, and the prohibition or 
        limitation by the clearing agency of any person with 
        respect to access to services offered by the clearing 
        agency.
          (I) The rules of the clearing agency do not impose 
        any burden on competition not necessary or appropriate 
        in furtherance of the purposes of this title.
  (4)(A) A registered clearing agency may, and in cases in 
which the Commission, by order, directs as appropriate in the 
public interest shall, deny participation to any person subject 
to a statutory disqualification. A registered clearing agency 
shall file notice with the Commission not less than thirty days 
prior to admitting any person to participation, if the clearing 
agency knew, or in the exercise of reasonable care should have 
known, that such person was subject to a statutory 
disqualification. The notice shall be in such form and contain 
such information as the Commission, by rule, may prescribe as 
necessary or appropriate in the public interest or for the 
protection of investors.
  (B) A registered clearing agency may deny participation to, 
or condition the participation of, any person if such person 
does not meet such standards of financial responsibility, 
operational capability, experience, and competence as are 
prescribed by the rules of the clearing agency. A registered 
clearing agency may examine and verify the qualifications of an 
applicant to be a participant in accordance with procedures 
established by the rules of the clearing agency.
  (5)(A) In any proceeding by a registered clearing agency to 
determine whether a participant should be disciplined (other 
than a summary proceeding pursuant to subparagraph (C) of this 
paragraph), the clearing agency shall bring specific charges, 
notify such participant of, and give him an opportunity to 
defend against such charges, and keep a record. A determination 
by the clearing agency to impose a disciplinary sanction shall 
be supported by a statement setting forth--
          (i) any act or practice in which such participant has 
        been found to have engaged, or which such participant 
        has been found to have omitted;
          (ii) the specific provisions of the rules of the 
        clearing agency which any such act or practice, or 
        omission to act, is deemed to violate; and
          (iii) the sanction imposed and the reasons therefor.
  (B) In any proceeding by a registered clearing agency to 
determine whether a person shall be denied participation or 
prohibited or limited with respect to access to services 
offered by the clearing agency, the clearing agency shall 
notify such person of, and give him an opportunity to be heard 
upon, the specific grounds for denial or prohibition or 
limitation under consideration and keep a record. A 
determination by the clearing agency to deny participation or 
prohibit or limit a person with respect to access to services 
offered by the clearing agency shall be supported by a 
statement setting forth the specific grounds on which the 
denial or prohibition or limitation is based.
  (C) A registered clearing agency may summarily suspend and 
close the accounts of a participant who (i) has been and is 
expelled or suspended from any self-regulatory organization, 
(ii) is in default of any delivery of funds or securities to 
the clearing agency, or (iii) is in such financial or operating 
difficulty that the clearing agency determines and so notifies 
the appropriate regulatory agency for such participant that 
such suspension and closing of accounts are necessary for the 
protection of the clearing agency, its participants, creditors, 
or investors. A participant so summarily suspended shall be 
promptly afforded an opportunity for a hearing by the clearing 
agency in accordance with the provisions of subparagraph (A) of 
this paragraph. The appropriate regulatory agency for such 
participant, by order, may stay any such summary suspension on 
its own motion or upon application by any person aggrieved 
thereby, if such appropriate regulatory agency determines 
summarily or after notice and opportunity for hearing (which 
hearing may consist solely of the submission of affidavits or 
presentation of oral arguments) that such stay is consistent 
with the public interest and protection of investors.
  (6) No registered clearing agency shall prohibit or limit 
access by any person to services offered by any participant 
therein.
  (7)(A) A clearing agency that is regulated directly or 
indirectly by the Commodity Futures Trading Commission through 
its association with a designated contract market for security 
futures products that is a national securities exchange 
registered pursuant to section 6(g), and that would be required 
to register pursuant to paragraph (1) of this subsection only 
because it performs the functions of a clearing agency with 
respect to security futures products effected pursuant to the 
rules of the designated contract market with which such agency 
is associated, is exempted from the provisions of this section 
and the rules and regulations thereunder, except that if such a 
clearing agency performs the functions of a clearing agency 
with respect to a security futures product that is not cash 
settled, it must have arrangements in place with a registered 
clearing agency to effect the payment and delivery of the 
securities underlying the security futures product.
  (B) Any clearing agency that performs the functions of a 
clearing agency with respect to security futures products must 
coordinate with and develop fair and reasonable links with any 
and all other clearing agencies that perform the functions of a 
clearing agency with respect to security futures products, in 
order to permit, as of the compliance date (as defined in 
section 6(h)(6)(C)), security futures products to be purchased 
on one market and offset on another market that trades such 
products.
  (8) A registered clearing agency shall be permitted to 
provide facilities for the clearance and settlement of any 
derivative agreements, contracts, or transactions that are 
excluded from the Commodity Exchange Act, subject to the 
requirements of this section and to such rules and regulations 
as the Commission may prescribe as necessary or appropriate in 
the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of this title.
          (9) Registration and requirements for notice-
        registered digital asset clearing agency.--
                  (A) Eligibility.--A person may register with 
                the Commission as a notice-registered digital 
                asset clearing agency if the person--
                          (i) is otherwise registered as a 
                        digital asset broker or digital asset 
                        dealer with the Commission and is 
                        engaging in a business involving 
                        restricted digital assets, in 
                        compliance with Commission rules 
                        pursuant to section 15H(f); or
                          (ii) is a bank engaging in a business 
                        involving digital assets, in compliance 
                        with applicable banking law and 
                        regulation relating to the custody and 
                        safekeeping of such assets.
                  (B) Registration.--A person may register with 
                the Commission as a notice-registered digital 
                asset clearing agency by providing the 
                Commission with notice of the activities of the 
                person or planned activities in such form as 
                the Commission determines appropriate. Such 
                notice shall include information describing the 
                person's policies and procedures relating to 
                the holding of customer assets.
                  (C) Rulemaking.--The Commission may adopt 
                rules, which may not take effect until at least 
                360 days following the date of enactment of 
                this paragraph, with regard to the activities 
                of notice-registered digital asset clearing 
                agencies, taking into account the nature of 
                restricted digital assets.
  (c)(1) Except as otherwise provided in this section, it shall 
be unlawful for any transfer agent, unless registered in 
accordance with this section, directly or indirectly, to make 
use of the mails or any means or instrumentality of interstate 
commerce to perform the function of a transfer agent with 
respect to any security registered under section 12 of this 
title or which would be required to be registered except for 
the exemption from registration provided by subsection 
(g)(2)(B) or (g)(2)(G) of that section. The appropriate 
regulatory agency, by rule or order, upon its own motion or 
upon application, may conditionally or unconditionally exempt 
any person or security or class of persons or securities from 
any provision of this section or any rule or regulation 
prescribed under this section, if the appropriate regulatory 
agency finds (A) that such exemption is in the public interest 
and consistent with the protection of investors and the 
purposes of this section, including the prompt and accurate 
clearance and settlement of securities transactions and the 
safeguarding of securities and funds, and (B) the Commission 
does not object to such exemption.
  (2) A transfer agent may be registered by filing with the 
appropriate regulatory agency for such transfer agent an 
application for registration in such form and containing such 
information and documents concerning such transfer agent and 
any persons associated with the transfer agent as such 
appropriate regulatory agency may prescribe as necessary or 
appropriate in furtherance of the purposes of this section. 
Except as hereinafter provided, such registration shall become 
effective 45 days after receipt of such application by such 
appropriate regulatory agency or within such shorter period of 
time as such appropriate regulatory agency may determine.
  (3) The appropriate regulatory agency for a transfer agent, 
by order, shall deny registration to, censure, place 
limitations on the activities, functions, or operations of, 
suspend for a period not exceeding 12 months, or revoke the 
registration of such transfer agent, if such appropriate 
regulatory agency finds, on the record after notice and 
opportunity for hearing, that such denial, censure, placing of 
limitations, suspension, or revocation is in the public 
interest and that such transfer agent, whether prior or 
subsequent to becoming such, or any person associated with such 
transfer agent, whether prior or subsequent to becoming so 
associated--
          (A) has committed or omitted any act, or is subject 
        to an order or finding, enumerated in subparagraph (A), 
        (D), (E), (H), or (G) of paragraph (4) of section 15(b) 
        of this title, has been convicted of any offense 
        specified in subparagraph (B) of such paragraph (4) 
        within ten years of the commencement of the proceedings 
        under this paragraph, or is enjoined from any action, 
        conduct, or practice specified in subparagraph (C) of 
        such paragraph (4); or
          (B) is subject to an order entered pursuant to 
        subparagraph (C) of paragraph (4) of this subsection 
        barring or suspending the right of such person to be 
        associated with a transfer agent.
  (4)(A) Pending final determination whether any registration 
by a transfer agent under this subsection shall be denied, the 
appropriate regulatory agency for such transfer agent, by 
order, may postpone the effective date of such registration for 
a period not to exceed fifteen days, but if, after notice and 
opportunity for hearing (which may consist solely of affidavits 
and oral arguments), it shall appear to such appropriate 
regulatory agency to be necessary or appropriate in the public 
interest or for the protection of investors to postpone the 
effective date of such registration until final determination, 
such appropriate regulatory agency shall so order. Pending 
final determination whether any registration under this 
subsection shall be revoked, such appropriate regulatory 
agency, by order, may suspend such registration, if such 
suspension appears to such appropriate regulatory agency, after 
notice and opportunity for hearing, to be necessary or 
appropriate in the public interest or for the protection of 
investors.
  (B) A registered transfer agent may, upon such terms and 
conditions as the appropriate regulatory agency for such 
transfer agent deems necessary or appropriate in the public 
interest, for the protection of investors, or in furtherance of 
the purposes of this section, withdraw from registration by 
filing a written notice of withdrawal with such appropriate 
regulatory agency. If such appropriate regulatory agency finds 
that any transfer agent for which it is the appropriate 
regulatory agency, is no longer in existence or has ceased to 
do business as a transfer agent, such appropriate regulatory 
agency, by order, shall cancel or deny the registration.
  (C) The appropriate regulatory agency for a transfer agent, 
by order, shall censure or place limitations on the activities 
or functions of any person associated, seeking to become 
associated, or, at the time of the alleged misconduct, 
associated or seeking to become associated with the transfer 
agent, or suspend for a period not exceeding 12 months or bar 
any such person from being associated with any transfer agent, 
broker, dealer, investment adviser, municipal securities 
dealer, municipal advisor, or nationally recognized statistical 
rating organization, if the appropriate regulatory agency 
finds, on the record after notice and opportunity for hearing, 
that such censure, placing of limitations, suspension, or bar 
is in the public interest and that such person has committed or 
omitted any act, or is subject to an order or finding, 
enumerated in subparagraph (A), (D), (E), (H), or (G) or 
paragraph (4) of section 15(b) of this title, has been 
convicted of any offense specified in subparagraph (B) of such 
paragraph (4) within ten years of the commencement of the 
proceedings under this paragraph, or is enjoined from any 
action, conduct, or practice specified in subparagraph (C) of 
such paragraph (4). It shall be unlawful for any person as to 
whom such an order suspending or barring him from being 
associated with a transfer agent is in effect willfully to 
become, or to be, associated with a transfer agent without the 
consent of the appropriate regulatory agency that entered the 
order and the appropriate regulatory agency for that transfer 
agent. It shall be unlawful for any transfer agent to permit 
such a person to become, or remain, a person associated with it 
without the consent of such appropriate regulatory agencies, if 
the transfer agent knew, or in the exercise of reasonable care 
should have known, of such order. The Commission may establish, 
by rule, procedures by which a transfer agent reasonably can 
determine whether a person associated or seeking to become 
associated with it is subject to any such order, and may 
require, by rule, that any transfer agent comply with such 
procedures.
  (d)(1) No registered clearing agency or registered transfer 
agent shall, directly or indirectly, engage in any activity as 
clearing agency or transfer agent in contravention of such 
rules and regulations (A) as the Commission may prescribe as 
necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the 
purposes of this title, or (B) as the appropriate regulatory 
agency for such clearing agency or transfer agent may prescribe 
as necessary or appropriate for the safeguarding of securities 
and funds.
  (2) With respect to any clearing agency or transfer agent for 
which the Commission is not the appropriate regulatory agency, 
the appropriate regulatory agency for such clearing agency or 
transfer agent may, in accordance with section 8 of the Federal 
Deposit Insurance Act (12 U.S.C. 1818), enforce compliance by 
such clearing agency or transfer agent with the provisions of 
this section, sections 17 and 19 of this title, and the rules 
and regulations thereunder. For purposes of the preceding 
sentence, any violation of any such provision shall constitute 
adequate basis for the issuance of an order under section 8(b) 
or 8(c) of the Federal Deposit Insurance Act, and the 
participants in any such clearing agency and the persons doing 
business with any such transfer agent shall be deemed to be 
``depositors'' as that term is used in section 8(c) of that 
Act.
  (3)(A) With respect to any clearing agency or transfer agent 
for which the Commission is not the appropriate regulatory 
agency, the Commission and the appropriate regulatory agency 
for such clearing agency or transfer agent shall consult and 
cooperate with each other, and, as may be appropriate, with 
State banking authorities having supervision over such clearing 
agency or transfer agent toward the end that, to the maximum 
extent practicable, their respective regulatory 
responsibilities may be fulfilled and the rules and regulations 
applicable to such clearing agency or transfer agent may be in 
accord with both sound banking practices and a national system 
for the prompt and accurate clearance and settlement of 
securities transactions. In accordance with this objective--
          (i) the Commission and such appropriate regulatory 
        agency shall, at least fifteen days prior to the 
        issuance for public comment of any proposed rule or 
        regulation or adoption of any rule or regulation 
        concerning such clearing agency or transfer agent, 
        consult and request the views of the other; and
          (ii) such appropriate regulatory agency shall assume 
        primary responsibility to examine and enforce 
        compliance by such clearing agency or transfer agent 
        with the provisions of this section and sections 17 and 
        19 of this title.
  (B) Nothing in the preceding subparagraph or elsewhere in 
this title shall be construed to impair or limit (other than by 
the requirement of notification) the Commission's authority to 
make rules under any provision of this title or to enforce 
compliance pursuant to any provision of this title by any 
clearing agency, transfer agent, or person associated with a 
transfer agent with the provisions of this title and the rules 
and regulations thereunder.
  (4) Nothing in this section shall be construed to impair the 
authority of any State banking authority or other State or 
Federal regulatory authority having jurisdiction over a person 
registered as a clearing agency, transfer agent, or person 
associated with a transfer agent, to make and enforce rules 
governing such person which are not inconsistent with this 
title and the rules and regulations thereunder.
  (5) A registered transfer agent may not, directly or 
indirectly, engage in any activity in connection with the 
guarantee of a signature of an endorser of a security, 
including the acceptance or rejection of such guarantee, in 
contravention of such rules and regulations as the Commission 
may prescribe as necessary or appropriate in the public 
interest, for the protection of investors, to facilitate the 
equitable treatment of financial institutions which issue such 
guarantees, or otherwise in furtherance of the purposes of this 
title.
  (e) The Commission shall use its authority under this title 
to end the physical movement of securities certificates in 
connection with the settlement among brokers and dealers of 
transactions in securities consummated by means of the mails or 
any means or instrumentalities of interstate commerce.
  (f)(1) Notwithstanding any provision of State law, except as 
provided in paragraph (3), if the Commission makes each of the 
findings described in paragraph (2)(A), the Commission may 
adopt rules concerning--
          (A) the transfer of certificated or uncertificated 
        securities (other than government securities issued 
        pursuant to chapter 31 of title 31, United States Code, 
        or securities otherwise processed within a book-entry 
        system operated by the Federal Reserve banks pursuant 
        to a Federal book-entry regulation) or limited 
        interests (including security interests) therein; and
          (B) rights and obligations of purchasers, sellers, 
        owners, lenders, borrowers, and financial 
        intermediaries (including brokers, dealers, banks, and 
        clearing agencies) involved in or affected by such 
        transfers, and the rights of third parties whose 
        interests in such securities devolve from such 
        transfers.
  (2)(A) The findings described in this paragraph are findings 
by the Commission that--
          (i) such rule is necessary or appropriate for the 
        protection of investors or in the public interest and 
        is reasonably designed to promote the prompt, accurate, 
        and safe clearance and settlement of securities 
        transactions;
          (ii) in the absence of a uniform rule, the safe and 
        efficient operation of the national system for 
        clearance and settlement of securities transactions 
        will be, or is, substantially impeded; and
          (iii) to the extent such rule will impair or 
        diminish, directly or indirectly, rights of persons 
        specified in paragraph (1)(B) under State law 
        concerning transfers of securities (or limited 
        interests therein), the benefits of such rule outweigh 
        such impairment or diminution of rights.
  (B) In making the findings described in subparagraph (A), the 
Commission shall give consideration to the recommendations of 
the Advisory Committee established under paragraph (4), and it 
shall consult with and consider the views of the Secretary of 
the Treasury and the Board of Governors of the Federal Reserve 
System. If the Secretary of the Treasury objects, in writing, 
to any proposed rule of the Commission on the basis of the 
Secretary's view on the issues described in clauses (i), (ii), 
and (iii) of subparagraph (A), the Commission shall consider 
all feasible alternatives to the proposed rule, and it shall 
not adopt any such rule unless the Commission makes an explicit 
finding that the rule is the most practicable method for 
achieving safe and efficient operation of the national 
clearance and settlement system.
  (3) Any State may, prior to the expiration of 2 years after 
the Commission adopts a rule under this subsection, enact a 
statute that specifically refers to this subsection and the 
specific rule thereunder and establishes, prospectively from 
the date of enactment of the State statute, a provision that 
differs from that applicable under the Commission's rule.
  (4)(A) Within 90 days after the date of enactment of this 
subsection, the Commission shall (and at such times thereafter 
as the Commission may determine, the Commission may), after 
consultation with the Secretary of the Treasury and the Board 
of Governors of the Federal Reserve System, establish an 
advisory committee under chapter 10 of title 5, United States 
Code. The Advisory Committee shall be directed to consider and 
report to the Commission on such matters as the Commission, 
after consultation with the Secretary of the Treasury and the 
Board of Governors of the Federal Reserve System, determines, 
including the areas, if any, in which State commercial laws and 
related Federal laws concerning the transfer of certificated or 
uncertificated securities, limited interests (including 
security interests) in such securities, or the creation or 
perfection of security interests in such securities do not 
provide the necessary certainty, uniformity, and clarity for 
purchasers, sellers, owners, lenders, borrowers, and financial 
intermediaries concerning their respective rights and 
obligations.
  (B) The Advisory Committee shall consist of 15 members, of 
which--
          (i) 11 shall be designated by the Commission in 
        accordance with chapter 10 of title 5, United States 
        Code; and
          (ii) 2 each shall be designated by the Board of 
        Governors of the Federal Reserve System and the 
        Secretary of the Treasury.
  (C) The Advisory Committee shall conduct its activities in 
accordance with chapter 10 of title 5, United States Code. 
Within 6 months of its designation, or such longer time as the 
Commission may designate, the Advisory Committee shall issue a 
report to the Commission, and shall cause copies of that report 
to be delivered to the Secretary of the Treasury and the 
Chairman of the Board of Governors of the Federal Reserve 
System.
  (g) Due Diligence for the Delivery of Dividends, Interest, 
and Other Valuable Property Rights.--
          (1) Revision of rules required.--The Commission shall 
        revise its regulations in section 240.17Ad-17 of title 
        17, Code of Federal Regulations, as in effect on 
        December 8, 1997, to extend the application of such 
        section to brokers and dealers and to provide for the 
        following:
                  (A) A requirement that the paying agent 
                provide a single written notification to each 
                missing security holder that the missing 
                security holder has been sent a check that has 
                not yet been negotiated. The written 
                notification may be sent along with a check or 
                other mailing subsequently sent to the missing 
                security holder but must be provided no later 
                than 7 months after the sending of the not yet 
                negotiated check.
                  (B) An exclusion for paying agents from the 
                notification requirements when the value of the 
                not yet negotiated check is less than $25.
                  (C) A provision clarifying that the 
                requirements described in subparagraph (A) 
                shall have no effect on State escheatment laws.
                  (D) For purposes of such revised 
                regulations--
                          (i) a security holder shall be 
                        considered a ``missing security 
                        holder'' if a check is sent to the 
                        security holder and the check is not 
                        negotiated before the earlier of the 
                        paying agent sending the next regularly 
                        scheduled check or the elapsing of 6 
                        months after the sending of the not yet 
                        negotiated check; and
                          (ii) the term ``paying agent'' 
                        includes any issuer, transfer agent, 
                        broker, dealer, investment adviser, 
                        indenture trustee, custodian, or any 
                        other person that accepts payments from 
                        the issuer of a security and 
                        distributes the payments to the holders 
                        of the security.
          (2) Rulemaking.--The Commission shall adopt such 
        rules, regulations, and orders necessary to implement 
        this subsection no later than 1 year after the date of 
        enactment of this subsection. In proposing such rules, 
        the Commission shall seek to minimize disruptions to 
        current systems used by or on behalf of paying agents 
        to process payment to account holders and avoid 
        requiring multiple paying agents to send written 
        notification to a missing security holder regarding the 
        same not yet negotiated check.
  (g) Registration Requirement.--It shall be unlawful for a 
clearing agency, unless registered with the Commission, 
directly or indirectly to make use of the mails or any means or 
instrumentality of interstate commerce to perform the functions 
of a clearing agency with respect to a security-based swap.
  (h) Voluntary Registration.--A person that clears agreements, 
contracts, or transactions that are not required to be cleared 
under this title may register with the Commission as a clearing 
agency.
  (i) Standards for Clearing Agencies Clearing Security-based 
Swap Transactions.--To be registered and to maintain 
registration as a clearing agency that clears security-based 
swap transactions, a clearing agency shall comply with such 
standards as the Commission may establish by rule. In 
establishing any such standards, and in the exercise of its 
oversight of such a clearing agency pursuant to this title, the 
Commission may conform such standards or oversight to reflect 
evolving United States and international standards. Except 
where the Commission determines otherwise by rule or 
regulation, a clearing agency shall have reasonable discretion 
in establishing the manner in which it complies with any such 
standards.
  (j) Rules.--The Commission shall adopt rules governing 
persons that are registered as clearing agencies for security-
based swaps under this title.
  (k) Exemptions.--The Commission may exempt, conditionally or 
unconditionally, a clearing agency from registration under this 
section for the clearing of security-based swaps if the 
Commission determines that the clearing agency is subject to 
comparable, comprehensive supervision and regulation by the 
Commodity Futures Trading Commission or the appropriate 
government authorities in the home country of the agency. Such 
conditions may include, but are not limited to, requiring that 
the clearing agency be available for inspection by the 
Commission and make available all information requested by the 
Commission.
  (l) Existing Depository Institutions and Derivative Clearing 
Organizations.--
          (1) In general.--A depository institution or 
        derivative clearing organization registered with the 
        Commodity Futures Trading Commission under the 
        Commodity Exchange Act that is required to be 
        registered as a clearing agency under this section is 
        deemed to be registered under this section solely for 
        the purpose of clearing security-based swaps to the 
        extent that, before the date of enactment of this 
        subsection--
                  (A) the depository institution cleared swaps 
                as a multilateral clearing organization; or
                  (B) the derivative clearing organization 
                cleared swaps pursuant to an exemption from 
                registration as a clearing agency.
          (2) Conversion of depository institutions.--A 
        depository institution to which this subsection applies 
        may, by the vote of the shareholders owning not less 
        than 51 percent of the voting interests of the 
        depository institution, be converted into a State 
        corporation, partnership, limited liability company, or 
        similar legal form pursuant to a plan of conversion, if 
        the conversion is not in contravention of applicable 
        State law.
          (3) Sharing of information.--The Commodity Futures 
        Trading Commission shall make available to the 
        Commission, upon request, all information determined to 
        be relevant by the Commodity Futures Trading Commission 
        regarding a derivatives clearing organization deemed to 
        be registered with the Commission under paragraph (1).
  (m) Modification of Core Principles.--The Commission may 
conform the core principles established in this section to 
reflect evolving United States and international standards.

           *       *       *       *       *       *       *


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

  (a) Offers and Sales of Certain Restricted Digital Assets.--
          (1) In general.--Notwithstanding any other provision 
        of law, subject to paragraph (2), a restricted digital 
        asset may be offered and sold on a digital asset 
        trading system by any person other than a digital asset 
        issuer if, at the time of such offer or sale, any 
        blockchain system to which the restricted digital asset 
        relates is a functional network and the information 
        described in section 43 has been certified and made 
        publicly available for any blockchain system to which 
        the restricted digital asset relates.
          (2) Additional rules for related persons and 
        affiliated persons.--Except as provided under 
        subsection (c), a restricted digital asset owned by a 
        related person or an affiliated person may only be 
        offered or sold after 12 months after the later of--
                  (A) the date on which such restricted digital 
                asset was acquired; or
                  (B) the digital asset maturity date.
  (b) Offers and Sales of Certain Digital Commodities.--
          (1) In general.--Subject to paragraph (2), a digital 
        commodity may be offered and sold by any person.
          (2) Rules for related and affiliated persons.--Except 
        as provided under subsection (c), a digital commodity 
        may only be offered or sold by a related person or an 
        affiliated person if--
                  (A) the holder of the digital commodity owned 
                the digital commodity while it was a restricted 
                digital asset for 12 months after the later 
                of--
                          (i) the date on which such restricted 
                        digital asset was acquired; or
                          (ii) the digital asset maturity date;
                  (B) any blockchain system to which the 
                digital commodity relates is certified to be a 
                decentralized network under section 44; and
                  (C) the digital commodity is offered or sold 
                on or subject to the rules of a digital 
                commodity exchange registered under section 5i 
                of the Commodity Exchange Act.
          (3) Not an investment contract.--For purposes of the 
        securities laws, an offer or sale of a digital 
        commodity that does not violate paragraph (2) shall not 
        be a transaction in an investment contract.
  (c) Sales Restrictions for Affiliated Persons.--A digital 
asset may be offered and sold by an affiliated person under 
subsection (a) or (b) if--
          (1) the aggregate amount of such digital assets sold 
        in any 3-month period by the affiliated person is not 
        greater than one percent of the digital assets then 
        outstanding; or
          (2) the affiliated person promptly, following the 
        placement of an order to sell one percent or more of 
        the digital assets then outstanding during any 3-month 
        period, reports the sale to--
                  (A) the Commodity Futures Trading Commission, 
                in the case of an order to sell a digital 
                commodity on or subject to the rules of a 
                digital commodity exchange; or
                  (B) the Securities and Exchange Commission, 
                in the case of a sell order for a restricted 
                digital asset placed with a digital asset 
                trading system.
  (d) Treatment of Certain End User Distributions Under the 
Securities Laws.--
          (1) In general.--With respect to a digital asset, an 
        end user distribution is described under this paragraph 
        if--
                  (A) each blockchain system to which such 
                digital asset relates is a functional network; 
                and
                  (B) with respect to the digital asset and 
                each blockchain system to which such digital 
                asset relates, the information described in 
                section 43 has been certified and made publicly 
                available.
          (2) Not an investment contract.--For purposes of the 
        securities laws, an end user distribution described 
        under paragraph (1) shall not be a transaction in an 
        investment contract.
          (3) Exemption.--Section 5 of the Securities Act of 
        1933 (15 U.S.C. 77e) shall not apply to an end user 
        distribution described under paragraph (1) or a 
        transaction in a unit of digital asset issued in such a 
        distribution.

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

  (a) Disclosure Information.--With respect to a digital asset 
and any blockchain system to which the digital asset relates, 
the information described under this section is as follows:
          (1) Source code.--The source code for any blockchain 
        system to which the digital asset relates.
          (2) Transaction history.--A description of the steps 
        necessary to independently access, search, and verify 
        the transaction history of any blockchain system to 
        which the digital asset relates.
          (3) Digital asset economics.--A description of the 
        purpose of any blockchain system to which the digital 
        asset relates and the operation of any such blockchain 
        system, including--
                  (A) information explaining the launch and 
                supply process, including the number of digital 
                assets to be issued in an initial allocation, 
                the total number of digital assets to be 
                created, the release schedule for the digital 
                assets, and the total number of digital assets 
                then outstanding;
                  (B) information on any applicable consensus 
                mechanism or process for validating 
                transactions, method of generating or mining 
                digital assets, and any process for burning or 
                destroying digital assets on the blockchain 
                system;
                  (C) an explanation of governance mechanisms 
                for implementing changes to the blockchain 
                system or forming consensus among holders of 
                such digital assets; and
                  (D) sufficient information for a third party 
                to create a tool for verifying the transaction 
                history of the digital asset.
          (4) Plan of development.--The current state and 
        timeline for the development of any blockchain system 
        to which the digital asset relates, showing how and 
        when the blockchain system intends or intended to be 
        considered a functional network and decentralized 
        network.
          (5) Development disclosures.--A list of all persons 
        who are related persons or affiliated persons who have 
        been issued a unit of a digital asset by a digital 
        asset issuer or have a right to a unit of a digital 
        asset from a digital asset issuer.
          (6) Risk factor disclosures.--Where appropriate, 
        provide under the caption ``Risk Factors'' a 
        description of the material risks surrounding ownership 
        of a unit of a digital asset. This discussion shall be 
        organized logically with relevant headings and each 
        risk factor shall be set forth under a subcaption that 
        adequately describes the risk.
  (b) Certification.--With respect to a digital asset and any 
blockchain system to which the digital asset relates, the 
information required to be made available under this section 
has been certified if the digital asset issuer, an affiliated 
person, a decentralized governance system, or a digital 
commodity exchange certifies on a quarterly basis to the 
Commodity Futures Trading Commission and the Securities and 
Exchange Commission that the information is true and correct.

SEC. 44. CERTIFICATION OF CERTAIN DIGITAL ASSETS.

  (a) Certification.--Any person may certify to the Securities 
and Exchange Commission that the blockchain system to which a 
digital asset relates is a decentralized network.
  (b) Filing Requirements.--A certification described under 
subsection (a) shall be filed with the Commission, and 
include--
          (1) information regarding the person making the 
        certification;
          (2) a description of the blockchain system and the 
        digital asset which relates to such blockchain system, 
        including--
                  (A) the operation of the blockchain system;
                  (B) the functionality of the related digital 
                asset;
                  (C) any decentralized governance system which 
                relates to the blockchain system; and
                  (D) the process to develop consensus or 
                agreement within such decentralized governance 
                system;
          (3) a description of the development of the 
        blockchain system and the digital asset which relates 
        to the blockchain system, including--
                  (A) a history of the development of the 
                blockchain system and the digital asset which 
                relates to such blockchain system;
                  (B) a description of the issuance process for 
                the digital asset which relates to the 
                blockchain system;
                  (C) information identifying the digital asset 
                issuer of the digital asset which relates to 
                the blockchain system; and
                  (D) a list of any affiliated person related 
                to the digital asset issuer;
          (4) an analysis of the factors on which such person 
        based the certification that the blockchain system is a 
        decentralized network, including--
                  (A) an explanation of the protections and 
                prohibitions available during the previous 12 
                months against any one person being able to--
                          (i) control or materially alter the 
                        blockchain system;
                          (ii) exclude any other person from 
                        using or participating on the 
                        blockchain system; and
                          (iii) exclude any other person from 
                        participating in a decentralized 
                        governance system;
                  (B) information regarding the beneficial 
                ownership of the digital asset which relates to 
                such blockchain system and the distribution of 
                voting power in any decentralized governance 
                system during the previous 12 months;
                  (C) information regarding the history of 
                upgrades to the source code for such blockchain 
                system during the previous 3 months, 
                including--
                          (i) a description of any consensus or 
                        agreement process utilized to process 
                        or approve changes to the source code;
                          (ii) a list of any material changes 
                        to the source code, the purpose and 
                        effect of the changes, and the 
                        contributor of the changes, if known; 
                        and
                          (iii) any changes to the source code 
                        made by the digital asset issuer, a 
                        related person, or an affiliated 
                        person;
                  (D) information regarding any activities 
                conducted to market the digital asset which 
                relates to the blockchain system during the 
                previous 3 months by the digital asset issuer 
                or an affiliated person of the digital asset 
                issuer; and
                  (E) information regarding any issuance of a 
                unit of the digital asset which relates to such 
                blockchain system during the previous 12 
                months; and
          (5) with respect to a blockchain system for which a 
        certification has previously been rebutted under this 
        section or withdrawn under section 5i(m) of the 
        Commodity Exchange Act, specific information relating 
        to the analysis provided in subsection (f)(2) in 
        connection with such rebuttal or such section 
        5i(m)(1)(C) in connection with such withdrawal.
  (c) Rebuttable Presumption.--The Commission may rebut a 
certification described under subsection (a) with respect to a 
blockchain system if the Commission, within 60 days of 
receiving such certification, determines that the blockchain 
system is not a decentralized network.
  (d) Certification Review.--
          (1) In general.--Any blockchain system that relates 
        to a digital asset for which a certification has been 
        made under subsection (a) shall be considered a 
        decentralized network 60 days after the date on which 
        the Commission receives a certification under 
        subsection (a), unless the Commission notifies the 
        person who made the certification within such time that 
        the Commission is staying the certification due to--
                  (A) an inadequate explanation by the person 
                making the certification; or
                  (B) any novel or complex issues which require 
                additional time to consider.
          (2) Public notice.--The Commission shall make the 
        following available to the public and provide a copy to 
        the Commodity Futures Trading Commission:
                  (A) Each certification received under 
                subsection (a).
                  (B) Each stay of the Commission under this 
                section, and the reasons therefore.
                  (C) Any response from a person making a 
                certification under subsection (a) to a stay of 
                the certification by the Commission.
          (3) Consolidation.--The Commission may consolidate 
        and treat as one submission multiple certifications 
        made under subsection (a) for the same blockchain 
        system which relates to a digital asset which are 
        received during the review period provided under this 
        subsection.
  (e) Stay of Certification.--
          (1) In general.--A notification by the Commission 
        pursuant to subsection (d)(1) shall stay the 
        certification once for up to an additional 120 days 
        from the date of the notification.
          (2) Public comment period.--Before the end of the 60-
        day period described under subsection (d)(1), the 
        Commission may begin a public comment period of at 
        least 30 days in conjunction with a stay under this 
        section.
  (f) Disposition of Certification.--
          (1) In general.--A certification made under 
        subsection (a) shall--
                  (A) become effective--
                          (i) upon the publication of a 
                        notification from the Commission to the 
                        person who made the certification that 
                        the Commission does not object to the 
                        certification; or
                          (ii) at the expiration of the 
                        certification review period; and
                  (B) not become effective upon the publication 
                of a notification from the Commission to the 
                person who made the certification that the 
                Commission has rebutted the certification.
          (2) Detailed analysis included with rebuttal.--The 
        Commission shall include, with each publication of a 
        notification of rebuttal described under paragraph 
        (1)(B), a detailed analysis of the factors on which the 
        decision was based.
  (g) Recertification.--With respect to a blockchain system for 
which a certification has been rebutted under this section, no 
person may make a certification under subsection (a) with 
respect to such blockchain system during the 90-day period 
beginning on the date of such rebuttal.
  (h) Appeal of Rebuttal.--
          (1) In general.--If a certification is rebutted under 
        this section, the person making such certification may 
        appeal the decision to the United States Court of 
        Appeals for the District of Columbia, not later than 60 
        days after the notice of rebuttal is made.
          (2) Review.--In an appeal under paragraph (1), the 
        court shall have de novo review of the determination to 
        rebut the certification.
  (i) Liability for Providing False Information.--It shall be 
unlawful for any person to provide false information in support 
of a certification under this section if such person knew or 
reasonably should have known such information was false.

           *       *       *       *       *       *       *

                              ----------                              


                         COMMODITY EXCHANGE ACT

   Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, That this 
Act may be cited as the ``Commodity Exchange Act''.

SEC. 1A. DEFINITIONS.

   As used in this Act:
          (1) Alternative trading system.--The term 
        ``alternative trading system'' means an organization, 
        association, or group of persons that--
                  (A) is registered as a broker or dealer 
                pursuant to section 15(b) of the Securities 
                Exchange Act of 1934 (except paragraph (11) 
                thereof);
                  (B) performs the functions commonly performed 
                by an exchange (as defined in section 3(a)(1) 
                of the Securities Exchange Act of 1934);
                  (C) does not--
                          (i) set rules governing the conduct 
                        of subscribers other than the conduct 
                        of such subscribers' trading on the 
                        alternative trading system; or
                          (ii) discipline subscribers other 
                        than by exclusion from trading; and
                  (D) is exempt from the definition of the term 
                ``exchange'' under such section 3(a)(1) by rule 
                or regulation of the Securities and Exchange 
                Commission on terms that require compliance 
                with regulations of its trading functions.
          (2) Appropriate federal banking agency.--The term 
        ``appropriate Federal banking agency''--
                  (A) has the meaning given the term in section 
                3 of the Federal Deposit Insurance Act (12 
                U.S.C. 1813);
                  (B) means the Board in the case of a 
                noninsured State bank; and
                  (C) is the Farm Credit Administration for 
                farm credit system institutions.
          (3) Associated person of a security-based swap dealer 
        or major security-based swap participant.--The term 
        ``associated person of a security-based swap dealer or 
        major security-based swap participant'' has the meaning 
        given the term in section 3(a) of the Securities 
        Exchange Act of 1934 (15 U.S.C. 78c(a)).
          (4) Associated person of a swap dealer or major swap 
        participant.--
                  (A) In general.--The term ``associated person 
                of a swap dealer or major swap participant'' 
                means a person who is associated with a swap 
                dealer or major swap participant 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 
                        swaps; or
                          (ii) the supervision of any person or 
                        persons so engaged.
                  (B) Exclusion.--Other than for purposes of 
                section 4s(b)(6), the term ``associated person 
                of a swap dealer or major swap participant'' 
                does not include any person associated with a 
                swap dealer or major swap participant the 
                functions of which are solely clerical or 
                ministerial.
          (5) Board.--The term ``Board'' means the Board of 
        Governors of the Federal Reserve System.
          (6) Board of trade.--The term ``board of trade'' 
        means any organized exchange or other trading facility.
          (7) Cleared swap.--The term ``cleared swap'' means 
        any swap that is, directly or indirectly, submitted to 
        and cleared by a derivatives clearing organization 
        registered with the Commission.
          (8) Commission.--The term ``Commission'' means the 
        Commodity Futures Trading Commission established under 
        section 2(a)(2).
          (9) Commodity.--The term ``commodity'' means wheat, 
        cotton, rice, corn, oats, barley, rye, flaxseed, grain 
        sorghums, mill feeds, butter, eggs, Solanum tuberosum 
        (Irish potatoes), wool, wool tops, fats and oils 
        (including lard, tallow, cottonseed oil, peanut oil, 
        soybean oil, and all other fats and oils), cottonseed 
        meal, cottonseed, peanuts, soybeans, soybean meal, 
        livestock, livestock products, and frozen concentrated 
        orange juice, and all other goods and articles, except 
        onions (as provided by the first section of Public Law 
        85-839 (7 U.S.C. 13-1)) and motion picture box office 
        receipts (or any index, measure, value, or data related 
        to such receipts), and all services, rights, and 
        interests (except motion picture box office receipts, 
        or any index, measure, value or data related to such 
        receipts) in which contracts for future delivery are 
        presently or in the future dealt in.
          (10) Commodity pool.--
                  (A) In general.--The term ``commodity pool'' 
                means any investment trust, syndicate, or 
                similar form of enterprise operated for the 
                purpose of trading in commodity interests, 
                including any--
                          (i) commodity for future delivery, 
                        security futures product, or swap;
                          (ii) agreement, contract, or 
                        transaction described in section 
                        2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
                          (iii) digital commodity;
                          [(iii)] (iv) commodity option 
                        authorized under section 4c; or
                          [(iv)] (v) leverage transaction 
                        authorized under section 19.
                  (B) Further definition.--The Commission, by 
                rule or regulation, may include within, or 
                exclude from, the term ``commodity pool'' any 
                investment trust, syndicate, or similar form of 
                enterprise if the Commission determines that 
                the rule or regulation will effectuate the 
                purposes of this Act.
          (11) Commodity pool operator.--
                  (A) In general.--The term ``commodity pool 
                operator'' means any person--
                          (i) engaged in a business that is of 
                        the nature of a commodity pool, 
                        investment trust, syndicate, or similar 
                        form of enterprise, and who, in 
                        connection therewith, solicits, 
                        accepts, or receives from others, 
                        funds, securities, or property, either 
                        directly or through capital 
                        contributions, the sale of stock or 
                        other forms of securities, or 
                        otherwise, for the purpose of trading 
                        in commodity interests, including any--
                                  (I) commodity for future 
                                delivery, security futures 
                                product, or swap;
                                  (II) agreement, contract, or 
                                transaction described in 
                                section 2(c)(2)(C)(i) or 
                                section 2(c)(2)(D)(i);
                                  (III) digital commodity;
                                  [(III)] (IV) commodity option 
                                authorized under section 4c; or
                                  [(IV)] (V) leverage 
                                transaction authorized under 
                                section 19; or
                          (ii) who is registered with the 
                        Commission as a commodity pool 
                        operator.
                  (B) Exclusion.--The term ``commodity pool 
                operator'' does not include--
                          (i) a decentralized governance 
                        system; or
                          (ii) ancillary activities, as defined 
                        in section 4v.
                  [(B)] (C) Further definition.--The 
                Commission, by rule or regulation, may include 
                within, or exclude from, the term ``commodity 
                pool operator'' any person engaged in a 
                business that is of the nature of a commodity 
                pool, investment trust, syndicate, or similar 
                form of enterprise if the Commission determines 
                that the rule or regulation will effectuate the 
                purposes of this Act.
          (12) Commodity trading advisor.--
                  (A) In general.--Except as otherwise provided 
                in this paragraph, the term ``commodity trading 
                advisor'' means any person who--
                          (i) for compensation or profit, 
                        engages in the business of advising 
                        others, either directly or through 
                        publications, writings, or electronic 
                        media, as to the value of or the 
                        advisability of trading in--
                                  (I) any contract of sale of a 
                                commodity for future delivery, 
                                security futures product, or 
                                swap;
                                  (II) any agreement, contract, 
                                or transaction described in 
                                section 2(c)(2)(C)(i) or 
                                section 2(c)(2)(D)(i);
                                  (III) a digital commodity;
                                  [(III)] (IV) any commodity 
                                option authorized under section 
                                4c; or
                                  [(IV)] (V) any leverage 
                                transaction authorized under 
                                section 19;
                          (ii) for compensation or profit, and 
                        as part of a regular business, issues 
                        or promulgates analyses or reports 
                        concerning any of the activities 
                        referred to in clause (i);
                          (iii) is registered with the 
                        Commission as a commodity trading 
                        advisor; or
                          (iv) the Commission, by rule or 
                        regulation, may include if the 
                        Commission determines that the rule or 
                        regulation will effectuate the purposes 
                        of this Act.
                  (B) Exclusions.--Subject to subparagraph (C), 
                the term ``commodity trading advisor'' does not 
                include--
                          (i) any bank or trust company or any 
                        person acting as an employee thereof;
                          (ii) any news reporter, news 
                        columnist, or news editor of the print 
                        or electronic media, or any lawyer, 
                        accountant, or teacher;
                          (iii) any floor broker or futures 
                        commission merchant;
                          (iv) the publisher or producer of any 
                        print or electronic data of general and 
                        regular dissemination, including its 
                        employees;
                          (v) the fiduciary of any defined 
                        benefit plan that is subject to the 
                        Employee Retirement Income Security Act 
                        of 1974 (29 U.S.C. 1001 et seq.);
                          (vi) any contract market or 
                        derivatives transaction execution 
                        facility; and
                          (vii) such other persons not within 
                        the intent of this paragraph as the 
                        Commission may specify by rule, 
                        regulation, or order.
                  (C) Incidental services.--Subparagraph (B) 
                shall apply only if the furnishing of such 
                services by persons referred to in subparagraph 
                (B) is solely incidental to the conduct of 
                their business or profession.
                  (D) Advisors.--The Commission, by rule or 
                regulation, may include within the term 
                ``commodity trading advisor'', any person 
                advising as to the value of commodities or 
                issuing reports or analyses concerning 
                commodities if the Commission determines that 
                the rule or regulation will effectuate the 
                purposes of this paragraph.
          (13) Contract of sale.--The term ``contract of sale'' 
        includes sales, agreements of sale, and agreements to 
        sell.
          (14) Cooperative association of producers.--The term 
        ``cooperative association of producers'' means any 
        cooperative association, corporate, or otherwise, not 
        less than 75 percent in good faith owned or controlled, 
        directly or indirectly, by producers of agricultural 
        products and otherwise complying with the Act of 
        February 18, 1922 (42 Stat. 388, chapter 57; 7 U.S.C. 
        291 and 292), including any organization acting for a 
        group of such associations and owned or controlled by 
        such associations, except that business done for or 
        with the United States, or any agency thereof, shall 
        not be considered either member or nonmember business 
        in determining the compliance of any such association 
        with this Act.
          (15) Derivatives clearing organization.--
                  (A) In general.--The term ``derivatives 
                clearing organization'' means a clearinghouse, 
                clearing association, clearing corporation, or 
                similar entity, facility, system, or 
                organization that, with respect to an 
                agreement, contract, or transaction--
                          (i) enables each party to the 
                        agreement, contract, or transaction to 
                        substitute, through novation or 
                        otherwise, the credit of the 
                        derivatives clearing organization for 
                        the credit of the parties;
                          (ii) arranges or provides, on a 
                        multilateral basis, for the settlement 
                        or netting of obligations resulting 
                        from such agreements, contracts, or 
                        transactions executed by participants 
                        in the derivatives clearing 
                        organization; or
                          (iii) otherwise provides clearing 
                        services or arrangements that mutualize 
                        or transfer among participants in the 
                        derivatives clearing organization the 
                        credit risk arising from such 
                        agreements, contracts, or transactions 
                        executed by the participants.
                  (B) Exclusions.--The term ``derivatives 
                clearing organization'' does not include an 
                entity, facility, system, or organization 
                solely because it arranges or provides for--
                          (i) settlement, netting, or novation 
                        of obligations resulting from 
                        agreements, contracts, or transactions, 
                        on a bilateral basis and without a 
                        central counterparty;
                          (ii) settlement or netting of cash 
                        payments through an interbank payment 
                        system; or
                          (iii) settlement, netting, or 
                        novation of obligations resulting from 
                        a sale of a commodity in a transaction 
                        in the spot market for the commodity.
          (16) Electronic trading facility.--The term 
        ``electronic trading facility'' means a trading 
        facility that--
                  (A) operates by means of an electronic or 
                telecommunications network; and
                  (B) maintains an automated audit trail of 
                bids, offers, and the matching of orders or the 
                execution of transactions on the facility.
          (17) Eligible commercial entity.--The term ``eligible 
        commercial entity'' means, with respect to an 
        agreement, contract or transaction in a commodity--
                  (A) an eligible contract participant 
                described in clause (i), (ii), (v), (vii), 
                (viii), or (ix) of paragraph (18)(A) that, in 
                connection with its business--
                          (i) has a demonstrable ability, 
                        directly or through separate 
                        contractual arrangements, to make or 
                        take delivery of the underlying 
                        commodity;
                          (ii) incurs risks, in addition to 
                        price risk, related to the commodity; 
                        or
                          (iii) is a dealer that regularly 
                        provides risk management or hedging 
                        services to, or engages in market-
                        making activities with, the foregoing 
                        entities involving transactions to 
                        purchase or sell the commodity or 
                        derivative agreements, contracts, or 
                        transactions in the commodity;
                  (B) an eligible contract participant, other 
                than a natural person or an instrumentality, 
                department, or agency of a State or local 
                governmental entity, that--
                          (i) regularly enters into 
                        transactions to purchase or sell the 
                        commodity or derivative agreements, 
                        contracts, or transactions in the 
                        commodity; and
                          (ii) either--
                                  (I) in the case of a 
                                collective investment vehicle 
                                whose participants include 
                                persons other than--
                                          (aa) qualified 
                                        eligible persons, as 
                                        defined in Commission 
                                        rule 4.7(a) (17 CFR 
                                        4.7(a));
                                          (bb) accredited 
                                        investors, as defined 
                                        in Regulation D of the 
                                        Securities and Exchange 
                                        Commission under the 
                                        Securities Act of 1933 
                                        (17 CFR 230.501(a)), 
                                        with total assets of 
                                        $2,000,000; or
                                          (cc) qualified 
                                        purchasers, as defined 
                                        in section 2(a)(51)(A) 
                                        of the Investment 
                                        Company Act of 1940;
                                in each case as in effect on 
                                the date of the enactment of 
                                the Commodity Futures 
                                Modernization Act of 2000, has, 
                                or is one of a group of 
                                vehicles under common control 
                                or management having in the 
                                aggregate, $1,000,000,000 in 
                                total assets; or
                                  (II) in the case of other 
                                persons, has, or is one of a 
                                group of persons under common 
                                control or management having in 
                                the aggregate, $100,000,000 in 
                                total assets; or
                  (C) such other persons as the Commission 
                shall determine appropriate and shall designate 
                by rule, regulation, or order.
          (18) Eligible contract participant.--The term 
        ``eligible contract participant'' means--
                  (A) acting for its own account--
                          (i) a financial institution;
                          (ii) an insurance company that is 
                        regulated by a State, or that is 
                        regulated by a foreign government and 
                        is subject to comparable regulation as 
                        determined by the Commission, including 
                        a regulated subsidiary or affiliate of 
                        such an insurance company;
                          (iii) an investment company subject 
                        to regulation under the Investment 
                        Company Act of 1940 (15 U.S.C. 80
                          (iv) a-1 et seq.) or a foreign person 
                        performing a similar role or function 
                        subject as such to foreign regulation 
                        (regardless of whether each investor in 
                        the investment company or the foreign 
                        person is itself an eligible contract 
                        participant);
                          (v) a commodity pool that--
                                  (I) has total assets 
                                exceeding $5,000,000; and
                                  (II) is formed and operated 
                                by a person subject to 
                                regulation under this Act or a 
                                foreign person performing a 
                                similar role or function 
                                subject as such to foreign 
                                regulation (regardless of 
                                whether each investor in the 
                                commodity pool or the foreign 
                                person is itself an eligible 
                                contract participant) provided, 
                                however, that for purposes of 
                                section 2(c)(2)(B)(vi) and 
                                section 2(c)(2)(C)(vii), the 
                                term ``eligible contract 
                                participant'' shall not include 
                                a commodity pool in which any 
                                participant is not otherwise an 
                                eligible contract participant;
                          (vi) a corporation, partnership, 
                        proprietorship, organization, trust, or 
                        other entity--
                                  (I) that has total assets 
                                exceeding $10,000,000;
                                  (II) the obligations of which 
                                under an agreement, contract, 
                                or transaction are guaranteed 
                                or otherwise supported by a 
                                letter of credit or keepwell, 
                                support, or other agreement by 
                                an entity described in 
                                subclause (I), in clause (i), 
                                (ii), (iii), (iv), or (vii), or 
                                in subparagraph (C); or
                                  (III) that--
                                          (aa) has a net worth 
                                        exceeding $1,000,000; 
                                        and
                                          (bb) enters into an 
                                        agreement, contract, or 
                                        transaction in 
                                        connection with the 
                                        conduct of the entity's 
                                        business or to manage 
                                        the risk associated 
                                        with an asset or 
                                        liability owned or 
                                        incurred or reasonably 
                                        likely to be owned or 
                                        incurred by the entity 
                                        in the conduct of the 
                                        entity's business;
                          (vii) an employee benefit plan 
                        subject to the Employee Retirement 
                        Income Security Act of 1974 (29 U.S.C. 
                        1001 et seq.), a governmental employee 
                        benefit plan, or a foreign person 
                        performing a similar role or function 
                        subject as such to foreign regulation--
                                  (I) that has total assets 
                                exceeding $5,000,000; or
                                  (II) the investment decisions 
                                of which are made by--
                                          (aa) an investment 
                                        adviser or commodity 
                                        trading advisor subject 
                                        to regulation under the 
                                        Investment Advisers Act 
                                        of 1940 (15 U.S.C. 80b-
                                        1 et seq.) or this Act;
                                          (bb) a foreign person 
                                        performing a similar 
                                        role or function 
                                        subject as such to 
                                        foreign regulation;
                                          (cc) a financial 
                                        institution; or
                                          (dd) an insurance 
                                        company described in 
                                        clause (ii), or a 
                                        regulated subsidiary or 
                                        affiliate of such an 
                                        insurance company;
                          (viii)(I) a governmental entity 
                        (including the United States, a State, 
                        or a foreign government) or political 
                        subdivision of a governmental entity;
                          (II) a multinational or supranational 
                        government entity; or
                          (III) an instrumentality, agency, or 
                        department of an entity described in 
                        subclause (I) or (II);
                        except that such term does not include 
                        an entity, instrumentality, agency, or 
                        department referred to in subclause (I) 
                        or (III) of this clause unless (aa) the 
                        entity, instrumentality, agency, or 
                        department is a person described in 
                        clause (i), (ii), or (iii) of paragraph 
                        (17)(A); (bb) the entity, 
                        instrumentality, agency, or department 
                        owns and invests on a discretionary 
                        basis $50,000,000 or more in 
                        investments; or (cc) the agreement, 
                        contract, or transaction is offered by, 
                        and entered into with, an entity that 
                        is listed in any of subclauses (I) 
                        through (VI) of section 2(c)(2)(B)(ii);
                          (ix)(I) a broker or dealer subject to 
                        regulation under the Securities 
                        Exchange Act of 1934 (15 U.S.C. 78a et 
                        seq.) or a foreign person performing a 
                        similar role or function subject as 
                        such to foreign regulation, except 
                        that, if the broker or dealer or 
                        foreign person is a natural person or 
                        proprietorship, the broker or dealer or 
                        foreign person shall not be considered 
                        to be an eligible contract participant 
                        unless the broker or dealer or foreign 
                        person also meets the requirements of 
                        clause (v) or (xi);
                          (II) an associated person of a 
                        registered broker or dealer concerning 
                        the financial or securities activities 
                        of which the registered person makes 
                        and keeps records under section 15C(b) 
                        or 17(h) of the Securities Exchange Act 
                        of 1934 (15 U.S.C. 78o-5(b), 78q(h));
                          (III) an investment bank holding 
                        company (as defined in section 17(i) of 
                        the Securities Exchange Act of 1934 (15 
                        U.S.C. 78q(i));
                          (x) a futures commission merchant 
                        subject to regulation under this Act or 
                        a foreign person performing a similar 
                        role or function subject as such to 
                        foreign regulation, except that, if the 
                        futures commission merchant or foreign 
                        person is a natural person or 
                        proprietorship, the futures commission 
                        merchant or foreign person shall not be 
                        considered to be an eligible contract 
                        participant unless the futures 
                        commission merchant or foreign person 
                        also meets the requirements of clause 
                        (v) or (xi);
                          (xi) a floor broker or floor trader 
                        subject to regulation under this Act in 
                        connection with any transaction that 
                        takes place on or through the 
                        facilities of a registered entity 
                        (other than an electronic trading 
                        facility with respect to a significant 
                        price discovery contract) or an exempt 
                        board of trade, or any affiliate 
                        thereof, on which such person regularly 
                        trades; or
                          (xii) an individual who has amounts 
                        invested on a discretionary basis, the 
                        aggregate of which is in excess of--
                                  (I) $10,000,000; or
                                  (II) $5,000,000 and who 
                                enters into the agreement, 
                                contract, or transaction in 
                                order to manage the risk 
                                associated with an asset owned 
                                or liability incurred, or 
                                reasonably likely to be owned 
                                or incurred, by the individual;
                  (B)(i) a person described in clause (i), 
                (ii), (iv), (v), (viii), (ix), or (x) of 
                subparagraph (A) or in subparagraph (C), acting 
                as broker or performing an equivalent agency 
                function on behalf of another person described 
                in subparagraph (A) or (C); or
                  (ii) an investment adviser subject to 
                regulation under the Investment Advisers Act of 
                1940, a commodity trading advisor subject to 
                regulation under this Act, a foreign person 
                performing a similar role or function subject 
                as such to foreign regulation, or a person 
                described in clause (i), (ii), (iv), (v), 
                (viii), (ix), or (x) of subparagraph (A) or in 
                subparagraph (C), in any such case acting as 
                investment manager or fiduciary (but excluding 
                a person acting as broker or performing an 
                equivalent agency function) for another person 
                described in subparagraph (A) or (C) and who is 
                authorized by such person to commit such person 
                to the transaction; or
                  (C) any other person that the Commission 
                determines to be eligible in light of the 
                financial or other qualifications of the 
                person.
          (19) Excluded commodity.--The term ``excluded 
        commodity'' means--
                  
                          (i) an interest rate, exchange rate, 
                        currency, security, security index, 
                        credit risk or measure, debt or equity 
                        instrument, index or measure of 
                        inflation, or other macroeconomic index 
                        or measure;
                          (ii) any other rate, differential, 
                        index, or measure of economic or 
                        commercial risk, return, or value that 
                        is--
                                  (I) not based in substantial 
                                part on the value of a narrow 
                                group of commodities not 
                                described in clause (i); or
                                  (II) based solely on one or 
                                more commodities that have no 
                                cash market;
                          (iii) any economic or commercial 
                        index based on prices, rates, values, 
                        or levels that are not within the 
                        control of any party to the relevant 
                        contract, agreement, or transaction; or
                          (iv) an occurrence, extent of an 
                        occurrence, or contingency (other than 
                        a change in the price, rate, value, or 
                        level of a commodity not described in 
                        clause (i)) that is--
                                  (I) beyond the control of the 
                                parties to the relevant 
                                contract, agreement, or 
                                transaction; and
                                  (II) associated with a 
                                financial, commercial, or 
                                economic consequence.
          (20) Exempt commodity.--The term ``exempt commodity'' 
        means a commodity that is not an excluded commodity or 
        an agricultural commodity.
          (21) Financial institution.--The term ``financial 
        institution'' means--
                  (A) a corporation operating under the fifth 
                undesignated paragraph of section 25 of the 
                Federal Reserve Act (12 U.S.C. 603), commonly 
                known as ``an agreement corporation'';
                  (B) a corporation organized under section 25A 
                of the Federal Reserve Act (12 U.S.C. 611 et 
                seq.), commonly known as an ``Edge Act 
                corporation'';
                  (C) an institution that is regulated by the 
                Farm Credit Administration;
                  (D) a Federal credit union or State credit 
                union (as defined in section 101 of the Federal 
                Credit Union Act (12 U.S.C. 1752));
                  (E) a depository institution (as defined in 
                section 3 of the Federal Deposit Insurance Act 
                (12 U.S.C. 1813));
                  (F) a foreign bank or a branch or agency of a 
                foreign bank (each as defined in section 1(b) 
                of the International Banking Act of 1978 (12 
                U.S.C. 3101(b)));
                  (G) any financial holding company (as defined 
                in section 2 of the Bank Holding Company Act of 
                1956);
                  (H) a trust company; or
                  (I) a similarly regulated subsidiary or 
                affiliate of an entity described in any of 
                subparagraphs (A) through (H).
          (22) Floor broker.--
                  (A) In general.--The term ``floor broker'' 
                means any person--
                          (i) who, in or surrounding any pit, 
                        ring, post, or other place provided by 
                        a contract market for the meeting of 
                        persons similarly engaged, shall 
                        purchase or sell for any other person--
                                  (I) any commodity for future 
                                delivery, security futures 
                                product, or swap; or
                                  (II) any commodity option 
                                authorized under section 4c; or
                          (ii) who is registered with the 
                        Commission as a floor broker.
                  (B) Further definition.--The Commission, by 
                rule or regulation, may include within, or 
                exclude from, the term ``floor broker'' any 
                person in or surrounding any pit, ring, post, 
                or other place provided by a contract market 
                for the meeting of persons similarly engaged 
                who trades for any other person if the 
                Commission determines that the rule or 
                regulation will effectuate the purposes of this 
                Act.
          (23) Floor trader.--
                  (A) In general.--The term ``floor trader'' 
                means any person--
                          (i) who, in or surrounding any pit, 
                        ring, post, or other place provided by 
                        a contract market for the meeting of 
                        persons similarly engaged, purchases, 
                        or sells solely for such person's own 
                        account--
                                  (I) any commodity for future 
                                delivery, security futures 
                                product, or swap; or
                                  (II) any commodity option 
                                authorized under section 4c; or
                          (ii) who is registered with the 
                        Commission as a floor trader.
                  (B) Further definition.--The Commission, by 
                rule or regulation, may include within, or 
                exclude from, the term ``floor trader'' any 
                person in or surrounding any pit, ring, post, 
                or other place provided by a contract market 
                for the meeting of persons similarly engaged 
                who trades solely for such person's own account 
                if the Commission determines that the rule or 
                regulation will effectuate the purposes of this 
                Act.
          (24) Foreign exchange forward.--The term ``foreign 
        exchange forward'' means a transaction that solely 
        involves the exchange of 2 different currencies on a 
        specific future date at a fixed rate agreed upon on the 
        inception of the contract covering the exchange.
          (25) Foreign exchange swap.--The term ``foreign 
        exchange swap'' means a transaction that solely 
        involves--
                  (A) an exchange of 2 different currencies on 
                a specific date at a fixed rate that is agreed 
                upon on the inception of the contract covering 
                the exchange; and
                  (B) a reverse exchange of the 2 currencies 
                described in subparagraph (A) at a later date 
                and at a fixed rate that is agreed upon on the 
                inception of the contract covering the 
                exchange.
          (26) Foreign futures authority.--The term ``foreign 
        futures authority'' means any foreign government, or 
        any department, agency, governmental body, or 
        regulatory organization empowered by a foreign 
        government to administer or enforce a law, rule, or 
        regulation as it relates to a futures or options 
        matter, or any department or agency of a political 
        subdivision of a foreign government empowered to 
        administer or enforce a law, rule, or regulation as it 
        relates to a futures or options matter.
          (27) Future delivery.--The term ``future delivery'' 
        does not include any sale of any cash commodity for 
        deferred shipment or delivery.
          (28) Futures commission merchant.--
                  (A) In general.--The term ``futures 
                commission merchant'' means an individual, 
                association, partnership, corporation, or 
                trust--
                          (i) that--
                                  (I) is--
                                          (aa) engaged in 
                                        soliciting or in 
                                        accepting orders for--
                                                  (AA) the 
                                                purchase or 
                                                sale of a 
                                                commodity for 
                                                future 
                                                delivery;
                                                  (BB) a 
                                                security 
                                                futures 
                                                product;
                                                  (CC) a swap;
                                                  (DD) any 
                                                agreement, 
                                                contract, or 
                                                transaction 
                                                described in 
                                                section 
                                                2(c)(2)(C)(i) 
                                                or section 
                                                2(c)(2)(D)(i);
                                                  (EE) any 
                                                commodity 
                                                option 
                                                authorized 
                                                under section 
                                                4c; or
                                                  (FF) any 
                                                leverage 
                                                transaction 
                                                authorized 
                                                under section 
                                                19; or
                                          (bb) acting as a 
                                        counterparty in any 
                                        agreement, contract, or 
                                        transaction described 
                                        in section 
                                        2(c)(2)(C)(i) or 
                                        section 2(c)(2)(D)(i); 
                                        and
                                  (II) in or in connection with 
                                the activities described in 
                                items (aa) or (bb) of subclause 
                                (I), accepts any money, 
                                securities, or property (or 
                                extends credit in lieu thereof) 
                                to margin, guarantee, or secure 
                                any trades or contracts that 
                                result or may result therefrom; 
                                or
                          (ii) that is registered with the 
                        Commission as a futures commission 
                        merchant.
                  (B) Further definition.--The Commission, by 
                rule or regulation, may include within, or 
                exclude from, the term ``futures commission 
                merchant'' any person who engages in soliciting 
                or accepting orders for, or acting as a 
                counterparty in, any agreement, contract, or 
                transaction subject to this Act, and who 
                accepts any money, securities, or property (or 
                extends credit in lieu thereof) to margin, 
                guarantee, or secure any trades or contracts 
                that result or may result therefrom, if the 
                Commission determines that the rule or 
                regulation will effectuate the purposes of this 
                Act.
          (29) Hybrid instrument.--The term ``hybrid 
        instrument'' means a security having one or more 
        payments indexed to the value, level, or rate of, or 
        providing for the delivery of, one or more commodities.
          (30) Interstate commerce.--The term ``interstate 
        commerce'' means commerce--
                  (A) between any State, territory, or 
                possession, or the District of Columbia, and 
                any place outside thereof; or
                  (B) between points within the same State, 
                territory, or possession, or the District of 
                Columbia, but through any place outside 
                thereof, or within any territory or possession, 
                or the District of Columbia.
          (31) Introducing broker.--
                  (A) In general.--The term ``introducing 
                broker'' means any person (except an individual 
                who elects to be and is registered as an 
                associated person of a futures commission 
                merchant)--
                          (i) who--
                                  (I) is engaged in soliciting 
                                or in accepting orders for--
                                          (aa) the purchase or 
                                        sale of any commodity 
                                        for future delivery, 
                                        security futures 
                                        product, or swap;
                                          (bb) any agreement, 
                                        contract, or 
                                        transaction described 
                                        in section 
                                        2(c)(2)(C)(i) or 
                                        section 2(c)(2)(D)(i);
                                          (cc) any commodity 
                                        option authorized under 
                                        section 4c; or
                                          (dd) any leverage 
                                        transaction authorized 
                                        under section 19; and
                                  (II) does not accept any 
                                money, securities, or property 
                                (or extend credit in lieu 
                                thereof) to margin, guarantee, 
                                or secure any trades or 
                                contracts that result or may 
                                result therefrom; or
                          (ii) who is registered with the 
                        Commission as an introducing broker.
                  (B) Further definition.--The Commission, by 
                rule or regulation, may include within, or 
                exclude from, the term ``introducing broker'' 
                any person who engages in soliciting or 
                accepting orders for any agreement, contract, 
                or transaction subject to this Act, and who 
                does not accept any money, securities, or 
                property (or extend credit in lieu thereof) to 
                margin, guarantee, or secure any trades or 
                contracts that result or may result therefrom, 
                if the Commission determines that the rule or 
                regulation will effectuate the purposes of this 
                Act.
          (32) Major security-based swap participant.--The term 
        ``major security-based swap participant'' has the 
        meaning given the term in section 3(a) of the 
        Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
          (33) Major swap participant.--
                  (A) In general.--The term ``major swap 
                participant'' means any person who is not a 
                swap dealer, and--
                          (i) maintains a substantial position 
                        in swaps for any of the major swap 
                        categories as determined by the 
                        Commission, excluding--
                                  (I) positions held for 
                                hedging or mitigating 
                                commercial risk; and
                                  (II) positions maintained by 
                                any employee benefit plan (or 
                                any contract held by such a 
                                plan) as defined in paragraphs 
                                (3) and (32) of section 3 of 
                                the Employee Retirement Income 
                                Security Act of 1974 (29 U.S.C. 
                                1002) for the primary purpose 
                                of hedging or mitigating any 
                                risk directly associated with 
                                the operation of the plan;
                          (ii) whose outstanding swaps create 
                        substantial counterparty exposure that 
                        could have serious adverse effects on 
                        the financial stability of the United 
                        States banking system or financial 
                        markets; or
                          (iii)(I) is a financial entity that 
                        is highly leveraged relative to the 
                        amount of capital it holds and that is 
                        not subject to capital requirements 
                        established by an appropriate Federal 
                        banking agency; and
                          (II) maintains a substantial position 
                        in outstanding swaps in any major swap 
                        category as determined by the 
                        Commission.
                  (B) Definition of substantial position.--For 
                purposes of subparagraph (A), the Commission 
                shall define by rule or regulation the term 
                ``substantial position'' at the threshold that 
                the Commission determines to be prudent for the 
                effective monitoring, management, and oversight 
                of entities that are systemically important or 
                can significantly impact the financial system 
                of the United States. In setting the definition 
                under this subparagraph, the Commission shall 
                consider the person's relative position in 
                uncleared as opposed to cleared swaps and may 
                take into consideration the value and quality 
                of collateral held against counterparty 
                exposures.
                  (C) Scope of designation.--For purposes of 
                subparagraph (A), a person may be designated as 
                a major swap participant for 1 or more 
                categories of swaps without being classified as 
                a major swap participant for all classes of 
                swaps.
                  (D) Exclusions.--The definition under this 
                paragraph shall not include an entity whose 
                primary business is providing financing, and 
                uses derivatives for the purpose of hedging 
                underlying commercial risks related to interest 
                rate and foreign currency exposures, 90 percent 
                or more of which arise from financing that 
                facilitates the purchase or lease of products, 
                90 percent or more of which are manufactured by 
                the parent company or another subsidiary of the 
                parent company.
          (34) Member of a registered entity; member of a 
        derivatives transaction execution facility.--The term 
        ``member'' means, with respect to a registered entity 
        or derivatives transaction execution facility, an 
        individual, association, partnership, corporation, or 
        trust--
                  (A) owning or holding membership in, or 
                admitted to membership representation on, the 
                registered entity or derivatives transaction 
                execution facility; or
                  (B) having trading privileges on the 
                registered entity or derivatives transaction 
                execution facility.
        A participant in an alternative trading system that is 
        designated as a contract market pursuant to section 5f 
        is deemed a member of the contract market for purposes 
        of transactions in security futures products through 
        the contract market.
          (35) Narrow-based security index.--
                  (A) The term ``narrow-based security index'' 
                means an index--
                          (i) that has 9 or fewer component 
                        securities;
                          (ii) in which a component security 
                        comprises more than 30 percent of the 
                        index's weighting;
                          (iii) in which the five highest 
                        weighted component securities in the 
                        aggregate comprise more than 60 percent 
                        of the index's weighting; or
                          (iv) in which the lowest weighted 
                        component securities comprising, in the 
                        aggregate, 25 percent of the index's 
                        weighting have an aggregate dollar 
                        value of average daily trading volume 
                        of less than $50,000,000 (or in the 
                        case of an index with 15 or more 
                        component securities, $30,000,000), 
                        except that if there are two or more 
                        securities with equal weighting that 
                        could be included in the calculation of 
                        the lowest weighted component 
                        securities comprising, in the 
                        aggregate, 25 percent of the index's 
                        weighting, such securities shall be 
                        ranked from lowest to highest dollar 
                        value of average daily trading volume 
                        and shall be included in the 
                        calculation based on their ranking 
                        starting with the lowest ranked 
                        security.
                  (B) Notwithstanding subparagraph (A), an 
                index is not a narrow-based security index if--
                          (i)(I) it has at least 9 component 
                        securities;
                          (II) no component security comprises 
                        more than 30 percent of the index's 
                        weighting; and
                          (III) each component security is--
                                  (aa) registered pursuant to 
                                section 12 of the Securities 
                                Exchange Act of 1934;
                                  (bb) one of 750 securities 
                                with the largest market 
                                capitalization; and
                                  (cc) one of 675 securities 
                                with the largest dollar value 
                                of average daily trading 
                                volume;
                          (ii) a board of trade was designated 
                        as a contract market by the Commodity 
                        Futures Trading Commission with respect 
                        to a contract of sale for future 
                        delivery on the index, before the date 
                        of the enactment of the Commodity 
                        Futures Modernization Act of 2000;
                          (iii)(I) a contract of sale for 
                        future delivery on the index traded on 
                        a designated contract market or 
                        registered derivatives transaction 
                        execution facility for at least 30 days 
                        as a contract of sale for future 
                        delivery on an index that was not a 
                        narrow-based security index; and
                          (II) it has been a narrow-based 
                        security index for no more than 45 
                        business days over 3 consecutive 
                        calendar months;
                          (iv) a contract of sale for future 
                        delivery on the index is traded on or 
                        subject to the rules of a foreign board 
                        of trade and meets such requirements as 
                        are jointly established by rule or 
                        regulation by the Commission and the 
                        Securities and Exchange Commission;
                          (v) no more than 18 months have 
                        passed since the date of the enactment 
                        of the Commodity Futures Modernization 
                        Act of 2000 and--
                                  (I) it is traded on or 
                                subject to the rules of a 
                                foreign board of trade;
                                  (II) the offer and sale in 
                                the United States of a contract 
                                of sale for future delivery on 
                                the index was authorized before 
                                the date of the enactment of 
                                the Commodity Futures 
                                Modernization Act of 2000; and
                                  (III) the conditions of such 
                                authorization continue to be 
                                met; or
                          (vi) a contract of sale for future 
                        delivery on the index is traded on or 
                        subject to the rules of a board of 
                        trade and meets such requirements as 
                        are jointly established by rule, 
                        regulation, or order by the Commission 
                        and the Securities and Exchange 
                        Commission.
                  (C) Within 1 year after the date of the 
                enactment of the Commodity Futures 
                Modernization Act of 2000, the Commission and 
                the Securities and Exchange Commission jointly 
                shall adopt rules or regulations that set forth 
                the requirements under subparagraph (B)(iv).
                  (D) An index that is a narrow-based security 
                index solely because it was a narrow-based 
                security index for more than 45 business days 
                over 3 consecutive calendar months pursuant to 
                clause (iii) of subparagraph (B) shall not be a 
                narrow-based security index for the 3 following 
                calendar months.
                  (E) For purposes of subparagraphs (A) and 
                (B)--
                          (i) the dollar value of average daily 
                        trading volume and the market 
                        capitalization shall be calculated as 
                        of the preceding 6 full calendar 
                        months; and
                          (ii) the Commission and the 
                        Securities and Exchange Commission 
                        shall, by rule or regulation, jointly 
                        specify the method to be used to 
                        determine market capitalization and 
                        dollar value of average daily trading 
                        volume.
          (36) Option.--The term ``option'' means an agreement, 
        contract, or transaction that is of the character of, 
        or is commonly known to the trade as, an ``option'', 
        ``privilege'', ``indemnity'', ``bid'', ``offer'', 
        ``put'', ``call'', ``advance guaranty'', or ``decline 
        guaranty''.
          (37) Organized exchange.--The term ``organized 
        exchange'' means a trading facility that--
                  (A) permits trading--
                          (i) by or on behalf of a person that 
                        is not an eligible contract 
                        participant; or
                          (ii) by persons other than on a 
                        principal-to-principal basis; or
                  (B) has adopted (directly or through another 
                nongovernmental entity) rules that--
                          (i) govern the conduct of 
                        participants, other than rules that 
                        govern the submission of orders or 
                        execution of transactions on the 
                        trading facility; and
                          (ii) include disciplinary sanctions 
                        other than the exclusion of 
                        participants from trading.
          (38) Person.--The term ``person'' imports the plural 
        or singular, and includes individuals, associations, 
        partnerships, corporations, and trusts.
          (39) Prudential regulator.--The term ``prudential 
        regulator'' means--
                  (A) the Board in the case of a swap dealer, 
                major swap participant, security-based swap 
                dealer, or major security-based swap 
                participant that is--
                          (i) a State-chartered bank that is a 
                        member of the Federal Reserve System;
                          (ii) a State-chartered branch or 
                        agency of a foreign bank;
                          (iii) any foreign bank which does not 
                        operate an insured branch;
                          (iv) any organization operating under 
                        section 25A of the Federal Reserve Act 
                        or having an agreement with the Board 
                        under section 225 of the Federal 
                        Reserve Act;
                          (v) any bank holding company (as 
                        defined in section 2 of the Bank 
                        Holding Company Act of 1965 (12 U.S.C. 
                        1841)), any foreign bank (as defined in 
                        section 1(b)(7) of the International 
                        Banking Act of 1978 (12 U.S.C. 
                        3101(b)(7)) that is treated as a bank 
                        holding company under section 8(a) of 
                        the International Banking Act of 1978 
                        (12 U.S.C. 3106(a)), and any subsidiary 
                        of such a company or foreign bank 
                        (other than a subsidiary that is 
                        described in subparagraph (A) or (B) or 
                        that is required to be registered with 
                        the Commission as a swap dealer or 
                        major swap participant under this Act 
                        or with the Securities and Exchange 
                        Commission as a security-based swap 
                        dealer or major security-based swap 
                        participant);
                          (vi) after the transfer date (as 
                        defined in section 311 of the Dodd-
                        Frank Wall Street Reform and Consumer 
                        Protection Act), any savings and loan 
                        holding company (as defined in section 
                        10 of the Home Owners' Loan Act (12 
                        U.S.C. 1467a)) and any subsidiary of 
                        such company (other than a subsidiary 
                        that is described in subparagraph (A) 
                        or (B) or that is required to be 
                        registered as a swap dealer or major 
                        swap participant with the Commission 
                        under this Act or with the Securities 
                        and Exchange Commission as a security-
                        based swap dealer or major security-
                        based swap participant); or
                          (vii) any organization operating 
                        under section 25A of the Federal 
                        Reserve Act (12U.S.C. 611 et seq.) or 
                        having an agreement with the Board 
                        under section 25 of the Federal Reserve 
                        Act (12 U.S.C. 601 et seq.);
                  (B) the Office of the Comptroller of the 
                Currency in the case of a swap dealer, major 
                swap participant, security-based swap dealer, 
                or major security-based swap participant that 
                is--
                          (i) a national bank;
                          (ii) a federally chartered branch or 
                        agency of a foreign bank; or
                          (iii) any Federal savings 
                        association;
                  (C) the Federal Deposit Insurance Corporation 
                in the case of a swap dealer, major swap 
                participant, security-based swap dealer, or 
                major security-based swap participant that is--
                          (i) a State-chartered bank that is 
                        not a member of the Federal Reserve 
                        System; or
                          (ii) any State savings association;
                  (D) the Farm Credit Administration, in the 
                case of a swap dealer, major swap participant, 
                security-based swap dealer, or major security-
                based swap participant that is an institution 
                chartered under the Farm Credit Act of 1971 (12 
                U.S.C. 2001 et seq.); and
                  (E) the Federal Housing Finance Agency in the 
                case of a swap dealer, major swap participant, 
                security-based swap dealer, or major security-
                based swap participant that is a regulated 
                entity (as such term is defined in section 1303 
                of the Federal Housing Enterprises Financial 
                Safety and Soundness Act of 1992).
          (40) Registered entity.--The term ``registered 
        entity'' means--
                  (A) a board of trade designated as a contract 
                market under section 5;
                  (B) a derivatives clearing organization 
                registered under section 5b;
                  (C) a board of trade designated as a contract 
                market under section 5f;
                  (D) a swap execution facility registered 
                under section 5h;
                  (E) a swap data repository registered under 
                section 21; [and]
                  (F) with respect to a contract that the 
                Commission determines is a significant price 
                discovery contract, any electronic trading 
                facility on which the contract is executed or 
                traded[.]; and
                  (G) a digital commodity exchange registered 
                under section 5i.
          (41) Security.--The term ``security'' means a 
        security as defined in section 2(a)(1) of the 
        Securities Act of 1933 (15 U.S.C. 77b(a)(1)) or section 
        3(a)(10) of the Securities Exchange Act of 1934 (15 
        U.S.C. 78c(a)(10)).
          (42) Security-based swap.--The term ``security-based 
        swap'' has the meaning given the term in section 3(a) 
        of the Securities Exchange Act of 1934 (15 U.S.C. 
        78c(a)).
          (43) Security-based swap dealer.--The term 
        ``security-based swap dealer'' has the meaning given 
        the term in section 3(a) of the Securities Exchange Act 
        of 1934 (15 U.S.C. 78c(a)).
          (44) Security future.--The term ``security future'' 
        means a contract of sale for future delivery of a 
        single security or of a narrow-based security index, 
        including any interest therein or based on the value 
        thereof, except an exempted security under section 
        3(a)(12) of the Securities Exchange Act of 1934 as in 
        effect on the date of the enactment of the Futures 
        Trading Act of 1982 (other than any municipal security 
        as defined in section 3(a)(29) of the Securities 
        Exchange Act of 1934 as in effect on the date of the 
        enactment of the Futures Trading Act of 1982). The term 
        ``security future'' does not include any agreement, 
        contract, or transaction excluded from this Act under 
        section 2(c), 2(d), 2(f), or 2(g) of this Act (as in 
        effect on the date of the enactment of the Commodity 
        Futures Modernization Act of 2000) or title IV of the 
        Commodity Futures Modernization Act of 2000.
          (45) Security futures product.--The term ``security 
        futures product'' means a security future or any put, 
        call, straddle, option, or privilege on any security 
        future.
          (46) Significant price discovery contract.--The term 
        ``significant price discovery contract'' means an 
        agreement, contract, or transaction subject to section 
        2(h)(5).
          (47) Swap.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the term ``swap'' means any 
                agreement, contract, or transaction--
                          (i) that is a put, call, cap, floor, 
                        collar, or similar option of any kind 
                        that is for the purchase or sale, or 
                        based on the value, of 1 or more 
                        interest or other rates, currencies, 
                        commodities, securities, instruments of 
                        indebtedness, indices, quantitative 
                        measures, or other financial or 
                        economic interests or property of any 
                        kind;
                          (ii) that provides for any purchase, 
                        sale, payment, or delivery (other than 
                        a dividend on an equity security) that 
                        is dependent on the occurrence, 
                        nonoccurrence, or the extent of the 
                        occurrence of an event or contingency 
                        associated with a potential financial, 
                        economic, or commercial consequence;
                          (iii) that provides on an executory 
                        basis for the exchange, on a fixed or 
                        contingent basis, of 1 or more payments 
                        based on the value or level of 1 or 
                        more interest or other rates, 
                        currencies, commodities, securities, 
                        instruments of indebtedness, indices, 
                        quantitative measures, or other 
                        financial or economic interests or 
                        property of any kind, or any interest 
                        therein or based on the value thereof, 
                        and that transfers, as between the 
                        parties to the transaction, in whole or 
                        in part, the financial risk associated 
                        with a future change in any such value 
                        or level without also conveying a 
                        current or future direct or indirect 
                        ownership interest in an asset 
                        (including any enterprise or investment 
                        pool) or liability that incorporates 
                        the financial risk so transferred, 
                        including any agreement, contract, or 
                        transaction commonly known as--
                                  (I) an interest rate swap;
                                  (II) a rate floor;
                                  (III) a rate cap;
                                  (IV) a rate collar;
                                  (V) a cross-currency rate 
                                swap;
                                  (VI) a basis swap;
                                  (VII) a currency swap;
                                  (VIII) a foreign exchange 
                                swap;
                                  (IX) a total return swap;
                                  (X) an equity index swap;
                                  (XI) an equity swap;
                                  (XII) a debt index swap;
                                  (XIII) a debt swap;
                                  (XIV) a credit spread;
                                  (XV) a credit default swap;
                                  (XVI) a credit swap;
                                  (XVII) a weather swap;
                                  (XVIII) an energy swap;
                                  (XIX) a metal swap;
                                  (XX) an agricultural swap;
                                  (XXI) an emissions swap; and
                                  (XXII) a commodity swap;
                          (iv) that is an agreement, contract, 
                        or transaction that is, or in the 
                        future becomes, commonly known to the 
                        trade as a swap;
                          (v) including any security-based swap 
                        agreement which meets the definition of 
                        ``swap agreement'' as defined in 
                        section 206A of the Gramm-Leach-Bliley 
                        Act (15 U.S.C. 78c note) of which a 
                        material term is based on the price, 
                        yield, value, or volatility of any 
                        security or any group or index of 
                        securities, or any interest therein; or
                          (vi) that is any combination or 
                        permutation of, or option on, any 
                        agreement, contract, or transaction 
                        described in any of clauses (i) through 
                        (v).
                  (B) Exclusions.--The term ``swap'' does not 
                include--
                          (i) any contract of sale of a 
                        commodity for future delivery (or 
                        option on such a contract), leverage 
                        contract authorized under section 19, 
                        security futures product, or agreement, 
                        contract, or transaction described in 
                        section 2(c)(2)(C)(i) or section 
                        2(c)(2)(D)(i);
                          (ii) any sale of a nonfinancial 
                        commodity or security for deferred 
                        shipment or delivery, so long as the 
                        transaction is intended to be 
                        physically settled;
                          (iii) any 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, that is subject to--
                                  (I) the Securities Act of 
                                1933 (15 U.S.C. 77a et seq.); 
                                and
                                  (II) the Securities Exchange 
                                Act of 1934 (15 U.S.C. 78a et 
                                seq.);
                          (iv) any put, call, straddle, option, 
                        or privilege relating to a foreign 
                        currency entered into on a national 
                        securities exchange registered pursuant 
                        to section 6(a) of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 
                        78f(a));
                          (v) any agreement, contract, or 
                        transaction providing for the purchase 
                        or sale of 1 or more securities on a 
                        fixed basis that is subject to--
                                  (I) the Securities Act of 
                                1933 (15 U.S.C. 77a et seq.); 
                                and
                                  (II) the Securities Exchange 
                                Act of 1934 (15 U.S.C. 78a et 
                                seq.);
                          (vi) any agreement, contract, or 
                        transaction providing for the purchase 
                        or sale of 1 or more securities on a 
                        contingent basis that is subject to the 
                        Securities Act of 1933 (15 U.S.C. 77a 
                        et seq.) and the Securities Exchange 
                        Act of 1934 (15 U.S.C. 78a et seq.), 
                        unless the agreement, contract, or 
                        transaction predicates the purchase or 
                        sale on the occurrence of a bona fide 
                        contingency that might reasonably be 
                        expected to affect or be affected by 
                        the creditworthiness of a party other 
                        than a party to the agreement, 
                        contract, or transaction;
                          (vii) any note, bond, or evidence of 
                        indebtedness that is a security, as 
                        defined in section 2(a)(1) of the 
                        Securities Act of 1933 (15 U.S.C. 
                        77b(a)(1));
                          (viii) any agreement, contract, or 
                        transaction that is--
                                  (I) based on a security; and
                                  (II) entered into directly or 
                                through an underwriter (as 
                                defined in section 2(a)(11) of 
                                the Securities Act of 1933 (15 
                                U.S.C. 77b(a)(11)) by the 
                                issuer of such security for the 
                                purposes of raising capital, 
                                unless the agreement, contract, 
                                or transaction is entered into 
                                to manage a risk associated 
                                with capital raising;
                          (ix) any agreement, contract, or 
                        transaction a counterparty of which is 
                        a Federal Reserve bank, the Federal 
                        Government, or a Federal agency that is 
                        expressly backed by the full faith and 
                        credit of the United States; and
                          (x) any security-based swap, other 
                        than a security-based swap as described 
                        in subparagraph (D).
                  (C) Rule of construction regarding master 
                agreements.--
                          (i) In general.--Except as provided 
                        in clause (ii), the term ``swap'' 
                        includes a master agreement that 
                        provides for an agreement, contract, or 
                        transaction that is a swap under 
                        subparagraph (A), together with each 
                        supplement to any master agreement, 
                        without regard to whether the master 
                        agreement contains an agreement, 
                        contract, or transaction that is not a 
                        swap pursuant to subparagraph (A).
                          (ii) Exception.--For purposes of 
                        clause (i), the master agreement shall 
                        be considered to be a swap only with 
                        respect to each agreement, contract, or 
                        transaction covered by the master 
                        agreement that is a swap pursuant to 
                        subparagraph (A).
                  (D) Mixed swap.--The term ``security-based 
                swap'' includes any agreement, contract, or 
                transaction that is as described in section 
                3(a)(68)(A) of the Securities Exchange Act of 
                1934 (15 U.S.C. 78c(a)(68)(A)) and also is 
                based on the value of 1 or more interest or 
                other rates, currencies, commodities, 
                instruments of indebtedness, indices, 
                quantitative measures, other financial or 
                economic interest or property of any kind 
                (other than a single security or a narrow-based 
                security index), or the occurrence, non-
                occurrence, or the extent of the occurrence of 
                an event or contingency associated with a 
                potential financial, economic, or commercial 
                consequence (other than an event described in 
                subparagraph (A)(iii)).
                  (E) Treatment of foreign exchange swaps and 
                forwards.--
                          (i) In general.--Foreign exchange 
                        swaps and foreign exchange forwards 
                        shall be considered swaps under this 
                        paragraph unless the Secretary makes a 
                        written determination under section 1b 
                        that either foreign exchange swaps or 
                        foreign exchange forwards or both--
                                  (I) should be not be 
                                regulated as swaps under this 
                                Act; and
                                  (II) are not structured to 
                                evade the Dodd-Frank Wall 
                                Street Reform and Consumer 
                                Protection Act in violation of 
                                any rule promulgated by the 
                                Commission pursuant to section 
                                721(c) of that Act.
                          (ii) Congressional notice; 
                        effectiveness.--The Secretary shall 
                        submit any written determination under 
                        clause (i) to the appropriate 
                        committees of Congress, including the 
                        Committee on Agriculture, Nutrition, 
                        and Forestry of the Senate and the 
                        Committee on Agriculture of the House 
                        of Representatives. Any such written 
                        determination by the Secretary shall 
                        not be effective until it is submitted 
                        to the appropriate committees of 
                        Congress.
                          (iii) Reporting.--Notwithstanding a 
                        written determination by the Secretary 
                        under clause (i), all foreign exchange 
                        swaps and foreign exchange forwards 
                        shall be reported to either a swap data 
                        repository, or, if there is no swap 
                        data repository that would accept such 
                        swaps or forwards, to the Commission 
                        pursuant to section 4r within such time 
                        period as the Commission may by rule or 
                        regulation prescribe.
                          (iv) Business standards.--
                        Notwithstanding a written determination 
                        by the Secretary pursuant to clause 
                        (i), any party to a foreign exchange 
                        swap or forward that is a swap dealer 
                        or major swap participant shall conform 
                        to the business conduct standards 
                        contained in section 4s(h).
                          (v) Secretary.--For purposes of this 
                        subparagraph, the term ``Secretary'' 
                        means the Secretary of the Treasury.
                  (F) Exception for certain foreign exchange 
                swaps and forwards.--
                          (i) Registered entities.--Any foreign 
                        exchange swap and any foreign exchange 
                        forward that is listed and traded on or 
                        subject to the rules of a designated 
                        contract market or a swap execution 
                        facility, or that is cleared by a 
                        derivatives clearing organization, 
                        shall not be exempt from any provision 
                        of this Act or amendments made by the 
                        Wall Street Transparency and 
                        Accountability Act of 2010 prohibiting 
                        fraud or manipulation.
                          (ii) Retail transactions.--Nothing in 
                        subparagraph (E) shall affect, or be 
                        construed to affect, the applicability 
                        of this Act or the jurisdiction of the 
                        Commission with respect to agreements, 
                        contracts, or transactions in foreign 
                        currency pursuant to section 2(c)(2).
          (48) Swap data repository.--The term ``swap data 
        repository'' means any person that collects and 
        maintains information or records with respect to 
        transactions or positions in, or the terms and 
        conditions of, swaps entered into by third parties for 
        the purpose of providing a centralized recordkeeping 
        facility for swaps.
          (49) Swap dealer.--
                  (A) In general.--The term ``swap dealer'' 
                means any person who--
                          (i) holds itself out as a dealer in 
                        swaps;
                          (ii) makes a market in swaps;
                          (iii) regularly enters into swaps 
                        with counterparties as an ordinary 
                        course of business for its own account; 
                        or
                          (iv) engages in any activity causing 
                        the person to be commonly known in the 
                        trade as a dealer or market maker in 
                        swaps,
                provided however, in no event shall an insured 
                depository institution be considered to be a 
                swap dealer to the extent it offers to enter 
                into a swap with a customer in connection with 
                originating a loan with that customer.
                  (B) Inclusion.--A person may be designated as 
                a swap dealer for a single type or single class 
                or category of swap or activities and 
                considered not to be a swap dealer for other 
                types, classes, or categories of swaps or 
                activities.
                  (C) Exception.--The term ``swap dealer'' does 
                not include a person that enters into swaps for 
                such person's own account, either individually 
                or in a fiduciary capacity, but not as a part 
                of a regular business.
                  (D) De minimis exception.--The Commission 
                shall exempt from designation as a swap dealer 
                an entity that engages in a de minimis quantity 
                of swap dealing in connection with transactions 
                with or on behalf of its customers. The 
                Commission shall promulgate regulations to 
                establish factors with respect to the making of 
                this determination to exempt.
          (50) Swap execution facility.--The term ``swap 
        execution facility'' means a trading system or platform 
        in which multiple participants have the ability to 
        execute or trade swaps by accepting bids and offers 
        made by multiple participants in the facility or 
        system, through any means of interstate commerce, 
        including any trading facility, that--
                  (A) facilitates the execution of swaps 
                between persons; and
                  (B) is not a designated contract market.
          (51) Trading facility.--
                  (A) In general.--The term ``trading 
                facility'' means a person or group of persons 
                that constitutes, maintains, or provides a 
                physical or electronic facility or system in 
                which multiple participants have the ability to 
                execute or trade agreements, contracts, or 
                transactions--
                          (i) by accepting bids or offers made 
                        by other participants that are open to 
                        multiple participants in the facility 
                        or system; or
                          (ii) through the interaction of 
                        multiple bids or multiple offers within 
                        a system with a pre-determined non-
                        discretionary automated trade matching 
                        and execution algorithm.
                  (B) Exclusions.--The term ``trading 
                facility'' does not include--
                          (i) a person or group of persons 
                        solely because the person or group of 
                        persons constitutes, maintains, or 
                        provides an electronic facility or 
                        system that enables participants to 
                        negotiate the terms of and enter into 
                        bilateral transactions as a result of 
                        communications exchanged by the parties 
                        and not from interaction of multiple 
                        bids and multiple offers within a 
                        predetermined, nondiscretionary 
                        automated trade matching and execution 
                        algorithm;
                          (ii) a government securities dealer 
                        or government securities broker, to the 
                        extent that the dealer or broker 
                        executes or trades agreements, 
                        contracts, or transactions in 
                        government securities, or assists 
                        persons in communicating about, 
                        negotiating, entering into, executing, 
                        or trading an agreement, contract, or 
                        transaction in government securities 
                        (as the terms ``government securities 
                        dealer'', ``government securities 
                        broker'', and ``government securities'' 
                        are defined in section 3(a) of the 
                        Securities Exchange Act of 1934 (15 
                        U.S.C. 78c(a))); or
                          (iii) facilities on which bids and 
                        offers, and acceptances of bids and 
                        offers effected on the facility, are 
                        not binding.
                Any person, group of persons, dealer, broker, 
                or facility described in clause (i) or (ii) is 
                excluded from the meaning of the term ``trading 
                facility'' for the purposes of this Act without 
                any prior specific approval, certification, or 
                other action by the Commission.
                  (C) Special rule.--A person or group of 
                persons that would not otherwise constitute a 
                trading facility shall not be considered to be 
                a trading facility solely as a result of the 
                submission to a derivatives clearing 
                organization of transactions executed on or 
                through the person or group of persons.
          (52) Associated person of a digital commodity 
        broker.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the term ``associated person 
                of a digital commodity broker'' means a person 
                who is associated with a digital commodity 
                broker as a partner, officer, employee, or 
                agent (or any person occupying a similar status 
                or performing similar functions) in any 
                capacity that involves--
                          (i) the solicitation or acceptance of 
                        a contract for sale of a digital 
                        commodity; or
                          (ii) the supervision of any person 
                        engaged in the solicitation or 
                        acceptance of a contract for sale of a 
                        digital commodity.
                  (B) Exclusion.--The term ``associated person 
                of a digital commodity broker'' does not 
                include any person associated with a digital 
                commodity broker the functions of which are 
                solely clerical or ministerial.
          (53) Associated person of a digital commodity 
        dealer.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the term ``associated person 
                of a digital commodity dealer'' means a person 
                who is associated with a digital commodity 
                dealer as a partner, officer, employee, or 
                agent (or any person occupying a similar status 
                or performing similar functions) in any 
                capacity that involves--
                          (i) the solicitation or acceptance of 
                        a contract for sale of a digital 
                        commodity; or
                          (ii) the supervision of any person 
                        engaged in the solicitation or 
                        acceptance of a contract for sale of a 
                        digital commodity.
                  (B) Exclusion.--The term ``associated person 
                of a digital commodity dealer'' does not 
                include any person associated with a digital 
                commodity dealer the functions of which are 
                solely clerical or ministerial.
          (54) Bank secrecy act.--The term ``Bank Secrecy Act'' 
        means--
                  (A) section 21 of the Federal Deposit 
                Insurance Act (12 U.S.C. 1829b);
                  (B) chapter 2 of title I of Public Law 91-508 
                (12 U.S.C. 1951 et seq.); and
                  (C) subchapter II of chapter 53 of title 31, 
                United States Code.
          (55) Digital commodity.--
                  (A) In general.--The term ``digital 
                commodity'' means--
                          (i) any unit of a digital asset held 
                        by a person, other than a digital asset 
                        issuer, a related person, or an 
                        affiliated person, before the first 
                        date on which each blockchain system to 
                        which the digital asset relates is a 
                        functional network and certified to be 
                        a decentralized network under section 
                        44 of the Securities Exchange Act of 
                        1934, that was--
                                  (I) issued to the person 
                                through an end user 
                                distribution described under 
                                section 42(d)(1) of the 
                                Securities Exchange Act of 
                                1934; or
                                  (II) acquired by such person 
                                in a transaction that was 
                                executed on a digital commodity 
                                exchange; or
                          (ii) any unit of a digital asset held 
                        by a person, other than a digital asset 
                        issuer, a related person, or an 
                        affiliated person, after the first date 
                        on which each blockchain system to 
                        which the digital asset relates is a 
                        functional network and certified to be 
                        a decentralized network under section 
                        44 of the Securities Exchange Act of 
                        1934; and
                          (iii) any unit of a digital asset 
                        held by a related person or an 
                        affiliated person during any period 
                        when any blockchain system to which the 
                        digital asset relates is a functional 
                        network and certified to be a 
                        decentralized network under section 44 
                        of the Securities Exchange Act of 1934.
                  (B) Exclusion.--The term ``digital 
                commodity'' does not include a permitted 
                payment stablecoin.
          (56) Digital commodity broker.--
                  (A) In general.--The term ``digital commodity 
                broker'' means any person who, in a digital 
                commodity cash or spot market, is--
                          (i) engaged in soliciting or 
                        accepting orders for the purchase or 
                        sale of a unit of a digital commodity 
                        from a customer that is not an eligible 
                        contract participant;
                          (ii) engaged in soliciting or 
                        accepting orders for the purchase or 
                        sale of a unit of a digital commodity 
                        from a customer on or subject to the 
                        rules of a registered entity; or
                          (iii) registered with the Commission 
                        as a digital commodity broker.
                  (B) Exceptions.--The term ``digital commodity 
                broker'' does not include a person solely 
                because the person--
                          (i) enters into a digital commodity 
                        transaction the primary purpose of 
                        which is to make, send, receive, or 
                        facilitate payments, whether involving 
                        a payment service provider or on a 
                        peer-to-peer basis; or
                          (ii) validates a digital commodity 
                        transaction, operates a node, or 
                        engages in similar activity to 
                        participate in facilitating, operating, 
                        or securing a blockchain system.
          (57) Digital commodity custodian.--The term ``digital 
        commodity custodian'' means a bank or trust company in 
        the business of holding, maintaining, or safeguarding 
        digital commodities.
          (58) Digital commodity dealer.--
                  (A) In general.--The term ``digital commodity 
                dealer'' means any person who--
                          (i) in digital commodity cash or spot 
                        markets--
                                  (I) holds itself out as a 
                                dealer in a digital commodity;
                                  (II) makes a market in a 
                                digital commodity;
                                  (III) regularly enters into 
                                digital commodity transactions 
                                with counterparties as an 
                                ordinary course of business for 
                                its own account; or
                                  (IV) engages in any activity 
                                causing the person to be 
                                commonly known in the trade as 
                                a dealer or market maker in a 
                                digital commodity;
                          (ii) regularly enters into any 
                        agreement, contract, or transaction 
                        described in subsection (c)(2)(D)(i) 
                        involving a digital commodity; or
                          (iii) is registered with the 
                        Commission as a digital commodity 
                        dealer.
                  (B) Exception.--The term ``digital commodity 
                dealer'' does not include a person solely 
                because the person--
                          (i) enters into a digital commodity 
                        transaction with an eligible contract 
                        participant;
                          (ii) enters into a digital commodity 
                        transaction on or through a registered 
                        digital commodity exchange;
                          (iii) enters into a digital commodity 
                        transaction for the person's own 
                        account, either individually or in a 
                        fiduciary capacity, but not as a part 
                        of a regular business;
                          (iv) enters into a digital commodity 
                        transaction the primary purpose of 
                        which is to make, send, receive, or 
                        facilitate payments, whether involving 
                        a payment service provider or on a 
                        peer-to-peer basis; or
                          (v) validates a digital commodity 
                        transaction, operates a node, or 
                        engages in similar activity to 
                        participate in facilitating, operating, 
                        or securing a blockchain system.
          (59) Digital commodity exchange.--The term ``digital 
        commodity exchange'' means a trading facility that 
        offers or seeks to offer a cash or spot market in at 
        least 1 digital commodity.
          (60) Digital asset-related definitions.--
                  (A) Securities act of 1933.--The terms 
                ``affiliated person'', ``blockchain system'', 
                ``decentralized governance system'', 
                ``decentralized network'', ``digital asset'', 
                ``digital asset issuer'', ``end user 
                distribution'', ``functional network'', 
                ``permitted payment stablecoin'', ``related 
                person'', and ``restricted digital asset'' have 
                the meaning given the terms, respectively, 
                under section 2(a) of the Securities Act of 
                1933 (15 U.S.C. 77b(a)).
                  (B) Securities exchange act of 1934.--The 
                terms ``digital asset broker'' and ``digital 
                asset dealer'' have the meaning given those 
                terms, respectively, under section 3(a) of the 
                Securities Exchange Act of 1934 (15 U.S.C. 
                78c(a)).
          (61) Mixed digital asset transaction.--The term 
        ``mixed digital asset transaction'' has the meaning 
        given that term under section 3(a) of the Securities 
        Exchange Act of 1934 (15 U.S.C. 78c(a)).

           *       *       *       *       *       *       *


SEC. 2. JURISDICTION OF COMMISSION; LIABILITY OF PRINCIPAL FOR ACT OF 
                    AGENT; COMMODITY FUTURES TRADING COMMISSION; 
                    TRANSACTION IN INTERSTATE COMMERCE.

  (a) Jurisdiction of Commission; Commodity Futures Trading 
Commission.--
          (1) Jurisdiction of commission.--
                  (A) In general.--The Commission shall have 
                exclusive jurisdiction, except to the extent 
                otherwise provided in the Wall Street 
                Transparency and Accountability Act of 2010 
                (including an amendment made by that Act) and 
                subparagraphs (C), (D), and (I) of this 
                paragraph and subsections (c) and (f), with 
                respect to accounts, agreements (including any 
                transaction which is of the character of, or is 
                commonly known to the trade as, an ``option'', 
                ``privilege'', ``indemnity'', ``bid'', 
                ``offer'', ``put'', ``call'', ``advance 
                guaranty'', or ``decline guaranty''), and 
                transactions involving swaps or contracts of 
                sale of a commodity for future delivery 
                (including significant price discovery 
                contracts), traded or executed on a contract 
                market designated pursuant to section 5 or a 
                swap execution facility pursuant to section 5h 
                or any other board of trade, exchange, or 
                market, and transactions subject to regulation 
                by the Commission pursuant to subsection 
                (c)(2)(F) of this section or section 19 of this 
                Act. Except as hereinabove provided, nothing 
                contained in this section shall (I) supersede 
                or limit the jurisdiction at any time conferred 
                on the Securities and Exchange Commission or 
                other regulatory authorities under the laws of 
                the United States or of any State, or (II) 
                restrict the Securities and Exchange Commission 
                and such other authorities from carrying out 
                their duties and responsibilities in accordance 
                with such laws. Nothing in this section shall 
                supersede or limit the jurisdiction conferred 
                on courts of the United States or any State.
                  (B) Liability of principal for act of 
                agent.--The act, omission, or failure of any 
                official, agent, or other person acting for any 
                individual, association, partnership, 
                corporation, or trust within the scope of his 
                employment or office shall be deemed the act, 
                omission, or failure of such individual, 
                association, partnership, corporation, or 
                trust, as well as of such official, agent, or 
                other person.
  (C) Notwithstanding any other provision of law--
          (i)(I) Except as provided in subclause (II), this Act 
        shall not apply to and the Commission shall have no 
        jurisdiction to designate a board of trade as a 
        contract market for any transaction whereby any party 
        to such transaction acquires any put, call, or other 
        option on one or more securities (as defined in section 
        2(1) of the Securities Act of 1933 or section 3(a)(10) 
        of the Securities Exchange Act of 1934 on the date of 
        enactment of the Futures Trading Act of 1982), 
        including any group or index of such securities, or any 
        interest therein or based on the value thereof.
                  (II) This Act shall apply to and the 
                Commission shall have jurisdiction with respect 
                to accounts, agreements, and transactions 
                involving, and may permit the listing for 
                trading pursuant to section 5c(c) of, a put, 
                call, or other option on 1 or more securities 
                (as defined in section 2(a)(1) of the 
                Securities Act of 1933 or section 3(a)(10) of 
                the Securities Exchange Act of 1934 on the date 
                of enactment of the Futures Trading Act of 
                1982), including any group or index of such 
                securities, or any interest therein or based on 
                the value thereof, that is exempted by the 
                Securities and Exchange Commission pursuant to 
                section 36(a)(1) of the Securities Exchange Act 
                of 1934 with the condition that the Commission 
                exercise concurrent jurisdiction over such put, 
                call, or other option; provided, however, that 
                nothing in this paragraph shall be construed to 
                affect the jurisdiction and authority of the 
                Securities and Exchange Commission over such 
                put, call, or other option.
          (ii) This Act shall apply to and the Commission shall 
        have exclusive jurisdiction with respect to accounts, 
        agreements (including any transaction which is of the 
        character of, or is commonly known to the trade as, an 
        ``option'', ``privilege'', ``indemnity'', ``bid'', 
        ``offer'', ``put'', ``call'', ``advance guaranty'', or 
        ``decline guaranty'') and transactions involving, and 
        may designate a board of trade as a contract market in, 
        or register a derivatives transaction execution 
        facility that trades or executes, contracts of sale (or 
        options on such contracts) for future delivery of a 
        group or index of securities (or any interest therein 
        or based upon the value thereof): Provided, however, 
        That no board of trade shall be designated as a 
        contract market with respect to any such contracts of 
        sale (or options on such contracts) for future 
        delivery, and no derivatives transaction execution 
        facility shall trade or execute such contracts of sale 
        (or options on such contracts) for future delivery, 
        unless the board of trade or the derivatives 
        transaction execution facility, and the applicable 
        contract, meet the following minimum requirements:
                  (I) Settlement of or delivery on such 
                contract (or option on such contract) shall be 
                effected in cash or by means other than the 
                transfer or receipt of any security, except an 
                exempted security under section 3 of the 
                Securities Act of 1933 or section 3(a)(12) of 
                the Securities Exchange Act of 1934 as in 
                effect on the date of enactment of the Futures 
                Trading Act of 1982 (other than any municipal 
                security, as defined in section 3(a)(29) of the 
                Securities Exchange Act of 1934 on the date of 
                enactment of the Futures Trading Act of 1982);
                  (II) Trading in such contract (or option on 
                such contract) shall not be readily susceptible 
                to manipulation of the price of such contract 
                (or option on such contract), nor to causing or 
                being used in the manipulation of the price of 
                any underlying security, option on such 
                security or option on a group or index 
                including such securities; and
                  (III) Such group or index of securities shall 
                not constitute a narrow-based security index.
          (iii) If, in its discretion, the Commission 
        determines that a stock index futures contract, 
        notwithstanding its conformance with the requirements 
        in clause (ii) of this subparagraph, can reasonably be 
        used as a surrogate for trading a security (including a 
        security futures product), it may, by order, require 
        such contract and any option thereon be traded and 
        regulated as security futures products as defined in 
        section 3(a)(56) of the Securities Exchange Act of 1934 
        and section 1a of this Act subject to all rules and 
        regulations applicable to security futures products 
        under this Act and the securities laws as defined in 
        section 3(a)(47) of the Securities Exchange Act of 
        1934.
          (iv) No person shall offer to enter into, enter into, 
        or confirm the execution of any contract of sale (or 
        option on such contract) for future delivery of any 
        security, or interest therein or based on the value 
        thereof, except an exempted security under or section 
        3(a)(12) of the Securities Exchange Act of 1934 as in 
        effect on the date of enactment of the Futures Trading 
        Act of 1982 (other than any municipal security as 
        defined in section 3(a)(29) of the Securities Exchange 
        Act of 1934 on the date of enactment of the Futures 
        Trading Act of 1982), or except as provided in clause 
        (ii) of this subparagraph or subparagraph (D), any 
        group or index of such securities or any interest 
        therein or based on the value thereof.
          (v)(I) Notwithstanding any other provision of this 
        Act, any contract market in a stock index futures 
        contract (or option thereon) other than a security 
        futures product, or any derivatives transaction 
        execution facility on which such contract or option is 
        traded, shall file with the Board of Governors of the 
        Federal Reserve System any rule establishing or 
        changing the levels of margin (initial and maintenance) 
        for such stock index futures contract (or option 
        thereon) other than security futures products.
          (II) The Board may at any time request any contract 
        market or derivatives transaction execution facility to 
        set the margin for any stock index futures contract (or 
        option thereon), other than for any security futures 
        product, at such levels as the Board in its judgment 
        determines are appropriate to preserve the financial 
        integrity of the contract market or derivatives 
        transaction execution facility, or its clearing system, 
        or to prevent systemic risk. If the contract market or 
        derivatives transaction execution facility fails to do 
        so within the time specified by the Board in its 
        request, the Board may direct the contract market or 
        derivatives transaction execution facility to alter or 
        supplement the rules of the contract market or 
        derivatives transaction execution facility as specified 
        in the request.
          (III) Subject to such conditions as the Board may 
        determine, the Board may delegate any or all of its 
        authority, relating to margin for any stock index 
        futures contract (or option thereon), other than 
        security futures products, under this clause to the 
        Commission.
          (IV) It shall be unlawful for any futures commission 
        merchant to, directly or indirectly, extend or maintain 
        credit to or for, or collect margin from any customer 
        on any security futures product unless such activities 
        comply with the regulations prescribed pursuant to 
        section 7(c)(2)(B) of the Securities Exchange Act of 
        1934.
          (V) Nothing in this clause shall supersede or limit 
        the authority granted to the Commission in section 
        8a(9) to direct a contract market or registered 
        derivatives transaction execution facility, on finding 
        an emergency to exist, to raise temporary margin levels 
        on any futures contract, or option on the contract 
        covered by this clause, or on any security futures 
        product.
          (VI) Any action taken by the Board, or by the 
        Commission acting under the delegation of authority 
        under subclause III, under this clause directing a 
        contract market to alter or supplement a contract 
        market rule shall be subject to review only in the 
        Court of Appeals where the party seeking review resides 
        or has its principal place of business, or in the 
        United States Court of Appeals for the District of 
        Columbia Circuit. The review shall be based on the 
        examination of all information before the Board or the 
        Commission, as the case may be, at the time the 
        determination was made. The court reviewing the action 
        of the Board or the Commission shall not enter a stay 
        or order of mandamus unless the court has determined, 
        after notice and a hearing before a panel of the court, 
        that the agency action complained of was arbitrary, 
        capricious, an abuse of discretion, or otherwise not in 
        accordance with law.
  (D)(i) Notwithstanding any other provision of this Act, the 
Securities and Exchange Commission shall have jurisdiction and 
authority over security futures as defined in section 3(a)(55) 
of the Securities Exchange Act of 1934, section 2(a)(16) of the 
Securities Act of 1933, section 2(a)(52) of the Investment 
Company Act of 1940, and section 202(a)(27) of the Investment 
Advisers Act of 1940, options on security futures, and persons 
effecting transactions in security futures and options thereon, 
and this Act shall apply to and the Commission shall have 
jurisdiction with respect to accounts, agreements (including 
any transaction which is of the character of, or is commonly 
known to the trade as, an ``option'', ``privilege'', 
``indemnity'', ``bid'', ``offer'', ``put'', ``call'', ``advance 
guaranty'', or ``decline guaranty''), contracts, and 
transactions involving, and may designate a board of trade as a 
contract market in, or register a derivatives transaction 
execution facility that trades or executes, a security futures 
product as defined in section 1a of this Act: Provided, 
however, That, except as provided in clause (vi) of this 
subparagraph, no board of trade shall be designated as a 
contract market with respect to, or registered as a derivatives 
transaction execution facility for, any such contracts of sale 
for future delivery unless the board of trade and the 
applicable contract meet the following criteria:
          (I) Except as otherwise provided in a rule, 
        regulation, or order issued pursuant to clause (v) of 
        this subparagraph, any security underlying the security 
        future, including each component security of a narrow-
        based security index, is registered pursuant to section 
        12 of the Securities Exchange Act of 1934.
          (II) If the security futures product is not cash 
        settled, the board of trade on which the security 
        futures product is traded has arrangements in place 
        with a clearing agency registered pursuant to section 
        17A of the Securities Exchange Act of 1934 for the 
        payment and delivery of the securities underlying the 
        security futures product.
          (III) Except as otherwise provided in a rule, 
        regulation, or order issued pursuant to clause (v) of 
        this subparagraph, the security future is based upon 
        common stock and such other equity securities as the 
        Commission and the Securities and Exchange Commission 
        jointly determine appropriate.
          (IV) The security futures product is cleared by a 
        clearing agency that has in place provisions for linked 
        and coordinated clearing with other clearing agencies 
        that clear security futures products, which permits the 
        security futures product to be purchased on a 
        designated contract market, registered derivatives 
        transaction execution facility, national securities 
        exchange registered under section 6(a) of the 
        Securities Exchange Act of 1934, or national securities 
        association registered pursuant to section 15A(a) of 
        the Securities Exchange Act of 1934 and offset on 
        another designated contract market, registered 
        derivatives transaction execution facility, national 
        securities exchange registered under section 6(a) of 
        the Securities Exchange Act of 1934, or national 
        securities association registered pursuant to section 
        15A(a) of the Securities Exchange Act of 1934.
          (V) Only futures commission merchants, introducing 
        brokers, commodity trading advisors, commodity pool 
        operators or associated persons subject to suitability 
        rules comparable to those of a national securities 
        association registered pursuant to section 15A(a) of 
        the Securities Exchange Act of 1934 solicit, accept any 
        order for, or otherwise deal in any transaction in or 
        in connection with the security futures product.
          (VI) The security futures product is subject to a 
        prohibition against dual trading in section 4j of this 
        Act and the rules and regulations thereunder or the 
        provisions of section 11(a) of the Securities Exchange 
        Act of 1934 and the rules and regulations thereunder, 
        except to the extent otherwise permitted under the 
        Securities Exchange Act of 1934 and the rules and 
        regulations thereunder.
          (VII) Trading in the security futures product is not 
        readily susceptible to manipulation of the price of 
        such security futures product, nor to causing or being 
        used in the manipulation of the price of any underlying 
        security, option on such security, or option on a group 
        or index including such securities;
          (VIII) The board of trade on which the security 
        futures product is traded has procedures in place for 
        coordinated surveillance among such board of trade, any 
        market on which any security underlying the security 
        futures product is traded, and other markets on which 
        any related security is traded to detect manipulation 
        and insider trading, except that, if the board of trade 
        is an alternative trading system, a national securities 
        association registered pursuant to section 15A(a) of 
        the Securities Exchange Act of 1934 or national 
        securities exchange registered pursuant to section 6(a) 
        of the Securities Exchange Act of 1934 of which such 
        alternative trading system is a member has in place 
        such procedures.
          (IX) The board of trade on which the security futures 
        product is traded has in place audit trails necessary 
        or appropriate to facilitate the coordinated 
        surveillance required in subclause (VIII), except that, 
        if the board of trade is an alternative trading system, 
        a national securities association registered pursuant 
        to section 15A(a) of the Securities Exchange Act of 
        1934 or national securities exchange registered 
        pursuant to section 6(a) of the Securities Exchange Act 
        of 1934 of which such alternative trading system is a 
        member has rules to require such audit trails.
          (X) The board of trade on which the security futures 
        product is traded has in place procedures to coordinate 
        trading halts between such board of trade and markets 
        on which any security underlying the security futures 
        product is traded and other markets on which any 
        related security is traded, except that, if the board 
        of trade is an alternative trading system, a national 
        securities association registered pursuant to section 
        15A(a) of the Securities Exchange Act of 1934 or 
        national securities exchange registered pursuant to 
        section 6(a) of the Securities Exchange Act of 1934 of 
        which such alternative trading system is a member has 
        rules to require such coordinated trading halts.
          (XI) The margin requirements for a security futures 
        product comply with the regulations prescribed pursuant 
        to section 7(c)(2)(B) of the Securities Exchange Act of 
        1934, except that nothing in this subclause shall be 
        construed to prevent a board of trade from requiring 
        higher margin levels for a security futures product 
        when it deems such action to be necessary or 
        appropriate.
  (ii) It shall be unlawful for any person to offer, to enter 
into, to execute, to confirm the execution of, or to conduct 
any office or business anywhere in the United States, its 
territories or possessions, for the purpose of soliciting, or 
accepting any order for, or otherwise dealing in, any 
transaction in, or in connection with, a security futures 
product unless--
          (I) the transaction is conducted on or subject to the 
        rules of a board of trade that--
                  (aa) has been designated by the Commission as 
                a contract market in such security futures 
                product; or
                  (bb) is a registered derivatives transaction 
                execution facility for the security futures 
                product that has provided a certification with 
                respect to the security futures product 
                pursuant to clause (vii);
          (II) the contract is executed or consummated by, 
        through, or with a member of the contract market or 
        registered derivatives transaction execution facility; 
        and
          (III) the security futures product is evidenced by a 
        record in writing which shows the date, the parties to 
        such security futures product and their addresses, the 
        property covered, and its price, and each contract 
        market member or registered derivatives transaction 
        execution facility member shall keep the record for a 
        period of 3 years from the date of the transaction, or 
        for a longer period if the Commission so directs, which 
        record shall at all times be open to the inspection of 
        any duly authorized representative of the Commission.
  (iii)(I) Except as provided in subclause (II) but 
notwithstanding any other provision of this Act, no person 
shall offer to enter into, enter into, or confirm the execution 
of any option on a security future.
  (II) After 3 years after the date of the enactment of the 
Commodity Futures Modernization Act of 2000, the Commission and 
the Securities and Exchange Commission may by order jointly 
determine to permit trading of options on any security future 
authorized to be traded under the provisions of this Act and 
the Securities Exchange Act of 1934.
  (iv)(I) All relevant records of a futures commission merchant 
or introducing broker registered pursuant to section 4f(a)(2), 
floor broker or floor trader exempt from registration pursuant 
to section 4f(a)(3), associated person exempt from registration 
pursuant to [section 4k(6)] section 4k(7), or board of trade 
designated as a contract market in a security futures product 
pursuant to section 5f shall be subject to such reasonable 
periodic or special examinations by representatives of the 
Commission as the Commission deems necessary or appropriate in 
the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of this Act, and the 
Commission, before conducting any such examination, shall give 
notice to the Securities and Exchange Commission of the 
proposed examination and consult with the Securities and 
Exchange Commission concerning the feasibility and desirability 
of coordinating the examination with examinations conducted by 
the Securities and Exchange Commission in order to avoid 
unnecessary regulatory duplication or undue regulatory burdens 
for the registrant or board of trade.
  (II) The Commission shall notify the Securities and Exchange 
Commission of any examination conducted of any futures 
commission merchant or introducing broker registered pursuant 
to section 4f(a)(2), floor broker or floor trader exempt from 
registration pursuant to section 4f(a)(3), associated person 
exempt from registration pursuant to [section 4k(6)] section 
4k(7), or board of trade designated as a contract market in a 
security futures product pursuant to section 5f, and, upon 
request, furnish to the Securities and Exchange Commission any 
examination report and data supplied to or prepared by the 
Commission in connection with the examination.
  (III) Before conducting an examination under subclause (I), 
the Commission shall use the reports of examinations, unless 
the information sought is unavailable in the reports, of any 
futures commission merchant or introducing broker registered 
pursuant to section 4f(a)(2), floor broker or floor trader 
exempt from registration pursuant to section 4f(a)(3), 
associated person exempt from registration pursuant to [section 
4k(6)] section 4k(7), or board of trade designated as a 
contract market in a security futures product pursuant to 
section 5f that is made by the Securities and Exchange 
Commission, a national securities association registered 
pursuant to section 15A(a) of the Securities Exchange Act of 
1934 (15 U.S.C. 78o-3(a)), or a national securities exchange 
registered pursuant to section 6(a) of the Securities Exchange 
Act of 1934 (15 U.S.C. 78f(a)).
  (IV) Any records required under this subsection for a futures 
commission merchant or introducing broker registered pursuant 
to section 4f(a)(2), floor broker or floor trader exempt from 
registration pursuant to section 4f(a)(3), associated person 
exempt from registration pursuant to [section 4k(6)] section 
4k(7), or board of trade designated as a contract market in a 
security futures product pursuant to section 5f, shall be 
limited to records with respect to accounts, agreements, 
contracts, and transactions involving security futures 
products.
  (v)(I) The Commission and the Securities and Exchange 
Commission, by rule, regulation, or order, may jointly modify 
the criteria specified in subclause (I) or (III) of clause (i), 
including the trading of security futures based on securities 
other than equity securities, to the extent such modification 
fosters the development of fair and orderly markets in security 
futures products, is necessary or appropriate in the public 
interest, and is consistent with the protection of investors.
  (II) The Commission and the Securities and Exchange 
Commission, by order, may jointly exempt any person from 
compliance with the criterion specified in clause (i)(IV) to 
the extent such exemption fosters the development of fair and 
orderly markets in security futures products, is necessary or 
appropriate in the public interest, and is consistent with the 
protection of investors.
  (vi)(I) Notwithstanding clauses (i) and (vii), until the 
compliance date, a board of trade shall not be required to meet 
the criterion specified in clause (i)(IV).
  (II) The Commission and the Securities and Exchange 
Commission shall jointly publish in the Federal Register a 
notice of the compliance date no later than 165 days before the 
compliance date.
  (III) For purposes of this clause, the term ``compliance 
date'' means the later of--
          (aa) 180 days after the end of the first full 
        calendar month period in which the average aggregate 
        comparable share volume for all security futures 
        products based on single equity securities traded on 
        all designated contract markets and registered 
        derivatives transaction execution facilities equals or 
        exceeds 10 percent of the average aggregate comparable 
        share volume of options on single equity securities 
        traded on all national securities exchanges registered 
        pursuant to section 6(a) of the Securities Exchange Act 
        of 1934 and any national securities associations 
        registered pursuant to section 15A(a) of such Act; or
          (bb) 2 years after the date on which trading in any 
        security futures product commences under this Act.
  (vii) It shall be unlawful for a board of trade to trade or 
execute a security futures product unless the board of trade 
has provided the Commission with a certification that the 
specific security futures product and the board of trade, as 
applicable, meet the criteria specified in subclauses (I) 
through (XI) of clause (i), except as otherwise provided in 
clause (vi).
  (E)(i) To the extent necessary or appropriate in the public 
interest, to promote fair competition, and consistent with 
promotion of market efficiency, innovation, and expansion of 
investment opportunities, the protection of investors, and the 
maintenance of fair and orderly markets, the Commission and the 
Securities and Exchange Commission shall jointly issue such 
rules, regulations, or orders as are necessary and appropriate 
to permit the offer and sale of a security futures product 
traded on or subject to the rules of a foreign board of trade 
to United States persons.
  (ii) The rules, regulations, or orders adopted under clause 
(i) shall take into account, as appropriate, the nature and 
size of the markets that the securities underlying the security 
futures product reflects.
  (F)(i) Nothing in this Act is intended to prohibit a futures 
commission merchant from carrying security futures products 
traded on or subject to the rules of a foreign board of trade 
in the accounts of persons located outside of the United 
States.
  (ii) Nothing in this Act is intended to prohibit any eligible 
contract participant located in the United States from 
purchasing or carrying securities futures products traded on or 
subject to the rules of a foreign board of trade, exchange, or 
market to the same extent such person may be authorized to 
purchase or carry other securities traded on a foreign board of 
trade, exchange, or market so long as any underlying security 
for such security futures products is traded principally on, 
by, or through any exchange or market located outside the 
United States.
                  (G)(i) Nothing in this paragraph shall limit 
                the jurisdiction conferred on the Securities 
                and Exchange Commission by the Wall Street 
                Transparency and Accountability Act of 2010 
                with regard to security-based swap agreements 
                as defined pursuant to section 3(a)(78) of the 
                Securities Exchange Act of 1934, and security-
                based swaps.
                  (ii) In addition to the authority of the 
                Securities and Exchange Commission described in 
                clause (i), nothing in this subparagraph shall 
                limit or affect any statutory authority of the 
                Commission with respect to an agreement, 
                contract, or transaction described in clause 
                (i).
                  (H) Notwithstanding any other provision of 
                law, the Wall Street Transparency and 
                Accountability Act of 2010 shall not apply to, 
                and the Commodity Futures Trading Commission 
                shall have no jurisdiction under such Act (or 
                any amendments to the Commodity Exchange Act 
                made by such Act) with respect to, any security 
                other than a security-based swap.
                  (I)(i) Nothing in this Act shall limit or 
                affect any statutory authority of the Federal 
                Energy Regulatory Commission or a State 
                regulatory authority (as defined in section 
                3(21) of the Federal Power Act (16 U.S.C. 
                796(21)) with respect to an agreement, 
                contract, or transaction that is entered into 
                pursuant to a tariff or rate schedule approved 
                by the Federal Energy Regulatory Commission or 
                a State regulatory authority and is--
                          (I) not executed, traded, or cleared 
                        on a registered entity or trading 
                        facility; or
                          (II) executed, traded, or cleared on 
                        a registered entity or trading facility 
                        owned or operated by a regional 
                        transmission organization or 
                        independent system operator.
                  (ii) In addition to the authority of the 
                Federal Energy Regulatory Commission or a State 
                regulatory authority described in clause (i), 
                nothing in this subparagraph shall limit or 
                affect--
                          (I) any statutory authority of the 
                        Commission with respect to an 
                        agreement, contract, or transaction 
                        described in clause (i); or
                          (II) the jurisdiction of the 
                        Commission under subparagraph (A) with 
                        respect to an agreement, contract, or 
                        transaction that is executed, traded, 
                        or cleared on a registered entity or 
                        trading facility that is not owned or 
                        operated by a regional transmission 
                        organization or independent system 
                        operator (as defined by sections 3(27) 
                        and (28) of the Federal Power Act (16 
                        U.S.C. 796(27), 796(28)).
                  (J) Except as expressly provided in this Act, 
                nothing in the Financial Innovation and 
                Technology for the 21st Century Act shall 
                affect or apply to, or be interpreted to affect 
                or apply to--
                          (i) any agreement, contract, or 
                        transaction that is subject to 
                        regulation under this Act as--
                                  (I) a contract of sale of a 
                                commodity for future delivery 
                                or an option on such a 
                                contract;
                                  (II) a swap;
                                  (III) a security futures 
                                product;
                                  (IV) an option authorized 
                                under section 4c of this Act;
                                  (V) an agreement, contract, 
                                or transaction described in 
                                subparagraph (C)(i) or (D)(i) 
                                of subsection (c)(2) of this 
                                section; or
                                  (VI) a leverage transaction 
                                authorized under section 19 of 
                                this Act; or
                          (ii) the activities of any person 
                        with respect to any such an agreement, 
                        contract, or transaction.
          (2)(A) There is hereby established, as an independent 
        agency of the United States Government, a Commodity 
        Futures Trading Commission. The Commission shall be 
        composed of five Commissioners who shall be appointed 
        by the President, by and with the advice and consent of 
        the Senate. In nominating persons for appointment, the 
        President shall--
                  (i) select persons who shall each have 
                demonstrated knowledge in futures trading or 
                its regulation, or the production, 
                merchandising, processing or distribution of 
                one or more of the commodities or other goods 
                and articles, services, rights, and interests 
                covered by this Act; and
                  (ii) seek to ensure that the demonstrated 
                knowledge of the Commissioners is balanced with 
                respect to such areas.
        Not more than three of the members of the Commission 
        shall be members of the same political party. Each 
        Commissioner shall hold office for a term of five years 
        and until his successor is appointed and has qualified, 
        except that he shall not so continue to serve beyond 
        the expiration of the next session of Congress 
        subsequent to the expiration of said fixed term of 
        office, and except (i) any Commissioner appointed to 
        fill a vacancy occurring prior to the expiration of the 
        term for which his predecessor was appointed shall be 
        appointed for the remainder of such term, and (ii) the 
        terms of office of the Commissioners first taking 
        office after the enactment of this paragraph shall 
        expire as designated by the President at the time of 
        nomination, one at the end of one year, one at the end 
        of two years, one at the end of three years, one at the 
        end of four years, and one at the end of five years.
          (B) The President shall appoint, by and with the 
        advice and consent of the Senate, a member of the 
        Commission as Chairman, who shall serve as Chairman at 
        the pleasure of the President. An individual may be 
        appointed as Chairman at the same time that person is 
        appointed as a Commissioner. The Chairman shall be the 
        chief administrative officer of the Commission and 
        shall preside at hearings before the Commission. At any 
        time, the President may appoint, by and with the advice 
        and consent of the Senate, a different Chairman, and 
        the Commissioner previously appointed as Chairman may 
        complete that Commissioner's term as a Commissioner.
          (3) A vacancy in the Commission shall not impair the 
        right of the remaining Commissioners to exercise all 
        the powers of the Commission.
          (4) The Commission shall have a General Counsel, who 
        shall be appointed by the Commission and serve at the 
        pleasure of the Commission. The General Counsel shall 
        report directly to the Commission and serve as its 
        legal advisor. The Commission shall appoint such other 
        attorneys as may be necessary, in the opinion of the 
        Commission, to assist the General Counsel, represent 
        the Commission in all disciplinary proceedings pending 
        before it, represent the Commission in courts of law 
        whenever appropriate, assist the Department of Justice 
        in handling litigation concerning the Commission in 
        courts of law, and perform such other legal duties and 
        functions as the Commission may direct.
          (5) The Commission shall have an Executive Director, 
        who shall be appointed by the Commission and serve at 
        the pleasure of the Commission. The Executive Director 
        shall report directly to the Commission and perform 
        such functions and duties as the Commission may 
        prescribe.
          (6)(A) Except as otherwise provided in this 
        [paragraph and in] paragraph, paragraphs (4) and (5) of 
        this subsection, and section 18(c)(3), the executive 
        and administrative functions of the Commission, 
        including functions of the Commission with respect to 
        the appointment and supervision of personnel employed 
        under the Commission, the distribution of business 
        among such personnel and among administrative units of 
        the Commission, and the use and expenditure of funds, 
        according to budget categories, plans, programs, and 
        priorities established and approved by the Commission, 
        shall be exercised solely by the Chairman.
          (B) In carrying out any of his functions under the 
        provisions of this paragraph, the Chairman shall be 
        governed by general policies, plans, priorities, and 
        budgets approved by the Commission and by such 
        regulatory decisions, findings, and determinations as 
        the Commission may by law be authorized to make.
          (C) The appointment by the Chairman of the heads of 
        major administrative units under the Commission shall 
        be subject to the approval of the Commission.
          (D) Personnel employed regularly and full time in the 
        immediate offices of Commissioners other than the 
        Chairman shall not be affected by the provisions of 
        this paragraph.
          (E) There are hereby reserved to the Commission its 
        functions with respect to revising budget estimates and 
        with respect to determining the distribution of 
        appropriated funds according to major programs and 
        purposes.
          (F) The Chairman may from time to time make such 
        provisions as he shall deem appropriate authorizing the 
        performance by any officer, employee, or administrative 
        unit under his jurisdiction of any functions of the 
        Chairman under this paragraph.
          (7) Appointment and compensation.--
                  (A) In general.--The Commission may appoint 
                and fix the compensation of such officers, 
                attorneys, economists, examiners, and other 
                employees as may be necessary for carrying out 
                the functions of the Commission under this Act.
                  (B) Rates of pay.--Rates of basic pay for all 
                employees of the Commission may be set and 
                adjusted by the Commission without regard to 
                chapter 51 or subchapter III of chapter 53 of 
                title 5, United States Code.
                  (C) Comparability.--
                          (i) In general.--The Commission may 
                        provide additional compensation and 
                        benefits to employees of the Commission 
                        if the same type of compensation or 
                        benefits are provided by any agency 
                        referred to in section 1206(a) of the 
                        Financial Institutions Reform, 
                        Recovery, and Enforcement Act of 1989 
                        (12 U.S.C. 1833b(a)) or could be 
                        provided by such an agency under 
                        applicable provisions of law (including 
                        rules and regulations).
                          (ii) Consultation.--In setting and 
                        adjusting the total amount of 
                        compensation and benefits for 
                        employees, the Commission shall consult 
                        with, and seek to maintain 
                        comparability with, the agencies 
                        referred to in section 1206(a) of the 
                        Financial Institutions Reform, 
                        Recovery, and Enforcement Act of 1989 
                        (12 U.S.C. 1833b(a)).
          (8) No Commissioner or employee of the Commission 
        shall accept employment or compensation from any 
        person, exchange, or clearinghouse subject to 
        regulation by the Commission under this Act during his 
        term of office, nor shall he participate, directly or 
        indirectly, in any registered entity operations or 
        transactions of a character subject to regulation by 
        the Commission.
          (9)(A) The Commission shall, in cooperation with the 
        Secretary of Agriculture, maintain a liaison between 
        the Commission and the Department of Agriculture. The 
        Secretary shall take such steps as may be necessary to 
        enable the Commission to obtain information and utilize 
        such services and facilities of the Department of 
        Agriculture as may be necessary in order to maintain 
        effectively such liaison. In addition, the Secretary 
        shall appoint a liaison officer, who shall be an 
        employee of the Office of the Secretary, for the 
        purpose of maintaining a liaison between the Department 
        of Agriculture and the Commission. The Commission shall 
        furnish such liaison officer appropriate office space 
        within the offices of the Commission and shall allow 
        such liaison officer to attend and observe all 
        deliberations and proceedings of the Commission.
          (B)(i) The Commission shall maintain communications 
        with the Department of the Treasury, the Board of 
        Governors of the Federal Reserve System, and the 
        Securities and Exchange Commission for the purpose of 
        keeping such agencies fully informed of Commission 
        activities that relate to the responsibilities of those 
        agencies, for the purpose of seeking the views of those 
        agencies on such activities, and for considering the 
        relationships between the volume and nature of 
        investment and trading in contracts of sale of a 
        commodity for future delivery and in securities and 
        financial instruments under the jurisdiction of such 
        agencies.
          (ii) When a board of trade applies for designation or 
        registration as a contract market or derivatives 
        transaction execution facility involving transactions 
        for future delivery of any security issued or 
        guaranteed by the United States or any agency thereof, 
        the Commission shall promptly deliver a copy of such 
        application to the Department of the Treasury and the 
        Board of Governors of the Federal Reserve System. The 
        Commission may not designate or register a board of 
        trade as a contract market or derivatives transaction 
        execution facility based on such application until 
        forty-five days after the date the Commission delivers 
        the application to such agencies or until the 
        Commission receives comments from each of such agencies 
        on the application, whichever period is shorter. Any 
        comments received by the Commission from such agencies 
        shall be included as part of the public record of the 
        Commission's designation proceeding. In designating, 
        registering, or refusing, suspending, or revoking the 
        designation or registration of, a board of trade as a 
        contract market or derivatives transaction execution 
        facility involving transactions for future delivery 
        referred to in this clause or in considering any 
        possible action under this Act (including without 
        limitation emergency action under section 8a(9)) with 
        respect to such transactions, the Commission shall take 
        into consideration all comments it receives from the 
        Department of the Treasury and the Board of Governors 
        of the Federal Reserve System and shall consider the 
        effect that any such designation, registration, 
        suspension, revocation, or action may have on the debt 
        financing requirements of the United States Government 
        and the continued efficiency and integrity of the 
        underlying market for government securities.
          (iii) The provisions of this subparagraph shall not 
        create any rights, liabilities, or obligations upon 
        which actions may be brought against the Commission.
          (10)(A) Whenever the Commission submits any budget 
        estimate or request to the President or the Office of 
        Management and Budget, it shall concurrently transmit 
        copies of that estimate or request to the House and 
        Senate Appropriations Committees and the House 
        Committee on Agriculture and the Senate Committee on 
        Agriculture, Nutrition, and Forestry.
          (B) Whenever the Commission transmits any legislative 
        recommendations, or testimony, or comments on 
        legislation to the President or the Office of 
        Management and Budget, it shall concurrently transmit 
        copies thereof to the House Committee on Agriculture 
        and the Senate Committee on Agriculture, Nutrition, and 
        Forestry. No officer or agency of the United States 
        shall have any authority to require the Commission to 
        submit its legislative recommendations, or testimony, 
        or comments on legislation to any officer or agency of 
        the United States for approval, comments, or review, 
        prior to the submission of such recommendations, 
        testimony, or comments to the Congress. In instances in 
        which the Commission voluntarily seeks to obtain the 
        comments or review of any officer or agency of the 
        United States, the Commission shall include a 
        description of such actions in its legislative 
        recommendations, testimony, or comments on legislation 
        which it transmits to the Congress.
          (C) Whenever the Commission issues for official 
        publication any opinion, release, rule, order, 
        interpretation, or other determination on a matter, the 
        Commission shall provide that any dissenting, 
        concurring, or separate opinion by any Commissioner on 
        the matter be published in full along with the 
        Commission opinion, release, rule, order, 
        interpretation, or determination.
  (11) The Commission shall have an official seal, which shall 
be judicially noticed.
  (12) The Commission is authorized to promulgate such rules 
and regulations as it deems necessary to govern the operating 
procedures and conduct of the business of the Commission.
          (13) Public availability of swap transaction data.--
                  (A) Definition of real-time public 
                reporting.--In this paragraph, the term ``real-
                time public reporting'' means to report data 
                relating to a swap transaction, including price 
                and volume, as soon as technologically 
                practicable after the time at which the swap 
                transaction has been executed.
                  (B) Purpose.--The purpose of this section is 
                to authorize the Commission to make swap 
                transaction and pricing data available to the 
                public in such form and at such times as the 
                Commission determines appropriate to enhance 
                price discovery.
                  (C) General rule.--The Commission is 
                authorized and required to provide by rule for 
                the public availability of swap transaction and 
                pricing data as follows:
                          (i) With respect to those swaps that 
                        are subject to the mandatory clearing 
                        requirement described in subsection 
                        (h)(1) (including those swaps that are 
                        excepted from the requirement pursuant 
                        to subsection (h)(7)), the Commission 
                        shall require real-time public 
                        reporting for such transactions.
                          (ii) With respect to those swaps that 
                        are not subject to the mandatory 
                        clearing requirement described in 
                        subsection (h)(1), but are cleared at a 
                        registered derivatives clearing 
                        organization, the Commission shall 
                        require real-time public reporting for 
                        such transactions.
                          (iii) With respect to swaps that are 
                        not cleared at a registered derivatives 
                        clearing organization and which are 
                        reported to a swap data repository or 
                        the Commission under subsection (h)(6), 
                        the Commission shall require real-time 
                        public reporting for such transactions, 
                        in a manner that does not disclose the 
                        business transactions and market 
                        positions of any person.
                          (iv) With respect to swaps that are 
                        determined to be required to be cleared 
                        under subsection (h)(2) but are not 
                        cleared, the Commission shall require 
                        real-time public reporting for such 
                        transactions.
                  (D) Registered entities and public 
                reporting.--The Commission may require 
                registered entities to publicly disseminate the 
                swap transaction and pricing data required to 
                be reported under this paragraph.
                  (E) Rulemaking required.--With respect to the 
                rule providing for the public availability of 
                transaction and pricing data for swaps 
                described in clauses (i) and (ii) of 
                subparagraph (C), the rule promulgated by the 
                Commission shall contain provisions--
                          (i) to ensure such information does 
                        not identify the participants;
                          (ii) to specify the criteria for 
                        determining what constitutes a large 
                        notional swap transaction (block trade) 
                        for particular markets and contracts;
                          (iii) to specify the appropriate time 
                        delay for reporting large notional swap 
                        transactions (block trades) to the 
                        public; and
                          (iv) that take into account whether 
                        the public disclosure will materially 
                        reduce market liquidity.
                  (F) Timeliness of reporting.--Parties to a 
                swap (including agents of the parties to a 
                swap) shall be responsible for reporting swap 
                transaction information to the appropriate 
                registered entity in a timely manner as may be 
                prescribed by the Commission.
                  (G) Reporting of swaps to registered swap 
                data repositories.--Each swap (whether cleared 
                or uncleared) shall be reported to a registered 
                swap data repository.
          (14) Semiannual and annual public reporting of 
        aggregate swap data.--
                  (A) In general.--In accordance with 
                subparagraph (B), the Commission shall issue a 
                written report on a semiannual and annual basis 
                to make available to the public information 
                relating to--
                          (i) the trading and clearing in the 
                        major swap categories; and
                          (ii) the market participants and 
                        developments in new products.
                  (B) Use; consultation.--In preparing a report 
                under subparagraph (A), the Commission shall--
                          (i) use information from swap data 
                        repositories and derivatives clearing 
                        organizations; and
                          (ii) consult with the Office of the 
                        Comptroller of the Currency, the Bank 
                        for International Settlements, and such 
                        other regulatory bodies as may be 
                        necessary.
                  (C) Authority of the commission.--The 
                Commission may, by rule, regulation, or order, 
                delegate the public reporting responsibilities 
                of the Commission under this paragraph in 
                accordance with such terms and conditions as 
                the Commission determines to be appropriate and 
                in the public interest.
          (15) Energy and environmental markets advisory 
        committee.--
                  (A) Establishment.--
                          (i) In general.--An Energy and 
                        Environmental Markets Advisory 
                        Committee is hereby established.
                          (ii) Membership.--The Committee shall 
                        have 9 members.
                          (iii) Activities.--The Committee's 
                        objectives and scope of activities 
                        shall be--
                                  (I) to conduct public 
                                meetings;
                                  (II) to submit reports and 
                                recommendations to the 
                                Commission (including 
                                dissenting or minority views, 
                                if any); and
                                  (III) otherwise to serve as a 
                                vehicle for discussion and 
                                communication on matters of 
                                concern to exchanges, firms, 
                                end users, and regulators 
                                regarding energy and 
                                environmental markets and their 
                                regulation by the Commission.
                  (B) Requirements.--
                          (i) In general.--The Committee shall 
                        hold public meetings at such intervals 
                        as are necessary to carry out the 
                        functions of the Committee, but not 
                        less frequently than 2 times per year.
                          (ii) Members.--Members shall be 
                        appointed to 3-year terms, but may be 
                        removed for cause by vote of the 
                        Commission.
                  (C) Appointment.--The Commission shall 
                appoint members with a wide diversity of 
                opinion and who represent a broad spectrum of 
                interests, including hedgers and consumers.
                  (D) Reimbursement.--Members shall be entitled 
                to per diem and travel expense reimbursement by 
                the Commission.
                  (E) Chapter 10 of title 5, united states 
                code.--The Committee shall not be subject to 
                chapter 10 of title 5, United States Code.
  (b) For the purposes of this Act (but not in any wise 
limiting the foregoing definition of interstate commerce) a 
transaction in respect to any article shall be considered to be 
in interstate commerce if such article is part of that current 
of commerce usual in the commodity trade whereby commodities 
and commodity products and by-products thereof are sent from 
one State with the expectation that they will end their 
transit, after purchase, in another, including, in addition to 
cases within the above general description, all cases where 
purchase or sale is either for shipment to another State, or 
for manufacture within the State and the shipment outside the 
State of the products resulting from such manufacture. Articles 
normally in such current of commerce shall not be considered 
out of such commerce through resort being had to any means or 
device intended to remove transactions in respect thereto from 
the provisions of this Act. For the purpose of this paragraph 
the word ``State'' includes Territory, the District of 
Columbia, possession of the United States, and foreign nation.
  (c) Agreements, Contracts, and Transactions in Foreign 
Currency, Government Securities, and Certain Other 
Commodities.--
          (1) In general.--Except as provided in paragraph (2), 
        nothing in this Act (other than section, 5b, or 
        12(e)(2)(B)) governs or applies to an agreement, 
        contract, or transaction in--
                  (A) foreign currency;
                  (B) government securities;
                  (C) security warrants;
                  (D) security rights;
                  (E) resales of installment loan contracts;
                  (F) repurchase transactions in an excluded 
                commodity; [or]
                  (G) mortgages or mortgage purchase 
                commitments[.]; or
                  (H) permitted payment stablecoins.
          (2) Commission jurisdiction.--
                  (A) Agreements, contracts, and transactions 
                traded on an organized exchange.--This Act 
                applies to, and the Commission shall have 
                jurisdiction over, an agreement, contract, or 
                transaction described in paragraph (1) that 
                is--
                          (i) a contract of sale of a commodity 
                        for future delivery (or an option on 
                        such a contract), or an option on a 
                        commodity (other than foreign currency 
                        or a security or a group or index of 
                        securities), that is executed or traded 
                        on an organized exchange;
                          (ii) a swap; or
                          (iii) an option on foreign currency 
                        executed or traded on an organized 
                        exchange that is not a national 
                        securities exchange registered pursuant 
                        to section 6(a) of the Securities 
                        Exchange Act of 1934.
                  (B) Agreements, contracts, and transactions 
                in retail foreign currency.--
                          (i) This Act applies to, and the 
                        Commission shall have jurisdiction 
                        over, an agreement, contract, or 
                        transaction in foreign currency that--
                                  (I) is a contract of sale of 
                                a commodity for future delivery 
                                (or an option on such a 
                                contract) or an option (other 
                                than an option executed or 
                                traded on a national securities 
                                exchange registered pursuant to 
                                section 6(a) of the Securities 
                                Exchange Act of 1934 (15 U.S.C. 
                                78f(a))); and
                                  (II) is offered to, or 
                                entered into with, a person 
                                that is not an eligible 
                                contract participant, unless 
                                the counterparty, or the person 
                                offering to be the 
                                counterparty, of the person 
                                is--
                                          (aa) a United States 
                                        financial institution;
                                          (bb)(AA) a broker or 
                                        dealer registered under 
                                        section 15(b) (except 
                                        paragraph (11) thereof) 
                                        or 15C of the 
                                        Securities Exchange Act 
                                        of 1934 (15 U.S.C. 
                                        78o(b), 78o-5); or
                                          (BB) an associated 
                                        person of a broker or 
                                        dealer registered under 
                                        section 15(b) (except 
                                        paragraph (11) thereof) 
                                        or 15C of the 
                                        Securities Exchange Act 
                                        of 1934 (15 U.S.C. 
                                        78o(b), 78o-5) 
                                        concerning the 
                                        financial or securities 
                                        activities of which the 
                                        broker or dealer makes 
                                        and keeps records under 
                                        section 15C(b) or 17(h) 
                                        of the Securities 
                                        Exchange Act of 1934 
                                        (15 U.S.C. 78o-5(b), 
                                        78q(h));
                                          (cc)(AA) a futures 
                                        commission merchant 
                                        that is primarily or 
                                        substantially engaged 
                                        in the business 
                                        activities described in 
                                        section 1a of this Act, 
                                        is registered under 
                                        this Act, is not a 
                                        person described in 
                                        item (bb) of this 
                                        subclause, and 
                                        maintains adjusted net 
                                        capital equal to or in 
                                        excess of the dollar 
                                        amount that applies for 
                                        purposes of clause (ii) 
                                        of this subparagraph; 
                                        or
                                          (BB) an affiliated 
                                        person of a futures 
                                        commission merchant 
                                        that is primarily or 
                                        substantially engaged 
                                        in the business 
                                        activities described in 
                                        section 1a of this Act, 
                                        is registered under 
                                        this Act, and is not a 
                                        person described in 
                                        item (bb) of this 
                                        subclause, if the 
                                        affiliated person 
                                        maintains adjusted net 
                                        capital equal to or in 
                                        excess of the dollar 
                                        amount that applies for 
                                        purposes of clause (ii) 
                                        of this subparagraph 
                                        and is not a person 
                                        described in such item 
                                        (bb), and the futures 
                                        commission merchant 
                                        makes and keeps records 
                                        under section 
                                        4f(c)(2)(B) of this Act 
                                        concerning the futures 
                                        and other financial 
                                        activities of the 
                                        affiliated person;
                                          (dd) a financial 
                                        holding company (as 
                                        defined in section 2 of 
                                        the Bank Holding 
                                        Company Act of 1956); 
                                        or
                                          (ff) a retail foreign 
                                        exchange dealer that 
                                        maintains adjusted net 
                                        capital equal to or in 
                                        excess of the dollar 
                                        amount that applies for 
                                        purposes of clause (ii) 
                                        of this subparagraph 
                                        and is registered in 
                                        such capacity with the 
                                        Commission, subject to 
                                        such terms and 
                                        conditions as the 
                                        Commission shall 
                                        prescribe, and is a 
                                        member of a futures 
                                        association registered 
                                        under section 17.
                          (ii) The dollar amount that applies 
                        for purposes of this clause is--
                                  (I) $10,000,000, beginning 
                                120 days after the date of the 
                                enactment of this clause;
                                  (II) $15,000,000, beginning 
                                240 days after such date of 
                                enactment; and
                                  (III) $20,000,000, beginning 
                                360 days after such date of 
                                enactment.
                          (iii) Notwithstanding items (cc) and 
                        (gg) of clause (i)(II) of this 
                        subparagraph, agreements, contracts, or 
                        transactions described in clause (i) of 
                        this subparagraph, and accounts or 
                        pooled investment vehicles described in 
                        clause (vi), shall be subject to 
                        subsection (a)(1)(B) of this section 
                        and sections 4(b), 4b, 4c(b), 4o, 6(c) 
                        and 6(d) (except to the extent that 
                        sections 6(c) and 6(d) prohibit 
                        manipulation of the market price of any 
                        commodity in interstate commerce, or 
                        for future delivery on or subject to 
                        the rules of any market), 6c, 6d, 8(a), 
                        13(a), and 13(b) if the agreements, 
                        contracts, or transactions are offered, 
                        or entered into, by a person that is 
                        registered as a futures commission 
                        merchant or retail foreign exchange 
                        dealer, or an affiliated person of a 
                        futures commission merchant registered 
                        under this Act that is not also a 
                        person described in any of item (aa), 
                        (bb), (ee), or (ff) of clause (i)(II) 
                        of this subparagraph.
                          (iv)(I) Notwithstanding items (cc) 
                        and (gg) of clause (i)(II), a person, 
                        unless registered in such capacity as 
                        the Commission by rule, regulation, or 
                        order shall determine and a member of a 
                        futures association registered under 
                        section 17, shall not--
                                  (aa) solicit or accept orders 
                                from any person that is not an 
                                eligible contract participant 
                                in connection with agreements, 
                                contracts, or transactions 
                                described in clause (i) entered 
                                into with or to be entered into 
                                with a person who is not 
                                described in item (aa), (bb), 
                                (ee), or (ff) of clause 
                                (i)(II);
                                  (bb) exercise discretionary 
                                trading authority or obtain 
                                written authorization to 
                                exercise discretionary trading 
                                authority over any account for 
                                or on behalf of any person that 
                                is not an eligible contract 
                                participant in connection with 
                                agreements, contracts, or 
                                transactions described in 
                                clause (i) entered into with or 
                                to be entered into with a 
                                person who is not described in 
                                item (aa), (bb), (ee), or (ff) 
                                of clause (i)(II); or
                                  (cc) operate or solicit 
                                funds, securities, or property 
                                for any pooled investment 
                                vehicle that is not an eligible 
                                contract participant in 
                                connection with agreements, 
                                contracts, or transactions 
                                described in clause (i) entered 
                                into with or to be entered into 
                                with a person who is not 
                                described in item (aa), (bb), 
                                (ee), or (ff) of clause 
                                (i)(II).
                          (II) Subclause (I) of this clause 
                        shall not apply to--
                                  (aa) any person described in 
                                any of item (aa), (bb), (ee), 
                                or (ff) of clause (i)(II);
                                  (bb) any such person's 
                                associated persons; or
                                  (cc) any person who would be 
                                exempt from registration if 
                                engaging in the same activities 
                                in connection with transactions 
                                conducted on or subject to the 
                                rules of a contract market or a 
                                derivatives transaction 
                                execution facility.
                          (III) Notwithstanding items (cc) and 
                        (gg) of clause (i)(II), the Commission 
                        may 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 the activities of 
                        persons subject to subclause (I).
                          (IV) Subclause (III) of this clause 
                        shall not apply to--
                                  (aa) any person described in 
                                any of item (aa) through (ff) 
                                of clause (i)(II);
                                  (bb) any such person's 
                                associated persons; or
                                  (cc) any person who would be 
                                exempt from registration if 
                                engaging in the same activities 
                                in connection with transactions 
                                conducted on or subject to the 
                                rules of a contract market or a 
                                derivatives transaction 
                                execution facility.
                          (v) Notwithstanding items (cc) and 
                        (gg) of clause (i)(II), the Commission 
                        may 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 agreements, contracts, 
                        or transactions described in clause (i) 
                        which are offered, or entered into, by 
                        a person described in item (cc) or (gg) 
                        of clause (i)(II).
                          (vi) This Act applies to, and the 
                        Commission shall have jurisdiction 
                        over, an account or pooled investment 
                        vehicle that is offered for the purpose 
                        of trading, or that trades, any 
                        agreement, contract, or transaction in 
                        foreign currency described in clause 
                        (i).
                  (C)(i)(I) This subparagraph shall apply to 
                any agreement, contract, or transaction in 
                foreign currency that is--
                                  (aa) offered to, or entered 
                                into with, a person that is not 
                                an eligible contract 
                                participant (except that this 
                                subparagraph shall not apply if 
                                the counterparty, or the person 
                                offering to be the 
                                counterparty, of the person 
                                that is not an eligible 
                                contract participant is a 
                                person described in any of item 
                                (aa), (bb), (ee), or (ff) of 
                                subparagraph (B)(i)(II)); and
                                  (bb) offered, or entered 
                                into, on a leveraged or 
                                margined basis, or financed by 
                                the offeror, the counterparty, 
                                or a person acting in concert 
                                with the offeror or 
                                counterparty on a similar 
                                basis.
                  (II) Subclause (I) of this clause shall not 
                apply to--
                          (aa) a security that is not a 
                        security futures product; or
                          (bb) a contract of sale that--
                                  (AA) results in actual 
                                delivery within 2 days; or
                                  (BB) creates an enforceable 
                                obligation to deliver between a 
                                seller and buyer that have the 
                                ability to deliver and accept 
                                delivery, respectively, in 
                                connection with their line of 
                                business.
                  (ii)(I) Agreements, contracts, or 
                transactions described in clause (i) of this 
                subparagraph, and accounts or pooled investment 
                vehicles described in clause (vii), shall be 
                subject to subsection (a)(1)(B) of this section 
                and sections 4(b), 4b, 4c(b), 4o, 6(c) and 6(d) 
                (except to the extent that sections 6(c) and 
                6(d) prohibit manipulation of the market price 
                of any commodity in interstate commerce, or for 
                future delivery on or subject to the rules of 
                any market), 6c, 6d, 8(a), 13(a), and 13(b).
                  (II) Subclause (I) of this clause shall not 
                apply to--
                          (aa) any person described in any of 
                        item (aa), (bb), (ee), or (ff) of 
                        subparagraph (B)(i)(II); or
                          (bb) any such person's associated 
                        persons.
                  (III) The Commission may 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 agreements, contracts, 
                or transactions described in clause (i) of this 
                subparagraph if the agreements, contracts, or 
                transactions are offered, or entered into, by a 
                person that is not described in item (aa) 
                through (ff) of subparagraph (B)(i)(II).
                  (iii)(I) A person, unless registered in such 
                capacity as the Commission by rule, regulation, 
                or order shall determine and a member of a 
                futures association registered under section 
                17, shall not--
                          (aa) solicit or accept orders from 
                        any person that is not an eligible 
                        contract participant in connection with 
                        agreements, contracts, or transactions 
                        described in clause (i) of this 
                        subparagraph entered into with or to be 
                        entered into with a person who is not 
                        described in item (aa), (bb), (ee), or 
                        (ff) of subparagraph (B)(i)(II);
                          (bb) exercise discretionary trading 
                        authority or obtain written 
                        authorization to exercise written 
                        trading authority over any account for 
                        or on behalf of any person that is not 
                        an eligible contract participant in 
                        connection with agreements, contracts, 
                        or transactions described in clause (i) 
                        of this subparagraph entered into with 
                        or to be entered into with a person who 
                        is not described in item (aa), (bb), 
                        (ee), or (ff) of subparagraph 
                        (B)(i)(II); or
                          (cc) operate or solicit funds, 
                        securities, or property for any pooled 
                        investment vehicle that is not an 
                        eligible contract participant in 
                        connection with agreements, contracts, 
                        or transactions described in clause (i) 
                        of this subparagraph entered into with 
                        or to be entered into with a person who 
                        is not described in item (aa), (bb), 
                        (ee), or (ff) of subparagraph 
                        (B)(i)(II).
                  (II) Subclause (I) of this clause shall not 
                apply to--
                          (aa) any person described in item 
                        (aa), (bb), (ee), or (ff) of 
                        subparagraph (B)(i)(II);
                          (bb) any such person's associated 
                        persons; or
                          (cc) any person who would be exempt 
                        from registration if engaging in the 
                        same activities in connection with 
                        transactions conducted on or subject to 
                        the rules of a contract market or a 
                        derivatives transaction execution 
                        facility.
                  (III) The Commission may 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 the activities of 
                persons subject to subclause (I).
                  (IV) Subclause (III) of this clause shall not 
                apply to--
                          (aa) any person described in item 
                        (aa) through (ff) of subparagraph 
                        (B)(i)(II);
                          (bb) any such person's associated 
                        persons; or
                          (cc) any person who would be exempt 
                        from registration if engaging in the 
                        same activities in connection with 
                        transactions conducted on or subject to 
                        the rules of a contract market or a 
                        derivatives transaction execution 
                        facility.
                  (iv) Sections 4(b) and 4b shall apply to any 
                agreement, contract, or transaction described 
                in clause (i) of this subparagraph as if the 
                agreement, contract, or transaction were a 
                contract of sale of a commodity for future 
                delivery.
                  (v) This subparagraph shall not be construed 
                to limit any jurisdiction that the Commission 
                may otherwise have under any other provision of 
                this Act over an agreement, contract, or 
                transaction that is a contract of sale of a 
                commodity for future delivery.
                  (vi) This subparagraph shall not be construed 
                to limit any jurisdiction that the Commission 
                or the Securities and Exchange Commission may 
                otherwise have under any other provision of 
                this Act with respect to security futures 
                products and persons effecting transactions in 
                security futures products.
                          (vii) This Act applies to, and the 
                        Commission shall have jurisdiction 
                        over, an account or pooled investment 
                        vehicle that is offered for the purpose 
                        of trading, or that trades, any 
                        agreement, contract, or transaction in 
                        foreign currency described in clause 
                        (i).
                  (D) Retail commodity transactions.--
                          (i) Applicability.--Except as 
                        provided in clause (ii), this 
                        subparagraph shall apply to any 
                        agreement, contract, or transaction in 
                        any commodity that is--
                                  (I) entered into with, or 
                                offered to (even if not entered 
                                into with), a person that is 
                                not an eligible contract 
                                participant or eligible 
                                commercial entity; and
                                  (II) entered into, or offered 
                                (even if not entered into), on 
                                a leveraged or margined basis, 
                                or financed by the offeror, the 
                                counterparty, or a person 
                                acting in concert with the 
                                offeror or counterparty on a 
                                similar basis.
                          (ii) Exceptions.--This subparagraph 
                        shall not apply to--
                                  (I) an agreement, contract, 
                                or transaction described in 
                                paragraph (1) or subparagraphs 
                                (A), (B), or (C), including any 
                                agreement, contract, or 
                                transaction specifically 
                                excluded from subparagraph (A), 
                                (B), or (C);
                                  (II) any security;
                                  (III) a contract of sale of a 
                                commodity, other than a digital 
                                commodity, that--
                                          (aa) results in 
                                        actual delivery within 
                                        28 days or such other 
                                        longer period as the 
                                        Commission may 
                                        determine by rule or 
                                        regulation based upon 
                                        the typical commercial 
                                        practice in cash or 
                                        spot markets for the 
                                        commodity involved; or
                                          (bb) creates an 
                                        enforceable obligation 
                                        to deliver between a 
                                        seller and a buyer that 
                                        have the ability to 
                                        deliver and accept 
                                        delivery, respectively, 
                                        in connection with the 
                                        line of business of the 
                                        seller and buyer; or
                                  (IV) a contract of sale of a 
                                digital commodity that--
                                          (aa) results in 
                                        actual delivery, as the 
                                        Commission shall by 
                                        rule determine, within 
                                        2 days or such other 
                                        period as the 
                                        Commission may 
                                        determine by rule or 
                                        regulation based upon 
                                        the typical commercial 
                                        practice in cash or 
                                        spot markets for the 
                                        digital commodity 
                                        involved; or
                                          (bb) is executed with 
                                        a registered digital 
                                        commodity dealer--
                                                  (AA) 
                                                directly;
                                                  (BB) through 
                                                a registered 
                                                digital 
                                                commodity 
                                                broker; or
                                                  (CC) on or 
                                                subject to the 
                                                rules of a 
                                                registered 
                                                digital 
                                                commodity 
                                                exchange;
                                  [(IV)] (V) an agreement, 
                                contract, or transaction that 
                                is listed on a national 
                                securities exchange registered 
                                under section 6(a) of the 
                                Securities Exchange Act of 1934 
                                (15 U.S.C. 78f(a)); or
                                  [(V)] (VI) an identified 
                                banking product, as defined in 
                                section 402(b) of the Legal 
                                Certainty for Bank Products Act 
                                of 2000 (7 U.S.C.27(b)).
                          (iii) Enforcement.--Sections 4(a), 
                        4(b), and 4b apply to any agreement, 
                        contract, or transaction described in 
                        clause (i), as if the agreement, 
                        contract, or transaction was a contract 
                        of sale of a commodity for future 
                        delivery.
                          (iv) Eligible commercial entity.--For 
                        purposes of this subparagraph, an 
                        agricultural producer, packer, or 
                        handler shall be considered to be an 
                        eligible commercial entity for any 
                        agreement, contract, or transaction for 
                        a commodity in connection with the line 
                        of business of the agricultural 
                        producer, packer, or handler.
                  (E) Prohibition.--
                          (i) Definition of federal regulatory 
                        agency.--In this subparagraph, the term 
                        ``Federal regulatory agency'' means--
                                  (I) the Commission;
                                  (II) the Securities and 
                                Exchange Commission;
                                  (III) an appropriate Federal 
                                banking agency;
                                  (IV) the National Credit 
                                Union Association; and
                                  (V) the Farm Credit 
                                Administration.
                          (ii) Prohibition.--
                                  (I) In general.--Except as 
                                provided in subclause (II), a 
                                person described in 
                                subparagraph (B)(i)(II) for 
                                which there is a Federal 
                                regulatory agency shall not 
                                offer to, or enter into with, a 
                                person that is not an eligible 
                                contract participant, any 
                                agreement, contract, or 
                                transaction in foreign currency 
                                described in subparagraph 
                                (B)(i)(I) except pursuant to a 
                                rule or regulation of a Federal 
                                regulatory agency allowing the 
                                agreement, contract, or 
                                transaction under such terms 
                                and conditions as the Federal 
                                regulatory agency shall 
                                prescribe.
                                  (II) Effective date.--With 
                                regard to persons described in 
                                subparagraph (B)(i)(II) for 
                                which a Federal regulatory 
                                agency has issued a proposed 
                                rule concerning agreements, 
                                contracts, or transactions in 
                                foreign currency described in 
                                subparagraph (B)(i)(I) prior to 
                                the date of enactment of this 
                                subclause, subclause (I) shall 
                                take effect 90 days after the 
                                date of enactment of this 
                                subclause.
                          (iii) Requirements of rules and 
                        regulations.--
                                  (I) In general.--The rules 
                                and regulations described in 
                                clause (ii) shall prescribe 
                                appropriate requirements with 
                                respect to--
                                          (aa) disclosure;
                                          (bb) recordkeeping;
                                          (cc) capital and 
                                        margin;
                                          (dd) reporting;
                                          (ee) business 
                                        conduct;
                                          (ff) documentation; 
                                        and
                                          (gg) such other 
                                        standards or 
                                        requirements as the 
                                        Federal regulatory 
                                        agency shall determine 
                                        to be necessary.
                                  (II) Treatment.--The rules or 
                                regulations described in clause 
                                (ii) shall treat all 
                                agreements, contracts, and 
                                transactions in foreign 
                                currency described in 
                                subparagraph (B)(i)(I), and all 
                                agreements, contracts, and 
                                transactions in foreign 
                                currency that are functionally 
                                or economically similar to 
                                agreements, contracts, or 
                                transactions described in 
                                subparagraph (B)(i)(I), 
                                similarly.
  (F) Commission jurisdiction with respect to digital commodity 
transactions.--
          (i) In general.--Subject to sections 6d and 12(e), 
        the Commission shall have exclusive jurisdiction with 
        respect to any account, agreement, contract, or 
        transaction involving a contract of sale of a digital 
        commodity in interstate commerce, including in a 
        digital commodity cash or spot market, that is offered, 
        solicited, traded, facilitated, executed, cleared, 
        reported, or otherwise dealt in--
                  (I) on or subject to the rules of a 
                registered entity or an entity that is required 
                to be registered as a registered entity; or
                  (II) by any other entity registered, or 
                required to be registered, with the Commission.
          (ii) Limitations.--Clause (i) shall not apply with 
        respect to custodial or depository activities for a 
        digital commodity, or custodial or depository 
        activities for any promise or right to a future digital 
        commodity, of an entity regulated by an appropriate 
        Federal banking agency or a State bank supervisor 
        (within the meaning of section 3 of the Federal Deposit 
        Insurance Act).
          (iii) Mixed digital asset transactions.--
                  (I) In general.--Clause (i) shall not apply 
                to a mixed digital asset transaction.
                  (II) Oversight of mixed digital asset 
                transactions.--
                          (aa) On a cftc regulated platform.--A 
                        mixed digital asset transaction that 
                        occurs on or subject to the rules of a 
                        registered entity or by any other 
                        entity registered with the Commission--
                                  (AA) shall not occur except 
                                on or subject to the rules of a 
                                registered entity or by any 
                                other entity that is dually 
                                registered with the Commission 
                                and the Securities and Exchange 
                                Commission; and
                                  (BB) shall be subject to the 
                                jurisdiction of the Commission 
                                and the Securities and Exchange 
                                Commission.
                          (bb) Off exchange.--A mixed digital 
                        asset transaction that does not occur 
                        on or subject to the rules of a 
                        registered entity or by any other 
                        entity registered with the Commission 
                        shall be subject to the exclusive 
                        jurisdiction of the Securities and 
                        Exchange Commission.
                  (III) Reports on mixed digital asset 
                transactions.--A digital asset issuer, related 
                person, affiliated person, or other person 
                registered with the Securities and Exchange 
                Commission that engages in a mixed digital 
                asset transaction, shall, on request, open to 
                inspection and examination by the Commodity 
                Futures Trading Commission all books and 
                records relating to the mixed digital asset 
                transaction, subject to the confidentiality and 
                disclosure requirements of section 8.
  (G) Agreements, contracts, and transactions in stablecoins.--
          (i) Treatment of permitted payment stablecoins on 
        commission-registered entities.--Except as provided in 
        clauses (ii) and (iii), the Commission shall only have 
        jurisdiction over a cash or spot agreement, contract, 
        or transaction in a permitted payment stablecoin that 
        is offered, offered to enter into, entered into, 
        executed, confirmed the execution of, solicited, or 
        accepted--
                  (I) on or subject to the rules of a 
                registered entity; or
                  (II) by any other entity registered by the 
                Commission.
          (ii) Permitted payment stablecoin transaction 
        rules.--This Act shall only apply to a transaction 
        described in clause (i) for the purposes of regulating 
        the offer, execution, solicitation, or acceptance of a 
        cash or spot permitted payment stablecoin transaction 
        on a registered entity or other entity registered by 
        the Commission with respect to requirements imposed 
        with respect to--
                  (I) recordkeeping;
                  (II) custody;
                  (III) segregation;
                  (IV) reporting;
                  (V) trading procedures and trade processing 
                requirements;
                  (VI) information sharing;
                  (VII) conflicts of interest;
                  (VIII) antifraud, antimanipulation, or false 
                reporting; or
                  (IX) any other transaction level requirement 
                imposed on the registered entity or other 
                entity registered by the Commission that the 
                Commission by rule determines would foster the 
                development of fair and orderly cash or spot 
                markets in digital commodities, be necessary or 
                appropriate in the public interest, and be 
                consistent with the protection of customers.
          (iii) No authority over permitted payment 
        stablecoins.--Notwithstanding clause (ii), the 
        Commission shall not make a rule or regulation, impose 
        a requirement or obligation on a registered entity or 
        other entity registered by 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, including a requirement or 
        obligation regarding--
                  (I) design;
                  (II) structure;
                  (III) issuance;
                  (IV) redemption;
                  (V) financial resources;
                  (VI) collateral; or
                  (VII) any other aspect of such an operation 
                or such a stablecoin.
  (d) Swaps.--Nothing in this Act (other than subparagraphs 
(A), (B), (C), (D), (G), and (H) of subsection (a)(1), 
subsections (f) and (g), sections 1a, 2(a)(13), 2(c)(2)(A)(ii), 
2(e), 2(h), 4(c), 4a, 4b, and 4b-1, subsections (a), (b), and 
(g) of section 4c, sections 4d, 4e, 4f, 4g, 4h, 4i, 4j, 4k, 4l, 
4m, 4n, 4o, 4p, 4r, 4s, 4t, 5, 5b, 5c, 5e, and 5h, subsections 
(c) and (d) of section 6, sections 6c, 6d, 8, 8a, and 9, 
subsections (e)(2), (f), and (h) of section 12, subsections (a) 
and (b) of section 13, sections 17, 20, 21, and 22(a)(4), and 
any other provision of this Act that is applicable to 
registered entities or Commission registrants) governs or 
applies to a swap.
  (e) Limitation on Participation.--It shall be unlawful for 
any person, other than an eligible contract participant, to 
enter into a swap unless the swap is entered into on, or 
subject to the rules of, a board of trade designated as a 
contract market under section 5.
  (f) Exclusion for Qualifying Hybrid Instruments.--
          (1) In general.--Nothing in this Act (other than 
        section 12(e)(2)(B)) governs or is applicable to a 
        hybrid instrument that is predominantly a security.
          (2) Predominance.--A hybrid instrument shall be 
        considered to be predominantly a security if--
                  (A) the issuer of the hybrid instrument 
                receives payment in full of the purchase price 
                of the hybrid instrument, substantially 
                contemporaneously with delivery of the hybrid 
                instrument;
                  (B) the purchaser or holder of the hybrid 
                instrument is not required to make any payment 
                to the issuer in addition to the purchase price 
                paid under subparagraph (A), whether as margin, 
                settlement payment, or otherwise, during the 
                life of the hybrid instrument or at maturity;
                  (C) the issuer of the hybrid instrument is 
                not subject by the terms of the instrument to 
                mark-to-market margining requirements; and
                  (D) the hybrid instrument is not marketed as 
                a contract of sale of a commodity for future 
                delivery (or option on such a contract) subject 
                to this Act.
          (3) Mark-to-market margining requirements.--For the 
        purposes of paragraph (2)(C), mark-to-market margining 
        requirements do not include the obligation of an issuer 
        of a secured debt instrument to increase the amount of 
        collateral held in pledge for the benefit of the 
        purchaser of the secured debt instrument to secure the 
        repayment obligations of the issuer under the secured 
        debt instrument.
  (g) Application of Commodity Futures Laws.--
          (1) No provision of this Act shall be construed as 
        implying or creating any presumption that--
                  (A) any agreement, contract, or transaction 
                that is excluded from this Act under section 
                2(c), 2(d), 2(e), 2(f), or 2(g) of this Act or 
                title IV of the Commodity Futures Modernization 
                Act of 2000, or exempted under section 2(h) or 
                4(c) of this Act; or
                  (B) any agreement, contract, or transaction, 
                not otherwise subject to this Act, that is not 
                so excluded or exempted,
        is or would otherwise be subject to this Act.
          (2) No provision of, or amendment made by, the 
        Commodity Futures Modernization Act of 2000 shall be 
        construed as conferring jurisdiction on the Commission 
        with respect to any such agreement, contract, or 
        transaction, except as expressly provided in section 5b 
        of this Act.
  (h) Clearing Requirement.--
          (1) In general.--
                  (A) Standard for clearing.--It shall be 
                unlawful for any person to engage in a swap 
                unless that person submits such swap for 
                clearing to a derivatives clearing organization 
                that is registered under this Act or a 
                derivatives clearing organization that is 
                exempt from registration under this Act if the 
                swap is required to be cleared.
                  (B) Open access.--The rules of a derivatives 
                clearing organization described in subparagraph 
                (A) shall--
                          (i) prescribe that all swaps (but not 
                        contracts of sale of a commodity for 
                        future delivery or options on such 
                        contracts) submitted to the derivatives 
                        clearing organization with the same 
                        terms and conditions are economically 
                        equivalent within the derivatives 
                        clearing organization and may be offset 
                        with each other within the derivatives 
                        clearing organization; and
                          (ii) provide for non-discriminatory 
                        clearing of a swap (but not a contract 
                        of sale of a commodity for future 
                        delivery or option on such contract) 
                        executed bilaterally or on or through 
                        the rules of an unaffiliated designated 
                        contract market or swap execution 
                        facility.
          (2) Commission review.--
                  (A) Commission-initiated review.--
                          (i) The Commission on an ongoing 
                        basis shall review each swap, or any 
                        group, category, type, or class of 
                        swaps to make a determination as to 
                        whether the swap or group, category, 
                        type, or class of swaps should be 
                        required to be cleared.
                          (ii) The Commission shall provide at 
                        least a 30-day public comment period 
                        regarding any determination made under 
                        clause (i).
                  (B) Swap submissions.--
                          (i) A derivatives clearing 
                        organization shall submit to the 
                        Commission each swap, or any group, 
                        category, type, or class of swaps that 
                        it plans to accept for clearing, and 
                        provide notice to its members (in a 
                        manner to be determined by the 
                        Commission) of the submission.
                          (ii) Any swap or group, category, 
                        type, or class of swaps listed for 
                        clearing by a derivative clearing 
                        organization as of the date of 
                        enactment of this subsection shall be 
                        considered submitted to the Commission.
                          (iii) The Commission shall--
                                  (I) make available to the 
                                public submissions received 
                                under clauses (i) and (ii);
                                  (II) review each submission 
                                made under clauses (i) and 
                                (ii), and determine whether the 
                                swap, or group, category, type, 
                                or class of swaps described in 
                                the submission is required to 
                                be cleared; and
                                  (III) provide at least a 30-
                                day public comment period 
                                regarding its determination as 
                                to whether the clearing 
                                requirement under paragraph 
                                (1)(A) shall apply to the 
                                submission.
                  (C) Deadline.--The Commission shall make its 
                determination under subparagraph (B)(iii) not 
                later than 90 days after receiving a submission 
                made under subparagraphs (B)(i) and (B)(ii), 
                unless the submitting derivatives clearing 
                organization agrees to an extension for the 
                time limitation established under this 
                subparagraph.
                  (D) Determination.--
                          (i) In reviewing a submission made 
                        under subparagraph (B), the Commission 
                        shall review whether the submission is 
                        consistent with section 5b(c)(2).
                          (ii) In reviewing a swap, group of 
                        swaps, or class of swaps pursuant to 
                        subparagraph (A) or a submission made 
                        under subparagraph (B), the Commission 
                        shall take into account the following 
                        factors:
                                  (I) The existence of 
                                significant outstanding 
                                notional exposures, trading 
                                liquidity, and adequate pricing 
                                data.
                                  (II) The availability of rule 
                                framework, capacity, 
                                operational expertise and 
                                resources, and credit support 
                                infrastructure to clear the 
                                contract on terms that are 
                                consistent with the material 
                                terms and trading conventions 
                                on which the contract is then 
                                traded.
                                  (III) The effect on the 
                                mitigation of systemic risk, 
                                taking into account the size of 
                                the market for such contract 
                                and the resources of the 
                                derivatives clearing 
                                organization available to clear 
                                the contract.
                                  (IV) The effect on 
                                competition, including 
                                appropriate fees and charges 
                                applied to clearing.
                                  (V) The existence of 
                                reasonable legal certainty in 
                                the event of the insolvency of 
                                the relevant derivatives 
                                clearing organization or 1 or 
                                more of its clearing members 
                                with regard to the treatment of 
                                customer and swap counterparty 
                                positions, funds, and property.
                          (iii) In making a determination under 
                        subparagraph (A) or (B)(iii) that the 
                        clearing requirement shall apply, the 
                        Commission may require such terms and 
                        conditions to the requirement as the 
                        Commission determines to be 
                        appropriate.
                  (E) Rules.--Not later than 1 year after the 
                date of the enactment of this subsection, the 
                Commission shall adopt rules for a derivatives 
                clearing organization's submission for review, 
                pursuant to this paragraph, of a swap, or a 
                group, category, type, or class of swaps, that 
                it seeks to accept for clearing. Nothing in 
                this subparagraph limits the Commission from 
                making a determination under subparagraph 
                (B)(iii) for swaps described in subparagraph 
                (B)(ii).
          (3) Stay of clearing requirement.--
                  (A) In general.--After making a determination 
                pursuant to paragraph (2)(B), the Commission, 
                on application of a counterparty to a swap or 
                on its own initiative, may stay the clearing 
                requirement of paragraph (1) until the 
                Commission completes a review of the terms of 
                the swap (or the group, category, type, or 
                class of swaps) and the clearing arrangement.
                  (B) Deadline.--The Commission shall complete 
                a review undertaken pursuant to subparagraph 
                (A) not later than 90 days after issuance of 
                the stay, unless the derivatives clearing 
                organization that clears the swap, or group, 
                category, type, or class of swaps agrees to an 
                extension of the time limitation established 
                under this subparagraph.
                  (C) Determination.--Upon completion of the 
                review undertaken pursuant to subparagraph (A), 
                the Commission may--
                          (i) determine, unconditionally or 
                        subject to such terms and conditions as 
                        the Commission determines to be 
                        appropriate, that the swap, or group, 
                        category, type, or class of swaps must 
                        be cleared pursuant to this subsection 
                        if it finds that such clearing is 
                        consistent with paragraph (2)(D); or
                          (ii) determine that the clearing 
                        requirement of paragraph (1) shall not 
                        apply to the swap, or group, category, 
                        type, or class of swaps.
                  (D) Rules.--Not later than 1 year after the 
                date of the enactment of the Wall Street 
                Transparency and Accountability Act of 2010, 
                the Commission shall adopt rules for reviewing, 
                pursuant to this paragraph, a derivatives 
                clearing organization's clearing of a swap, or 
                a group, category, type, or class of swaps, 
                that it has accepted for clearing.
          (4) Prevention of evasion.--
                  (A) In general.--The Commission shall 
                prescribe rules under this subsection (and 
                issue interpretations of rules prescribed under 
                this subsection) as determined by the 
                Commission to be necessary to prevent evasions 
                of the mandatory clearing requirements under 
                this Act.
                  (B) Duty of commission to investigate and 
                take certain actions.--To the extent the 
                Commission finds that a particular swap, group, 
                category, type, or class of swaps would 
                otherwise be subject to mandatory clearing but 
                no derivatives clearing organization has listed 
                the swap, group, category, type, or class of 
                swaps for clearing, the Commission shall--
                          (i) investigate the relevant facts 
                        and circumstances;
                          (ii) within 30 days issue a public 
                        report containing the results of the 
                        investigation; and
                          (iii) take such actions as the 
                        Commission determines to be necessary 
                        and in the public interest, which may 
                        include requiring the retaining of 
                        adequate margin or capital by parties 
                        to the swap, group, category, type, or 
                        class of swaps.
                  (C) Effect on authority.--Nothing in this 
                paragraph--
                          (i) authorizes the Commission to 
                        adopt rules requiring a derivatives 
                        clearing organization to list for 
                        clearing a swap, group, category, type, 
                        or class of swaps if the clearing of 
                        the swap, group, category, type, or 
                        class of swaps would threaten the 
                        financial integrity of the derivatives 
                        clearing organization; and
                          (ii) affects the authority of the 
                        Commission to enforce the open access 
                        provisions of paragraph (1)(B) with 
                        respect to a swap, group, category, 
                        type, or class of swaps that is listed 
                        for clearing by a derivatives clearing 
                        organization.
          (5) Reporting transition rules.--Rules adopted by the 
        Commission under this section shall provide for the 
        reporting of data, as follows:
                  (A) Swaps entered into before the date of the 
                enactment of this subsection shall be reported 
                to a registered swap data repository or the 
                Commission no later than 180 days after the 
                effective date of this subsection.
                  (B) Swaps entered into on or after such date 
                of enactment shall be reported to a registered 
                swap data repository or the Commission no later 
                than the later of--
                          (i) 90 days after such effective 
                        date; or
                          (ii) such other time after entering 
                        into the swap as the Commission may 
                        prescribe by rule or regulation.
          (6) Clearing transition rules.--
                  (A) Swaps entered into before the date of the 
                enactment of this subsection are exempt from 
                the clearing requirements of this subsection if 
                reported pursuant to paragraph (5)(A).
                  (B) Swaps entered into before application of 
                the clearing requirement pursuant to this 
                subsection are exempt from the clearing 
                requirements of this subsection if reported 
                pursuant to paragraph (5)(B).
          (7) Exceptions.--
                  (A) In general.--The requirements of 
                paragraph (1)(A) shall not apply to a swap if 1 
                of the counterparties to the swap--
                          (i) is not a financial entity;
                          (ii) is using swaps to hedge or 
                        mitigate commercial risk; and
                          (iii) notifies the Commission, in a 
                        manner set forth by the Commission, how 
                        it generally meets its financial 
                        obligations associated with entering 
                        into non-cleared swaps.
                  (B) Option to clear.--The application of the 
                clearing exception in subparagraph (A) is 
                solely at the discretion of the counterparty to 
                the swap that meets the conditions of clauses 
                (i) through (iii) of subparagraph (A).
                  (C) Financial entity definition.--
                          (i) In general.--For the purposes of 
                        this paragraph, the term ``financial 
                        entity'' means--
                                  (I) a swap dealer;
                                  (II) a security-based swap 
                                dealer;
                                  (III) a major swap 
                                participant;
                                  (IV) a major security-based 
                                swap participant;
                                  (V) a commodity pool;
                                  (VI) a private fund as 
                                defined in section 202(a) of 
                                the Investment Advisers Act of 
                                1940 (15 U.S.C. 80-b-2(a));
                                  (VII) an employee benefit 
                                plan as defined in paragraphs 
                                (3) and (32) of section 3 of 
                                the Employee Retirement Income 
                                Security Act of 1974 (29 U.S.C. 
                                1002);
                                  (VIII) a person predominantly 
                                engaged in activities that are 
                                in the business of banking, or 
                                in activities that are 
                                financial in nature, as defined 
                                in section 4(k) of the Bank 
                                Holding Company Act of 1956.
                          (ii) Exclusion.--The Commission shall 
                        consider whether to exempt small banks, 
                        savings associations, farm credit 
                        system institutions, and credit unions, 
                        including--
                                  (I) depository institutions 
                                with total assets of 
                                $10,000,000,000 or less;
                                  (II) farm credit system 
                                institutions with total assets 
                                of $10,000,000,000 or less; or
                                  (III) credit unions with 
                                total assets of $10,000,000,000 
                                or less.
                          (iii) Limitation.--Such definition 
                        shall not include an entity whose 
                        primary business is providing 
                        financing, and uses derivatives for the 
                        purpose of hedging underlying 
                        commercial risks related to interest 
                        rate and foreign currency exposures, 90 
                        percent or more of which arise from 
                        financing that facilitates the purchase 
                        or lease of products, 90 percent or 
                        more of which are manufactured by the 
                        parent company or another subsidiary of 
                        the parent company.
                  (D) Treatment of affiliates.--
                          (i) In general.--An affiliate of a 
                        person that qualifies for an exception 
                        under subparagraph (A) (including 
                        affiliate entities predominantly 
                        engaged in providing financing for the 
                        purchase of the merchandise or 
                        manufactured goods of the person) may 
                        qualify for the exception only if the 
                        affiliate--
                                  (I) enters into the swap to 
                                hedge or mitigate the 
                                commercial risk of the person 
                                or other affiliate of the 
                                person that is not a financial 
                                entity, and the commercial risk 
                                that the affiliate is hedging 
                                or mitigating has been 
                                transferred to the affiliate;
                                  (II) is directly and wholly-
                                owned by another affiliate 
                                qualified for the exception 
                                under this subparagraph or an 
                                entity that is not a financial 
                                entity;
                                  (III) is not indirectly 
                                majority-owned by a financial 
                                entity;
                                  (IV) is not ultimately owned 
                                by a parent company that is a 
                                financial entity; and
                                  (V) does not provide any 
                                services, financial or 
                                otherwise, to any affiliate 
                                that is a nonbank financial 
                                company supervised by the Board 
                                of Governors (as defined under 
                                section 102 of the Financial 
                                Stability Act of 2010).
                          (ii) Limitation on qualifying 
                        affiliates.--The exception in clause 
                        (i) shall not apply if the affiliate 
                        is--
                                  (I) a swap dealer;
                                  (II) a security-based swap 
                                dealer;
                                  (III) a major swap 
                                participant;
                                  (IV) a major security-based 
                                swap participant;
                                  (V) a commodity pool;
                                  (VI) a bank holding company;
                                  (VII) a private fund, as 
                                defined in section 202(a) of 
                                the Investment Advisers Act of 
                                1940 (15 U.S.C. 80-b-2(a));
                                  (VIII) an employee benefit 
                                plan or government plan, as 
                                defined in paragraphs (3) and 
                                (32) of section 3 of the 
                                Employee Retirement Income 
                                Security Act of 1974 (29 U.S.C. 
                                1002);
                                  (IX) an insured depository 
                                institution;
                                  (X) a farm credit system 
                                institution;
                                  (XI) a credit union;
                                  (XII) a nonbank financial 
                                company supervised by the Board 
                                of Governors (as defined under 
                                section 102 of the Financial 
                                Stability Act of 2010); or
                                  (XIII) an entity engaged in 
                                the business of insurance and 
                                subject to capital requirements 
                                established by an insurance 
                                governmental authority of a 
                                State, a territory of the 
                                United States, the District of 
                                Columbia, a country other than 
                                the United States, or a 
                                political subdivision of a 
                                country other than the United 
                                States that is engaged in the 
                                supervision of insurance 
                                companies under insurance law.
                          (iii) Limitation on affiliates' 
                        affiliates.--Unless the Commission 
                        determines, by order, rule, or 
                        regulation, that it is in the public 
                        interest, the exception in clause (i) 
                        shall not apply with respect to an 
                        affiliate if the affiliate is itself 
                        affiliated with--
                                  (I) a major security-based 
                                swap participant;
                                  (II) a security-based swap 
                                dealer;
                                  (III) a major swap 
                                participant; or
                                  (IV) a swap dealer.
                          (iv) Conditions on transactions.--
                        With respect to an affiliate that 
                        qualifies for the exception in clause 
                        (i)--
                                  (I) the affiliate may not 
                                enter into any swap other than 
                                for the purpose of hedging or 
                                mitigating commercial risk; and
                                  (II) neither the affiliate 
                                nor any person affiliated with 
                                the affiliate that is not a 
                                financial entity may enter into 
                                a swap with or on behalf of any 
                                affiliate that is a financial 
                                entity or otherwise assume, 
                                net, combine, or consolidate 
                                the risk of swaps entered into 
                                by any such financial entity, 
                                except one that is an affiliate 
                                that qualifies for the 
                                exception under clause (i).
                          (v) Transition rule for affiliates.--
                        An affiliate, subsidiary, or a wholly 
                        owned entity of a person that qualifies 
                        for an exception under subparagraph (A) 
                        and is predominantly engaged in 
                        providing financing for the purchase or 
                        lease of merchandise or manufactured 
                        goods of the person shall be exempt 
                        from the margin requirement described 
                        in section 4s(e) and the clearing 
                        requirement described in paragraph (1) 
                        with regard to swaps entered into to 
                        mitigate the risk of the financing 
                        activities for not less than a 2-year 
                        period beginning on the date of 
                        enactment of this clause.
                          (vi) Risk management program.--Any 
                        swap entered into by an affiliate that 
                        qualifies for the exception in clause 
                        (i) shall be subject to a centralized 
                        risk management program of the 
                        affiliate, which is reasonably designed 
                        both to monitor and manage the risks 
                        associated with the swap and to 
                        identify each of the affiliates on 
                        whose behalf a swap was entered into.
                  (E) Election of counterparty.--
                          (i) Swaps required to be cleared.--
                        With respect to any swap that is 
                        subject to the mandatory clearing 
                        requirement under this subsection and 
                        entered into by a swap dealer or a 
                        major swap participant with a 
                        counterparty that is not a swap dealer, 
                        major swap participant, security-based 
                        swap dealer, or major security-based 
                        swap participant, the counterparty 
                        shall have the sole right to select the 
                        derivatives clearing organization at 
                        which the swap will be cleared.
                          (ii) Swaps not required to be 
                        cleared.--With respect to any swap that 
                        is not subject to the mandatory 
                        clearing requirement under this 
                        subsection and entered into by a swap 
                        dealer or a major swap participant with 
                        a counterparty that is not a swap 
                        dealer, major swap participant, 
                        security-based swap dealer, or major 
                        security-based swap participant, the 
                        counterparty--
                                  (I) may elect to require 
                                clearing of the swap; and
                                  (II) shall have the sole 
                                right to select the derivatives 
                                clearing organization at which 
                                the swap will be cleared.
                  (F) Abuse of exception.--The Commission may 
                prescribe such rules or issue interpretations 
                of the rules as the Commission determines to be 
                necessary to prevent abuse of the exceptions 
                described in this paragraph. The Commission may 
                also request information from those persons 
                claiming the clearing exception as necessary to 
                prevent abuse of the exceptions described in 
                this paragraph.
          (8) Trade execution.--
                  (A) In general.--With respect to transactions 
                involving swaps subject to the clearing 
                requirement of paragraph (1), counterparties 
                shall--
                          (i) execute the transaction on a 
                        board of trade designated as a contract 
                        market under section 5; or
                          (ii) execute the transaction on a 
                        swap execution facility registered 
                        under 5h or a swap execution facility 
                        that is exempt from registration under 
                        section 5h(f) of this Act.
                  (B) Exception.--The requirements of clauses 
                (i) and (ii) of subparagraph (A) shall not 
                apply if no board of trade or swap execution 
                facility makes the swap available to trade or 
                for swap transactions subject to the clearing 
                exception under paragraph (7).
  (i) Applicability.--The provisions of this Act relating to 
swaps that were enacted by the Wall Street Transparency and 
Accountability Act of 2010 (including any rule prescribed or 
regulation promulgated under that Act), shall not apply to 
activities outside the United States unless those activities--
          (1) have a direct and significant connection with 
        activities in, or effect on, commerce of the United 
        States; or
          (2) contravene such rules or regulations as the 
        Commission may prescribe or promulgate as are necessary 
        or appropriate to prevent the evasion of any provision 
        of this Act that was enacted by the Wall Street 
        Transparency and Accountability Act of 2010.
  (j) Committee Approval by Board.--Exemptions from the 
requirements of subsection (h)(1) to clear a swap and 
subsection (h)(8) to execute a swap through a board of trade or 
swap execution facility shall be available to a counterparty 
that is an issuer of securities that are registered under 
section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 
78l) or that is required to file reports pursuant to section 
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o) 
only if an appropriate committee of the issuer's board or 
governing body has reviewed and approved its decision to enter 
into swaps that are subject to such exemptions.

           *       *       *       *       *       *       *

  Sec. 4d. (a) It shall be unlawful for any person to be a 
futures commission merchant unless--
          (1) such person shall have registered, under this 
        Act, with the Commission as such futures commission 
        merchant and such registration shall not have expired 
        nor been suspended nor revoked; and
          (2) such person shall, whether a member or nonmember 
        of a contract market or derivatives transaction 
        execution facility, treat and deal with all money, 
        securities, and property received by such person to 
        margin, guarantee, or secure the trades or contracts of 
        any customer of such person, or accruing to such 
        customer as the result of such trades or contracts, as 
        belonging to such customer. Such money, securities, and 
        property shall be separately accounted for and shall 
        not be commingled with the funds of such commission 
        merchant or be used to margin or guarantee the trades 
        or contracts, or to secure or extend the credit, of any 
        customer or person other than the one for whom the same 
        are held: Provided, however, That such money, 
        securities, and property of the customers of such 
        futures commission merchant may, for convenience, be 
        commingled and deposited in the same account or 
        accounts with [any bank or trust company] any bank, 
        trust company, or qualified digital commodity custodian 
        or with the clearing house organization of such 
        contract market or derivatives transaction execution 
        facility, and that such share thereof as in the normal 
        course of business shall be necessary to margin, 
        guarantee, secure, transfer, adjust, or settle the 
        contracts or trades of such customers, or resulting 
        market positions, with the clearing-house organization 
        of such contract market or derivatives transaction 
        execution facility or with any member of such contract 
        market or derivatives transaction execution facility, 
        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 such contracts and trades: 
        Provided further, That in accordance with such terms 
        and conditions as the Commission may prescribe by rule, 
        regulation, or order, such money, securities, and 
        property of the customers of such futures commission 
        merchant may be commingled and deposited as provided in 
        this section with any other money, securities, and 
        property received by such futures commission merchant 
        and required by the Commission to be separately 
        accounted for and treated and dealt with as belonging 
        to the customers of such futures commission merchant: 
        Provided further, That such money may be invested in 
        obligations of the United States, in general 
        obligations of any State or of any political 
        subdivision thereof, and in obligations fully 
        guaranteed as to principal and interest by the United 
        States, such investments to be made in accordance with 
        such rules and regulations and subject to such 
        conditions as the Commission may prescribe : Provided 
        further, That any such property that is a digital 
        commodity shall be held in a qualified digital 
        commodity custodian.
  (b) It shall be unlawful for any person, including but not 
limited to any clearing agency of a contract market or 
derivatives transaction execution facility and any depository, 
that has received any money, securities, or property for 
deposit in a separate account as provided in paragraph (2) of 
this section, to hold, dispose of, or use any such money, 
securities, or property as belonging to the depositing futures 
commission merchant or any person other than the customers of 
such futures commission merchant.
  (c) Conflicts of Interest.--The Commission shall require that 
futures commission merchants and introducing brokers implement 
conflict-of-interest systems and procedures that--
          (1) establish structural and institutional safeguards 
        to ensure that the activities of any person within the 
        firm relating to research or analysis of the price or 
        market for any commodity are separated by appropriate 
        informational partitions within the firm from the 
        review, pressure, or oversight of persons whose 
        involvement in trading or clearing activities might 
        potentially bias the judgment or supervision of the 
        persons; and
          (2) address such other issues as the Commission 
        determines to be appropriate.
  (d) Designation of Chief Compliance Officer.--Each futures 
commission merchant shall designate an individual to serve as 
its Chief Compliance Officer and perform such duties and 
responsibilities as shall be set forth in regulations to be 
adopted by the Commission or rules to be adopted by a futures 
association registered under section 17.
  (e) Consistent with this Act, the Commission, in consultation 
with the Securities and Exchange Commission, shall issue such 
rules, regulations, or orders as are necessary to avoid 
duplicative or conflicting regulations applicable to any 
futures commission merchant registered with the Commission 
pursuant to section 4f(a) (except paragraph (2) thereof), that 
is also registered with the Securities and Exchange Commission 
pursuant to section 15(b) of the Securities Exchange Act 
(except paragraph (11) thereof), involving the application of--
          (1) section 8, section 15(c)(3), and section 17 of 
        the Securities Exchange Act of 1934 and the rules and 
        regulations thereunder related to the treatment of 
        customer funds, securities, or property, maintenance of 
        books and records, financial reporting or other 
        financial responsibility rules (as defined in section 
        3(a)(40) of the Securities Exchange Act of 1934), 
        involving security futures products; and
          (2) similar provisions of this Act and the rules and 
        regulations thereunder involving security futures 
        products.
  (f) Swaps.--
          (1) Registration requirement.--It shall be unlawful 
        for any person to accept any money, securities, or 
        property (or to extend any credit in lieu of money, 
        securities, or property) from, for, or on behalf of a 
        swaps customer to margin, guarantee, or secure a swap 
        cleared by or through a derivatives clearing 
        organization (including money, securities, or property 
        accruing to the customer as the result of such a swap), 
        unless the person shall have registered under this Act 
        with the Commission as a futures commission merchant, 
        and the registration shall not have expired nor been 
        suspended nor revoked.
          (2) Cleared swaps.--
                  (A) Segregation required.--A futures 
                commission merchant shall treat and deal with 
                all money, securities, and property of any 
                swaps customer received to margin, guarantee, 
                or secure a swap cleared by or though a 
                derivatives clearing organization (including 
                money, securities, or property accruing to the 
                swaps customer as the result of such a swap) as 
                belonging to the swaps customer.
                  (B) Commingling prohibited.--Money, 
                securities, and property of a swaps customer 
                described in subparagraph (A) shall be 
                separately accounted for and shall not be 
                commingled with the funds of the futures 
                commission merchant or be used to margin, 
                secure, or guarantee any trades or contracts of 
                any swaps customer or person other than the 
                person for whom the same are held.
          (3) Exceptions.--
                  (A) Use of funds.--
                          (i) In general.--Notwithstanding 
                        paragraph (2), money, securities, and 
                        property of swap customers of a futures 
                        commission merchant described in 
                        paragraph (2) may, for convenience, be 
                        commingled and deposited in the same 
                        account or accounts with [any bank or 
                        trust company] any bank, trust company, 
                        or qualified digital commodity 
                        custodian or with a derivatives 
                        clearing organization.
                          (ii) Withdrawal.--Notwithstanding 
                        paragraph (2), such share of the money, 
                        securities, and property described in 
                        clause (i) as in the normal course of 
                        business shall be necessary to margin, 
                        guarantee, secure, transfer, adjust, or 
                        settle a cleared swap with a 
                        derivatives clearing organization, or 
                        with any member of the derivatives 
                        clearing organization, 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 cleared swap.
                  (B) Commission action.--Notwithstanding 
                paragraph (2), in accordance with such terms 
                and conditions as the Commission may prescribe 
                by rule, regulation, or order, any money, 
                securities, or property of the swaps customers 
                of a futures commission merchant described in 
                paragraph (2) may be commingled and deposited 
                in customer accounts with any other money, 
                securities, or property received by the futures 
                commission merchant and required by the 
                Commission to be separately accounted for and 
                treated and dealt with as belonging to the 
                swaps customer of the futures commission 
                merchant.
          (4) 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.
          (5) Commodity contract.--A swap cleared by or through 
        a derivatives clearing organization shall be considered 
        to be a commodity contract as such term is defined in 
        section 761 of title 11, United States Code, with 
        regard to all money, securities, and property of any 
        swaps customer received by a futures commission 
        merchant or a derivatives clearing organization to 
        margin, guarantee, or secure the swap (including money, 
        securities, or property accruing to the customer as the 
        result of the swap).
          (6) Prohibition.--It shall be unlawful for any 
        person, including any derivatives clearing organization 
        and any depository institution, that has received any 
        money, securities, or property for deposit in a 
        separate account or accounts as provided in paragraph 
        (2) to hold, dispose of, or use any such money, 
        securities, or property as belonging to the depositing 
        futures commission merchant or any person other than 
        the swaps customer of the futures commission merchant.
  (g) It shall be unlawful for any person to be an introducing 
broker unless such person shall have registered under this Act 
with the Commission as an introducing broker and such 
registration shall not have expired nor been suspended nor 
revoked.
  (h) Notwithstanding subsection (a)(2) or the rules and 
regulations thereunder, and pursuant to an exemption granted by 
the Commission under section 4(c) of this Act or pursuant to a 
rule or regulation, a futures commission merchant that is 
registered pursuant to section 4f(a)(1) of this Act and also 
registered as a broker or dealer pursuant to section 15(b)(1) 
of the Securities Exchange Act of 1934 may, pursuant to a 
portfolio margining program approved by the Securities and 
Exchange Commission pursuant to section 19(b) of the Securities 
Exchange Act of 1934, hold in a portfolio margining account 
carried as a securities account subject to section 15(c)(3) of 
the Securities Exchange Act of 1934 and the rules and 
regulations thereunder, a contract for the purchase or sale of 
a commodity for future delivery or an option on such a 
contract, and any money, securities or other property received 
from a customer to margin, guarantee or secure such a contract, 
or accruing to a customer as the result of such a contract. The 
Commission shall consult with the Securities and Exchange 
Commission to adopt rules to ensure that such transactions and 
accounts are subject to comparable requirements to the extent 
practical for similar products.

           *       *       *       *       *       *       *

  Sec. 4k. (1) It shall be unlawful for any person to be 
associated with a futures commission merchant as a partner, 
officer, or employee, or to be associated with an introducing 
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 customers' orders (other than in a clerical capacity) or 
(ii) the supervision of any person or persons so engaged, 
unless such person is registered with the Commission under this 
Act as an associated person of such futures commission merchant 
or of such introducing broker 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 
futures commission merchant or introducing broker to permit 
such a person to become or remain associated with the futures 
commission merchant or introducing broker in any such capacity 
if such futures commission merchant or introducing broker knew 
or should have known that such person was not so registered or 
that such registration had expired, been suspended (and the 
period of suspension has not expired), or been revoked. Any 
individual who is registered as a floor broker, futures 
commission merchant, or introducing broker (and such 
registration is not suspended or revoked) need not also 
register under this subsection.
  (2) It shall be unlawful for any person to be associated with 
a commodity pool operator as a partner, officer, employee, 
consultant, or agent (or any person occupying a similar status 
or performing similar functions), in any capacity that involves 
(i) the solicitation of funds, securities, or property for a 
participation in a commodity pool or (ii) the supervision of 
any person or persons so engaged, unless such person is 
registered with the Commission under this Act as an associated 
person of such commodity pool operator 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 commodity pool operator to permit such a person 
to become or remain associated with the commodity pool operator 
in any such capacity if the commodity pool operator knew or 
should have known that such person was not so registered or 
that such registration had expired, been suspended (and the 
period of suspension has not expired), or been revoked. Any 
individual who is registered as a floor broker, futures 
commission merchant, introducing broker, commodity pool 
operator, or as an associated person of another category of 
registrant under this section (and such registration is not 
suspended or revoked) need not also register under this 
subsection. The Commission may exempt any person or class of 
persons from having to register under this subsection by rule, 
regulation, or order.
  (3) It shall be unlawful for any person to be associated with 
a commodity trading advisor as a partner, officer, employee, 
consultant, or agent (or any person occupying a similar status 
or performing similar functions), in any capacity which 
involves (i) the solicitation of a client's or prospective 
client's discretionary account or (ii) the supervision of any 
person or persons so engaged, unless such person is registered 
with the Commission under this Act as an associated person of 
such commodity trading advisor 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 
commodity trading advisor to permit such a person to become or 
remain associated with the commodity trading advisor in any 
such capacity if the commodity trading advisor knew or should 
have known that such person was not so registered or that such 
registration had expired, been suspended (and the period of 
suspension has not expired), or been revoked. Any individual 
who is registered as a floor broker, futures commission 
merchant, introducing broker, commodity trading advisor, or as 
an associated person of another category of registrant under 
this section (and such registration is not suspended or 
revoked) need not also register under this subsection. The 
Commission may exempt any person or class of persons from 
having to register under this subsection by rule, regulation, 
or order.
  (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.
  [(4)] (5) Any person desiring to be registered as an 
associated person of a futures commission merchant, of an 
introducing broker, of a commodity pool operator, [or of a 
commodity trading advisor] of a commodity trading advisor, of a 
digital commodity broker, or of a digital commodity dealer 
shall make application to the Commission in the form and manner 
prescribed by the Commission, giving such information and facts 
as the Commission may deem necessary concerning the applicant. 
Such person, when registered hereunder, shall likewise continue 
to report and furnish to the Commission such information as the 
Commission may require. Such registration shall expire at such 
time as the Commission may by rule, regulation, or order 
prescribe.
  [(5)] (6) Any associated person of a broker or dealer that is 
registered with the Securities and Exchange Commission, and who 
limits its solicitation of orders, acceptance of orders, or 
execution of orders, or placing of orders on behalf of others 
involving any contracts of sale of any commodity for future 
delivery or any option on such a contract, on or subject to the 
rules of any contract market or registered derivatives 
transaction execution facility to security futures products, 
shall be exempt from the following provisions of this Act and 
the rules thereunder:
          (A) Subsections (b), (d), (e), and (g) of section 4c.
          (B) Sections 4d, 4e, and 4h.
          (C) Subsections (b) and (c) of section 4f.
          (D) Section 4j.
          (E) Paragraph (1) of this section.
          (F) Section 4p.
          (G) Section 6d.
          (H) Subsections (d) and (g) of section 8.
          (I) Section 16.
  [(6)] (7) It shall be unlawful for any registrant to permit a 
person to become or remain an associated person of such 
registrant, if the registrant knew or should have known of 
facts regarding such associated person that are set forth as 
statutory disqualifications in section 8a(2) of this Act, 
unless such registrant has notified the Commission of such 
facts and the Commission has determined that such person should 
be registered or temporarily licensed.

           *       *       *       *       *       *       *

  Sec. 4m. (1) It shall be unlawful for any commodity trading 
advisor or commodity pool operator, unless registered under 
this Act, to make use of the mails or any means or 
instrumentality of interstate commerce in connection with his 
business as such commodity trading advisor or commodity pool 
operator: Provided, That the provisions of this section shall 
not apply to any commodity trading advisor who, during the 
course of the preceding twelve months, has not furnished 
commodity trading advice to more than fifteen persons and who 
does not hold himself out generally to the public as a 
commodity trading advisor. The provisions of this section shall 
not apply to any commodity trading advisor who is a (1) dealer, 
processor, broker, or seller in cash market transactions of any 
commodity specifically set forth in section 2(a) of this Act 
prior to the enactment of the Commodity Futures Trading 
Commission Act of 1974 (or products thereof) or (2) nonprofit, 
voluntary membership, general farm organization, who provides 
advice on the sale or purchase of any commodity specifically 
set forth in section 2(a) of this Act prior to the enactment of 
the Commodity Futures Trading Commission Act of 1974; if the 
advice by the person described in clause (1) or (2) of this 
sentence as a commodity trading advisor is solely incidental to 
the conduct of that person's business: Provided, That such 
person shall be subject to proceedings under section 14 of this 
Act.
  (2) Nothing in this Act shall relieve any person of any 
obligation or duty, or affect the availability of any right or 
remedy available to the Securities and Exchange Commission or 
any private party arising under the Securities Act of 1933 or 
the Securities Exchange Act of 1934 governing the issuance, 
offer, purchase, or sale of securities of a commodity pool, or 
of persons engaged in transactions with respect to such 
securities, or reporting by a commodity pool.
  (3) Exception.--
          (A) In general.--Paragraph (1) shall not apply to 
        [any commodity trading advisor] a commodity pool 
        operator or commodity trading advisor that is 
        registered with the Securities and Exchange Commission 
        as an investment adviser whose business does not 
        consist primarily of [acting as a commodity trading 
        advisor] acting as a commodity pool operator or 
        commodity trading advisor, as defined in section 1a, 
        and that does not act as a commodity trading advisor to 
        any commodity pool that is engaged primarily in trading 
        commodity interests.
          (B) Engaged primarily.--For purposes of subparagraph 
        (A), a commodity trading advisor or a commodity pool 
        shall be considered to be ``engaged primarily'' in the 
        business of being a commodity trading advisor or 
        commodity pool if it is or holds itself out to the 
        public as being engaged primarily, or proposes to 
        engage primarily, in the business of advising on 
        commodity interests or investing, reinvesting, owning, 
        holding, or trading in commodity interests, 
        respectively.
          (C) Commodity interests.--For purposes of this 
        paragraph, commodity interests shall include contracts 
        of sale of a commodity for future delivery, options on 
        such contracts, security futures, swaps, leverage 
        contracts, foreign exchange, spot and forward contracts 
        on physical commodities, digital commodities, and any 
        monies held in an account used for trading commodity 
        interests.

           *       *       *       *       *       *       *


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

  (a) Registration.--It shall be unlawful for any person to act 
as a digital commodity broker or digital commodity dealer 
unless the person is registered as such with the Commission.
  (b) Requirements.--
          (1) In general.--A person shall register as a digital 
        commodity broker or digital commodity dealer by filing 
        a registration application with the Commission.
          (2) Contents.--
                  (A) In general.--The application shall be 
                made in such form and manner as is prescribed 
                by the Commission, and shall contain such 
                information as the Commission considers 
                necessary concerning the business in which the 
                applicant is or will be engaged.
                  (B) Continual reporting.--A person that is 
                registered as a digital commodity broker or 
                digital commodity dealer shall continue to 
                submit to the Commission reports that contain 
                such information pertaining to the business of 
                the person as the Commission may require.
          (3) Transition.--Within 180 days after the date of 
        the enactment of this section, the Commission shall 
        prescribe rules providing for the registration of 
        digital commodity brokers and digital commodity dealers 
        under this section.
          (4) 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 for 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.
          (5) Limitations on certain assets.--A registered 
        digital commodity broker or registered digital 
        commodity dealer shall not offer, offer to enter into, 
        enter into, or facilitate any contract for sale of a 
        digital commodity that has not been certified under 
        section 5c(d).
  (c) Additional Registrations.--
          (1) With the commission.--Any person required to be 
        registered as a digital commodity broker or digital 
        commodity dealer may also be registered as a futures 
        commission merchant, introducing broker, or swap 
        dealer.
          (2) With the securities and exchange commission.--Any 
        person required to be registered as a digital commodity 
        broker or digital commodity dealer under this section 
        may register with the Securities and Exchange 
        Commission as a digital asset broker or digital asset 
        dealer, pursuant to section 15(b) of the Securities 
        Exchange Act of 1934, as applicable, if the digital 
        asset broker or digital asset dealer limits its 
        solicitation of orders, acceptance of orders, or 
        execution of orders, or placing of orders on behalf of 
        others involving any contract of sale of digital 
        assets.
          (3) With membership in a registered futures 
        association.--Any person required to be registered as a 
        digital commodity broker or digital commodity dealer 
        under this section shall be a member of a registered 
        futures association.
          (4) Registration required.--Any person required to be 
        registered as a digital commodity broker or digital 
        commodity dealer under this section shall register with 
        the Commission as such regardless of whether the person 
        is registered as such with another State or Federal 
        regulator.
  (d) Rulemaking.--
          (1) In general.--The Commission shall prescribe such 
        rules applicable to registered digital commodity 
        brokers and registered digital commodity dealers as are 
        appropriate to carry out this section, including rules 
        in the public interest that limit the activities of 
        digital commodity brokers and digital commodity 
        dealers.
          (2) Multiple registrants.--The Commission shall 
        prescribe rules or regulations permitting, or may 
        otherwise authorize, exemptions or additional 
        requirements applicable to persons with multiple 
        registrations under this Act, including as futures 
        commission merchants, introducing brokers, digital 
        commodity brokers, digital commodity dealers, or swap 
        dealers, as may be in the public interest to reduce 
        compliance costs and promote customer protection.
  (e) Capital Requirements.--
          (1) In general.--Each registered digital commodity 
        broker and registered digital commodity dealer shall 
        meet such minimum capital requirements as the 
        Commission may prescribe to ensure that the digital 
        commodity broker or digital commodity dealer, 
        respectively, is able to--
                  (A) meet, and continue to meet, at all times, 
                the obligations of such a registrant;
                  (B) conduct an orderly wind-down of the 
                activities of the digital commodity broker or 
                digital commodity dealer, respectively; and
                  (C) in the case of a digital commodity 
                dealer, fulfill the customer obligations of the 
                digital commodity dealer for any margined, 
                leveraged, or financed transactions.
          (2) Rule of construction.--Nothing in this section 
        shall limit, or be construed to limit, the authority of 
        the Securities and Exchange Commission to set financial 
        responsibility rules for a broker or dealer registered 
        pursuant to section 15(b) of the Securities Exchange 
        Act of 1934 (15 U.S.C. 78o(b)) (except for section 
        15(b)(11) of such Act (15 U.S.C. 78o(b)(11)) in 
        accordance with section 15(c)(3) of such Act (15 U.S.C. 
        78o(c)(3)).
          (3) Futures commission merchants and other dealers.--
                  (A) In general.--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.).
                  (B) Coordination of capital requirements.--
                          (i) Commission rule.--The Commission 
                        shall, by rule, provide appropriate 
                        offsets to any applicable capital 
                        requirement for a person with multiple 
                        registrations as a digital commodity 
                        dealer, digital commodity broker, 
                        futures commission merchant, or 
                        introducing broker.
                          (ii) Joint rule.--The Commission and 
                        the Securities and Exchange Commission 
                        shall jointly, by rule, provide 
                        appropriate offsets to any applicable 
                        capital requirement for a person with 
                        multiple registrations as a digital 
                        commodity dealer, digital commodity 
                        broker, futures commission merchant, 
                        introducing broker, broker, or dealer.
  (f) Reporting and Recordkeeping.--Each registered digital 
commodity broker and registered digital commodity dealer--
          (1) shall make such reports as are required by the 
        Commission by rule or regulation regarding the 
        transactions, positions, and financial condition of the 
        digital commodity broker or digital commodity dealer, 
        respectively;
          (2) shall keep books and records in such form and 
        manner and for such period as may be prescribed by the 
        Commission by rule or regulation; and
          (3) shall keep the books and records open to 
        inspection and examination by any representative of the 
        Commission.
  (g) Daily Trading Records.--
          (1) In general.--Each registered digital commodity 
        broker and registered 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 registered digital 
        commodity broker and registered 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 registered digital commodity 
        broker and registered digital commodity dealer shall 
        maintain a complete audit trail for conducting 
        comprehensive and accurate trade reconstructions.
  (h) Business Conduct Standards.--
          (1) In general.--Each registered digital commodity 
        broker and registered digital commodity dealer shall 
        conform with such business conduct standards as the 
        Commission, by rule or regulation, prescribes related 
        to--
                  (A) fraud, manipulation, and other abusive 
                practices involving spot or margined, 
                leveraged, or financed digital commodity 
                transactions (including transactions that are 
                offered but not entered into);
                  (B) diligent supervision of the business of 
                the registered digital commodity broker or 
                digital commodity dealer, respectively; and
                  (C) such other matters as the Commission 
                deems appropriate.
          (2) Business conduct requirements.--The Commission 
        shall, by rule, prescribe business conduct requirements 
        which--
                  (A) require disclosure by a registered 
                digital commodity broker and registered digital 
                commodity dealer to any counterparty to the 
                transaction (other than an eligible contract 
                participant) of--
                          (i) information about the material 
                        risks and characteristics of the 
                        digital commodity; and
                          (ii) information about the material 
                        risks and characteristics of the 
                        transaction;
                  (B) establish a duty for such a digital 
                commodity broker and such a digital commodity 
                dealer to communicate in a fair and balanced 
                manner based on principles of fair dealing and 
                good faith;
                  (C) establish standards governing digital 
                commodity platform marketing and advertising, 
                including testimonials and endorsements; and
                  (D) establish such other standards and 
                requirements as the Commission may determine 
                are--
                          (i) in the public interest;
                          (ii) appropriate for the protection 
                        of customers; or
                          (iii) otherwise in furtherance of the 
                        purposes of this Act.
          (3) Prohibition on fraudulent practices.--It shall be 
        unlawful for a registered digital commodity broker or 
        registered digital commodity dealer to--
                  (A) employ any device, scheme, or artifice to 
                defraud any customer or counterparty;
                  (B) engage in any transaction, practice, or 
                course of business that operates as a fraud or 
                deceit on any customer or counterparty; or
                  (C) engage in any act, practice, or course of 
                business that is fraudulent, deceptive, or 
                manipulative.
  (i) Duties.--
          (1) Risk management procedures.--Each registered 
        digital commodity broker and registered 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 
        registered digital commodity broker and registered 
        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 registered 
        digital commodity broker and registered 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 registered digital 
        commodity broker and digital commodity dealer shall 
        implement conflict-of-interest systems and procedures 
        that--
                  (A) establish structural and institutional 
                safeguards--
                          (i) to minimize conflicts of interest 
                        that might potentially bias the 
                        judgment or supervision of the digital 
                        commodity broker or digital commodity 
                        dealer, respectively, and contravene 
                        the principles of fair and equitable 
                        trading and the business conduct 
                        standards described in this Act, 
                        including conflicts arising out of 
                        transactions or arrangements with 
                        affiliates (including affiliates acting 
                        as digital asset issuers, digital 
                        commodity dealers, or qualified digital 
                        commodity custodians), which may 
                        include information partitions and the 
                        legal separation of different digital 
                        commodity transaction intermediaries; 
                        and
                          (ii) to ensure that the activities of 
                        any person within the digital commodity 
                        broker or digital commodity dealer 
                        relating to research or analysis of the 
                        price or market for any digital 
                        commodity or acting in a role of 
                        providing exchange activities or making 
                        determinations as to accepting exchange 
                        customers are separated by appropriate 
                        informational partitions within the 
                        digital commodity broker or digital 
                        commodity dealer from the review, 
                        pressure, or oversight of persons whose 
                        involvement in pricing, trading, 
                        exchange, or clearing activities might 
                        potentially bias their judgment or 
                        supervision and contravene the core 
                        principles of open access and the 
                        business conduct standards described in 
                        this Act; and
                  (B) address such other issues as the 
                Commission determines to be appropriate.
          (5) Antitrust considerations.--Unless necessary or 
        appropriate to achieve the purposes of this Act, a 
        digital commodity broker or digital commodity dealer 
        shall not--
                  (A) adopt any process or take any action that 
                results in any unreasonable restraint of trade; 
                or
                  (B) impose any material anticompetitive 
                burden on trading or clearing.
  (j) Designation of Chief Compliance Officer.--
          (1) In general.--Each registered digital commodity 
        broker and registered digital commodity dealer shall 
        designate an individual to serve as a chief compliance 
        officer.
          (2) Duties.--The chief compliance officer shall--
                  (A) report directly to the board or to the 
                senior officer of the registered digital 
                commodity broker or registered digital 
                commodity dealer;
                  (B) review the compliance of the registered 
                digital commodity broker or registered digital 
                commodity dealer with respect to the registered 
                digital commodity broker and registered digital 
                commodity dealer requirements described in this 
                section;
                  (C) in consultation with the board of 
                directors, a body performing a function similar 
                to the board, or the senior officer of the 
                organization, resolve any conflicts of interest 
                that may arise;
                  (D) be responsible for administering each 
                policy and procedure that is required to be 
                established pursuant to this section;
                  (E) ensure compliance with this Act 
                (including regulations), including each rule 
                prescribed by the Commission under this 
                section;
                  (F) establish procedures for the remediation 
                of noncompliance issues identified by the chief 
                compliance officer through any--
                          (i) compliance office review;
                          (ii) look-back;
                          (iii) internal or external audit 
                        finding;
                          (iv) self-reported error; or
                          (v) validated complaint; and
                  (G) establish and follow appropriate 
                procedures for the handling, management 
                response, remediation, retesting, and closing 
                of noncompliance issues.
          (3) Annual reports.--
                  (A) In general.--In accordance with rules 
                prescribed by the Commission, the chief 
                compliance officer shall annually prepare and 
                sign a report that contains a description of--
                          (i) the compliance of the registered 
                        digital commodity broker or registered 
                        digital commodity dealer with respect 
                        to this Act (including regulations); 
                        and
                          (ii) each policy and procedure of the 
                        registered digital commodity broker or 
                        registered digital commodity dealer of 
                        the chief compliance officer (including 
                        the code of ethics and conflict of 
                        interest policies).
                  (B) Requirements.--The chief compliance 
                officer shall ensure that a compliance report 
                under subparagraph (A)--
                          (i) accompanies each appropriate 
                        financial report of the registered 
                        digital commodity broker or registered 
                        digital commodity dealer that is 
                        required to be furnished to the 
                        Commission pursuant to this section; 
                        and
                          (ii) includes a certification that, 
                        under penalty of law, the compliance 
                        report is accurate and complete.
  (k) Segregation of Digital Commodities.--
          (1) Holding of customer assets.--
                  (A) In general.--Each registered digital 
                commodity broker and registered digital 
                commodity dealer shall hold customer money, 
                assets, and property in a manner to minimize 
                the risk of loss to the customer or 
                unreasonable delay in customer access to the 
                money, assets, and property of the customer.
                  (B) Qualified digital commodity custodian.--
                Each registered digital commodity broker and 
                registered digital commodity dealer shall hold 
                in a qualified digital commodity custodian each 
                unit of a digital commodity that is--
                          (i) the property of a customer or 
                        counterparty of the digital commodity 
                        broker or digital commodity dealer, 
                        respectively; or
                          (ii) otherwise so required by the 
                        Commission to reasonably protect 
                        customers or promote the public 
                        interest.
          (2) Segregation of funds.--
                  (A) In general.--Each registered digital 
                commodity broker and registered digital 
                commodity dealer shall treat and deal with all 
                money, assets, and property that is received by 
                the registered digital commodity broker or 
                registered 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 registered digital 
                        commodity broker and registered 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 
                                        registered digital 
                                        commodity broker or 
                                        registered digital 
                                        commodity dealer may, 
                                        for convenience, 
                                        commingle and deposit 
                                        in the same account or 
                                        accounts with any bank, 
                                        trust company, 
                                        derivatives clearing 
                                        organization, or 
                                        qualified digital 
                                        commodity custodian 
                                        money, assets, and 
                                        property of customers.
                                          (bb) Withdrawal.--The 
                                        share of the money, 
                                        assets, and property 
                                        described in item (aa) 
                                        as in the normal course 
                                        of business shall be 
                                        necessary to margin, 
                                        guarantee, secure, 
                                        transfer, adjust, or 
                                        settle a contract for 
                                        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 registered 
                                digital commodity broker or 
                                registered digital commodity 
                                dealer may be commingled and 
                                deposited in customer accounts 
                                with any other money, assets, 
                                or property received by the 
                                digital commodity broker or 
                                digital commodity dealer, 
                                respectively, and required by 
                                the Commission to be separately 
                                accounted for and treated and 
                                dealt with as belonging to the 
                                customer of the digital 
                                commodity broker or digital 
                                commodity dealer, respectively.
          (3) Permitted investments.--Money described in 
        paragraph (2) may be invested in obligations of the 
        United States, in general obligations of any State or 
        of any political subdivision of a State, in obligations 
        fully guaranteed as to principal and interest by the 
        United States, or in any other investment that the 
        Commission may by rule or regulation allow.
          (4) Customer protection during bankruptcy.--
                  (A) Customer property.--All money, assets, or 
                property described in paragraph (2) shall be 
                considered customer property for purposes of 
                section 761 of title 11, United States Code.
                  (B) Transactions.--A transaction involving a 
                unit of a digital commodity occurring with a 
                digital commodity dealer shall be considered a 
                ``contract for the purchase or sale of a 
                commodity for future delivery, on or subject to 
                the rules of, a contract market or board of 
                trade'' for purposes of the definition of a 
                ``commodity contract'' in section 761 of title 
                11, United States Code.
                  (C) Brokers and dealers.--A registered 
                digital commodity dealer and a registered 
                digital commodity broker shall be considered a 
                futures commission merchant for purposes of 
                section 761 of title 11, United States Code.
                  (D) Assets removed from segregation.--Assets 
                removed from segregation due to a customer 
                election under paragraph (5) 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
                          (ii) for any other person, including 
                        any depository, digital commodity 
                        exchange, other digital commodity 
                        broker, other digital commodity dealer, 
                        or digital commodity custodian that has 
                        received any customer money, assets, or 
                        property for deposit, to hold, dispose 
                        of, or use any such money, assets, or 
                        property, as belonging to the 
                        depositing digital commodity broker or 
                        digital commodity dealer or any person 
                        other than the customers of the digital 
                        commodity broker or digital commodity 
                        dealer, respectively.
                  (B) Use further defined.--For purposes of 
                this section, ``use'' of a digital commodity 
                includes utilizing any unit of a digital asset 
                to participate in a blockchain service defined 
                in paragraph (5) or a decentralized governance 
                system associated with the digital commodity or 
                the blockchain system to which the digital 
                commodity relates in any manner other than that 
                expressly directed by the customer from whom 
                the unit of a digital commodity was received.
          (6) Participation in blockchain services.--
                  (A) In general.--A customer shall have the 
                right to waive the restrictions in paragraph 
                (1) for any unit of a digital commodity, by 
                affirmatively electing, in writing to the 
                digital commodity broker or digital commodity 
                dealer, to waive the restrictions.
                  (B) Use of funds.--Customer digital 
                commodities removed from segregation under 
                subparagraph (A) may be pooled and used by the 
                digital commodity broker or digital commodity 
                dealer, or one of their designees, to provide a 
                blockchain service for a blockchain system to 
                which the unit of the digital asset removed 
                from segregation in subparagraph (A) relates.
                  (C) Limitations.--The Commission may, by 
                rule, establish notice and disclosure 
                requirements, and any other limitations and 
                rules related to the waiving of any 
                restrictions under this paragraph that are 
                reasonably necessary to protect customers, 
                including eligible contract participants, non-
                eligible contract participants, or any other 
                class of customers.
                  (D) Blockchain service defined.--In this 
                subparagraph, the term ``blockchain service'' 
                means any activity relating to validating 
                transactions on a blockchain system, providing 
                security for a blockchain system, or other 
                similar activity required for the ongoing 
                operation of a blockchain system.
  (l) Federal Preemption.--Notwithstanding any other provision 
of law, the Commission shall have exclusive jurisdiction over 
any digital commodity broker or digital commodity dealer 
registered under this section.
  (m) Exemptions.--In order to promote responsible economic or 
financial innovation and fair competition, or protect 
customers, the Commission may (on its own initiative or on 
application of the registered digital commodity broker or 
registered digital commodity dealer) exempt, unconditionally or 
on stated terms or conditions, or for stated periods, and 
retroactively or prospectively, or both, a registered digital 
commodity broker or registered digital commodity dealer from 
the requirements of this section, if the Commission determines 
that--
          (1)(A) the exemption would be consistent with the 
        public interest and the purposes of this Act; and
          (B) the exemption will not have a material adverse 
        effect on the ability of the Commission or the digital 
        commodity broker or digital commodity dealer to 
        discharge regulatory duties under this Act; or
          (2) the registered digital commodity broker or 
        registered digital commodity dealer is subject to 
        comparable, comprehensive supervision and regulation by 
        the appropriate government authorities in the home 
        country of the registered digital commodity broker or 
        registered digital commodity dealer, respectively.
  (n) Treatment Under the Bank Secrecy Act.--A registered 
digital commodity broker and a registered digital commodity 
dealer shall be treated as a financial institution for purposes 
of the Bank Secrecy Act.

SEC. 4V. EXCLUSION FOR ANCILLARY ACTIVITIES.

  (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 solely based on the 
person undertaking any ancillary activities.
  (b) Exceptions.--Subsection (a) shall not be construed to 
apply to the antimanipulation, antifraud, or false reporting 
enforcement authorities of the Commission.
  (c) Ancillary Activities Defined.--In this section, the term 
``ancillary activities'' means any of the following activities 
related to the operation of a blockchain system:
          (1) Compiling network transactions, operating a pool, 
        relaying, searching, sequencing, validating, or acting 
        in a similar capacity with respect to a digital 
        commodity transaction.
          (2) Providing computational work, operating a node, 
        or procuring, offering, or utilizing network bandwidth, 
        or other similar incidental services with respect to a 
        digital commodity transaction.
          (3) Providing a user interface that enables a user to 
        read, and access data about a blockchain system, send 
        messages, or otherwise interact with a blockchain 
        system.
          (4) Developing, publishing, constituting, 
        administering, maintaining, or otherwise distributing a 
        blockchain system.
          (5) Developing, publishing, constituting, 
        administering, maintaining, or otherwise distributing 
        software or systems that create or deploy hardware or 
        software, including wallets or other systems, 
        facilitating an individual user's own personal ability 
        to keep, safeguard, or custody a user's digital 
        commodities or related private keys.

           *       *       *       *       *       *       *


SEC. 5C. COMMON PROVISIONS APPLICABLE TO REGISTERED ENTITIES.

  (a) Acceptable Business Practices Under Core Principles.--
          (1) In general.--Consistent with the purposes of this 
        Act, the Commission may issue interpretations, or 
        approve interpretations submitted to the Commission, of 
        sections [5(d) and 5b(c)(2)] 5(d), 5b(c)(2), and 5i(c), 
        to describe what would constitute an acceptable 
        business practice under such sections.
          (2) Effect of interpretation.--An interpretation 
        issued under paragraph (1) may provide the exclusive 
        means for complying with each section described in 
        paragraph (1).
  (b) Delegation of Functions Under Core Principles.--
          (1) In general.--A contract market, digital commodity 
        exchange, derivatives transaction execution facility, 
        or electronic trading facility with respect to a 
        significant price discovery contract may comply with 
        any applicable core principle through delegation of any 
        relevant function to a registered futures association 
        or a registered entity that is not an electronic 
        trading facility.
          (2) Responsibility.--A contract market, digital 
        commodity exchange, derivatives transaction execution 
        facility, or electronic trading facility that delegates 
        a function under paragraph (1) shall remain responsible 
        for carrying out the function.
          (3) Noncompliance.--If a contract market, digital 
        commodity exchange, derivatives transaction execution 
        facility, or electronic trading facility that delegates 
        a function under paragraph (1) becomes aware that a 
        delegated function is not being performed as required 
        under this Act, the contract market, digital commodity 
        exchange, derivatives transaction execution facility, 
        or electronic trading facility shall promptly take 
        steps to address the noncompliance.
  (c) New Contracts, New Rules, and Rule Amendments.--
          (1) In general.--A registered entity may elect to 
        list for trading or accept for clearing any new 
        contract, or other instrument, or may elect to approve 
        and implement any new rule or rule amendment, by 
        providing to the Commission (and the Secretary of the 
        Treasury, in the case of a contract of sale of a 
        government security for future delivery (or option on 
        such a contract) or a rule or rule amendment 
        specifically related to such a contract) a written 
        certification that the new contract or instrument or 
        clearing of the new contract or instrument, new rule, 
        or rule amendment complies with this Act (including 
        regulations under this Act).
          (2) Rule review.--The new rule or rule amendment 
        described in paragraph (1) shall become effective, 
        pursuant to the certification of the registered entity 
        and notice of such certification to its members or 
        participants (in a manner to be determined by the 
        Commission), on the date that is 10 business days after 
        the date on which the Commission receives the 
        certification (or such shorter period as determined by 
        the Commission by rule or regulation) unless the 
        Commission notifies the registered entity within such 
        time that it is staying the certification because there 
        exist novel or complex issues that require additional 
        time to analyze, an inadequate explanation by the 
        submitting registered entity, or a potential 
        inconsistency with this Act (including regulations 
        under this Act).
          (3) Stay of certification for rules.--
                  (A) A notification by the Commission pursuant 
                to paragraph (2) shall stay the certification 
                of the new rule or rule amendment for up to an 
                additional 90 days from the date of the 
                notification.
                  (B) A rule or rule amendment subject to a 
                stay pursuant to subparagraph (A) shall become 
                effective, pursuant to the certification of the 
                registered entity, at the expiration of the 
                period described in subparagraph (A) unless the 
                Commission--
                          (i) withdraws the stay prior to that 
                        time; or
                          (ii) notifies the registered entity 
                        during such period that it objects to 
                        the proposed certification on the 
                        grounds that it is inconsistent with 
                        this Act (including regulations under 
                        this Act).
                  (C) The Commission shall provide a not less 
                than 30-day public comment period, within the 
                90-day period in which the stay is in effect as 
                described in subparagraph (A), whenever the 
                Commission reviews a rule or rule amendment 
                pursuant to a notification by the Commission 
                under this paragraph.
          (4) Prior approval.--
                  (A) In general.--A registered entity may 
                request that the Commission grant prior 
                approval to any new contract or other 
                instrument, new rule, or rule amendment.
                  (B) Prior approval required.--Notwithstanding 
                any other provision of this section, a 
                designated contract market shall submit to the 
                Commission for prior approval each rule 
                amendment that materially changes the terms and 
                conditions, as determined by the Commission, in 
                any contract of sale for future delivery of a 
                commodity specifically enumerated in section 
                [1a(10)] 1a(9) (or any option thereon) traded 
                through its facilities if the rule amendment 
                applies to contracts and delivery months which 
                have already been listed for trading and have 
                open interest.
                  (C) Deadline.--If prior approval is requested 
                under subparagraph (A), the Commission shall 
                take final action on the request not later than 
                90 days after submission of the request, unless 
                the person submitting the request agrees to an 
                extension of the time limitation established 
                under this subparagraph.
          (5) Approval.--
                  (A) Rules.--The Commission shall approve a 
                new rule, or rule amendment, of a registered 
                entity unless the Commission finds that the new 
                rule, or rule amendment, is inconsistent with 
                this subtitle (including regulations).
                  (B) Contracts and instruments.--The 
                Commission shall approve a new contract or 
                other instrument unless the Commission finds 
                that the new contract or other instrument would 
                violate this Act (including regulations).
                  (C) Special rule for review and approval of 
                event contracts and swaps contracts.--
                          (i) Event contracts.--In connection 
                        with the listing of agreements, 
                        contracts, transactions, or swaps in 
                        excluded commodities that are based 
                        upon the occurrence, extent of an 
                        occurrence, or contingency (other than 
                        a change in the price, rate, value, or 
                        levels of a commodity described in 
                        section 1a(2)(i)), by a designated 
                        contract market or swap execution 
                        facility, the Commission may determine 
                        that such agreements, contracts, or 
                        transactions are contrary to the public 
                        interest if the agreements, contracts, 
                        or transactions involve--
                                  (I) activity that is unlawful 
                                under any Federal or State law;
                                  (II) terrorism;
                                  (III) assassination;
                                  (IV) war;
                                  (V) gaming; or
                                  (VI) other similar activity 
                                determined by the Commission, 
                                by rule or regulation, to be 
                                contrary to the public 
                                interest.
                          (ii) Prohibition.--No agreement, 
                        contract, or transaction determined by 
                        the Commission to be contrary to the 
                        public interest under clause (i) may be 
                        listed or made available for clearing 
                        or trading on or through a registered 
                        entity.
                          (iii) Swaps contracts.--
                                  (I) In general.--In 
                                connection with the listing of 
                                a swap for clearing by a 
                                derivatives clearing 
                                organization, the Commission 
                                shall determine, upon request 
                                or on its own motion, the 
                                initial eligibility, or the 
                                continuing qualification, of a 
                                derivatives clearing 
                                organization to clear such a 
                                swap under those criteria, 
                                conditions, or rules that the 
                                Commission, in its discretion, 
                                determines.
                                  (II) Requirements.--Any such 
                                criteria, conditions, or rules 
                                shall consider--
                                          (aa) the financial 
                                        integrity of the 
                                        derivatives clearing 
                                        organization; and
                                          (bb) any other 
                                        factors which the 
                                        Commission determines 
                                        may be appropriate.
                          (iv) Deadline.--The Commission shall 
                        take final action under clauses (i) and 
                        (ii) in not later than 90 days from the 
                        commencement of its review unless the 
                        party seeking to offer the contract or 
                        swap agrees to an extension of this 
                        time limitation.
                  (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.
  (d) Certifications for Digital Commodity Trading.--
          (1) In general.--Notwithstanding subsection (c), for 
        the purposes of listing or offering a digital commodity 
        for trading in a digital commodity cash or spot market, 
        an eligible entity shall issue a written certification 
        that the digital commodity meets the requirements of 
        this Act (including regulations thereunder).
          (2) Contents of the certification.--
                  (A) In general.--In making a written 
                certification under this paragraph, the 
                eligible entity shall furnish to the 
                Commission--
                          (i) an analysis of how the digital 
                        commodity meets the requirements of 
                        section 5i(c)(3);
                          (ii) information about the digital 
                        commodity regarding--
                                  (I) its purpose and use;
                                  (II) its unit creation or 
                                release process;
                                  (III) its consensus 
                                mechanism;
                                  (IV) its governance 
                                structure;
                                  (V) its participation and 
                                distribution; and
                                  (VI) its current and proposed 
                                functionality; and
                          (iii) any other information, 
                        analysis, or documentation the 
                        Commission may, by rule, require.
                  (B) Reliance on prior disclosures.--In making 
                a certification under this subsection, an 
                eligible entity may rely on the records and 
                disclosures of any relevant person registered 
                with the Securities and Exchange Commission or 
                other State or Federal agency.
          (3) Modifications.--
                  (A) In general.--An eligible entity shall 
                modify a certification made under paragraph (1) 
                to--
                          (i) account for significant changes 
                        in any information provided to the 
                        Commission under paragraph (2)(A)(ii); 
                        or
                          (ii) permit or restrict trading in 
                        units of a digital commodity asset held 
                        by a related person or an affiliated 
                        person.
                  (B) Recertification.--Modifications required 
                by this subsection shall be subject to the same 
                disapproval and review process as a new 
                certification under paragraphs (4) and (5).
          (4) Disapproval.--
                  (A) In general.--The written certification 
                described in paragraph (1) shall become 
                effective unless the Commission finds that the 
                digital asset does not meet the requirements of 
                this Act or the rules and regulations 
                thereunder.
                  (B) Analysis required.--The Commission shall 
                include, with any findings referred to in 
                subparagraph (A), a detailed analysis of the 
                factors on which the decision was based.
                  (C) Public findings.--The Commission shall 
                make public any disapproval decision, and any 
                related findings and analysis, made under this 
                paragraph.
          (5) Review.--
                  (A) In general.--Unless the Commission makes 
                a disapproval decision under paragraph (4), the 
                written certification described in paragraph 
                (1) shall become effective, pursuant to the 
                certification by the eligible entity and notice 
                of the certification to the public (in a manner 
                determined by the Commission) on the date that 
                is--
                          (i) 20 business days after the date 
                        the Commission receives the 
                        certification (or such shorter period 
                        as determined by the Commission by rule 
                        or regulation), in the case of a 
                        digital commodity that has not been 
                        certified under this section or for 
                        which a certification is being modified 
                        under paragraph (3); or
                          (ii) 2 business days after the date 
                        the Commission receives the 
                        certification (or such shorter period 
                        as determined by the Commission by rule 
                        or regulation) for any digital 
                        commodity that has been certified under 
                        this section.
                  (B) Extensions.--The time for consideration 
                under subparagraph (A) may be extended through 
                notice to the eligible entity that there are 
                novel or complex issues that require additional 
                time to analyze, that the explanation by the 
                submitting eligible entity is inadequate, or of 
                a potential inconsistency with this Act--
                          (i) once, for 30 business days, 
                        through written notice to the eligible 
                        entity by the Chairman; and
                          (ii) once, for an additional 30 
                        business days, through written notice 
                        to the digital commodity exchange from 
                        the Commission that includes a 
                        description of any deficiencies with 
                        the certification, including any--
                                  (I) novel or complex issues 
                                which require additional time 
                                to analyze;
                                  (II) missing information or 
                                inadequate explanations; or
                                  (III) potential 
                                inconsistencies with this Act.
          (6) Certification required.--Notwithstanding any 
        other requirement of this Act, a registered entity or 
        other entity registered with the Commission shall not 
        list for trading, accept for clearing, offer to enter 
        into, enter into, execute, confirm the execution of, or 
        conduct any office or business anywhere in the United 
        States, its territories or possessions, for the purpose 
        of soliciting, or accepting any order for, or otherwise 
        dealing in, any transaction in, or in connection with, 
        a digital asset, unless a certification has been made 
        under this section for the digital asset.
          (7) Eligible entity defined.--In this subsection, the 
        term ``eligible entity'' means a registered entity or 
        group of registered entities acting jointly.
  (e) Reservation of Emergency Authority.--Nothing in this 
section shall limit or in any way affect the emergency powers 
of the Commission provided in section 8a(9).
  (f) Consistent with this Act, each designated contract market 
and registered derivatives transaction execution facility shall 
issue such rules as are necessary to avoid duplicative or 
conflicting rules applicable to any futures commission merchant 
registered with the Commission pursuant to section 4f(a) of 
this Act (except paragraph (2) thereof), that is also 
registered with the Securities and Exchange Commission pursuant 
to section 15(b) of the Securities Exchange Act of 1934 (except 
paragraph (11) thereof) with respect to the application of--
          (1) rules of such designated contract market or 
        registered derivatives transaction execution facility 
        of the type specified in section 4d(e) involving 
        security futures products; and
          (2) similar rules of national securities associations 
        registered pursuant to section 15A(a) of the Securities 
        Exchange Act of 1934 and national securities exchanges 
        registered pursuant to section 6(g) of such Act 
        involving security futures products.

           *       *       *       *       *       *       *


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; or
                          (ii) serves only customers in a 
                        single State or territory.
          (2) Additional registrations.--
                  (A) With the commission.--
                          (i) In general.--A registered digital 
                        commodity exchange may also register 
                        as--
                                  (I) a designated contract 
                                market; or
                                  (II) a swap execution 
                                facility.
                          (ii) Rules.--For an entity with 
                        multiple registrations under clause 
                        (i), the Commission--
                                  (I) shall prescribe rules to 
                                exempt the entity from 
                                duplicative, conflicting, or 
                                unduly burdensome provisions of 
                                this Act and the rules under 
                                this Act, to the extent such an 
                                exemption would foster the 
                                development of fair and orderly 
                                cash or spot markets in digital 
                                commodities, be necessary or 
                                appropriate in the public 
                                interest, and be consistent 
                                with the protection of 
                                customers; and
                                  (II) may, after an analysis 
                                of the risks and benefits, 
                                prescribe rules to provide for 
                                portfolio margining, as may be 
                                necessary to protect market 
                                participants, promote fair and 
                                equitable trading in digital 
                                commodity markets, and promote 
                                responsible economic or 
                                financial innovation.
                  (B) With the securities and exchange 
                commission.--A registered digital commodity 
                exchange may register with the Securities and 
                Exchange Commission as a digital asset trading 
                system to list or trade contracts of sale for 
                digital assets deemed securities.
                  (C) With a registered futures association.--
                          (i) In general.--A registered digital 
                        commodity exchange shall also be a 
                        member of a registered futures 
                        association and comply with rules 
                        related to such activity, if the 
                        registered digital commodity exchange 
                        accepts customer funds required to be 
                        segregated under subsection (d).
                          (ii) Rulemaking required.--The 
                        Commission shall require any registered 
                        futures association with a digital 
                        commodity exchange as a member to 
                        provide such rules as may be necessary 
                        to further compliance with subsection 
                        (d), protect customers, and promote the 
                        public interest.
                  (D) Registration required.--A person required 
                to be registered as a digital commodity 
                exchange under this section shall register with 
                the Commission as such regardless of whether 
                the person is registered as such 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.
          (2) Prohibition on acting as a counterparty.--A 
        registered digital commodity exchange or any affiliate 
        of such an exchange shall not act as counterparty to 
        any transaction executed on or subject to the rules of 
        the registered digital commodity exchange.
          (3) Trading securities.--A registered digital 
        commodity exchange that is also registered with the 
        Securities and Exchange Commission may offer a contract 
        of sale of a digital asset deemed a security.
          (4) Rules for certain digital asset sales.--The 
        digital commodity exchange shall have in place such 
        rules as may be necessary to reasonably ensure the 
        orderly sale of any unit of a digital commodity sold by 
        a related person or an affiliated person.
  (c) Core Principles for Digital Commodity Exchanges.--
          (1) Compliance with core principles.--
                  (A) In general.--To be registered, and 
                maintain registration, as a digital commodity 
                exchange, a digital commodity exchange shall 
                comply with--
                          (i) the core principles described in 
                        this subsection; and
                          (ii) any requirement that the 
                        Commission may impose by rule or 
                        regulation pursuant to section 8a(5).
                  (B) Reasonable discretion of a digital 
                commodity exchange.--Unless otherwise 
                determined by the Commission by rule or 
                regulation, a digital commodity exchange 
                described in subparagraph (A) shall have 
                reasonable discretion in establishing the 
                manner in which the digital commodity exchange 
                complies with the core principles described in 
                this subsection.
          (2) Compliance with rules.--A digital commodity 
        exchange shall--
                  (A) establish and enforce compliance with any 
                rule of the digital commodity exchange, 
                including--
                          (i) the terms and conditions of the 
                        trades traded or processed on or 
                        through the digital commodity exchange; 
                        and
                          (ii) any limitation on access to the 
                        digital commodity exchange;
                  (B) establish and enforce trading, trade 
                processing, and participation rules that will 
                deter abuses and have the capacity to detect, 
                investigate, and enforce those rules, including 
                means--
                          (i) to provide market participants 
                        with impartial access to the market; 
                        and
                          (ii) to capture information that may 
                        be used in establishing whether rule 
                        violations have occurred; and
                  (C) establish rules governing the operation 
                of the exchange, including rules specifying 
                trading procedures to be used in entering and 
                executing orders traded or posted on the 
                facility.
          (3) Listing standards for digital commodities.--
                  (A) In general.--A digital commodity exchange 
                shall permit trading only in a digital 
                commodity that is not readily susceptible to 
                manipulation.
                  (B) Public information requirements.--
                          (i) In general.--A digital commodity 
                        exchange shall permit trading only in a 
                        digital commodity if the information 
                        required in clause (ii) is correct, 
                        current, and available to the public.
                          (ii) Required information.-- With 
                        respect to a digital commodity and each 
                        blockchain system to which the digital 
                        commodity relates for which the digital 
                        commodity exchange will make the 
                        digital commodity available to the 
                        customers of the digital commodity 
                        exchange, the information required in 
                        this clause is as follows:
                                  (I) Source code.--The source 
                                code for any blockchain system 
                                to which the digital commodity 
                                relates.
                                  (II) Transaction history.--A 
                                narrative description of the 
                                steps necessary to 
                                independently access, search, 
                                and verify the transaction 
                                history of any blockchain 
                                system to which the digital 
                                commodity relates.
                                  (III) Digital asset 
                                economics.--A narrative 
                                description of the purpose of 
                                any blockchain system to which 
                                the digital asset relates and 
                                the operation of any such 
                                blockchain system, including--
                                          (aa) information 
                                        explaining the launch 
                                        and supply process, 
                                        including the number of 
                                        digital assets to be 
                                        issued in an initial 
                                        allocation, the total 
                                        number of digital 
                                        assets to be created, 
                                        the release schedule 
                                        for the digital assets, 
                                        and the total number of 
                                        digital assets then 
                                        outstanding;
                                          (bb) information 
                                        detailing any 
                                        applicable consensus 
                                        mechanism or process 
                                        for validating 
                                        transactions, method of 
                                        generating or mining 
                                        digital assets, and any 
                                        process for burning or 
                                        destroying digital 
                                        assets on the 
                                        blockchain system;
                                          (cc) an explanation 
                                        of governance 
                                        mechanisms for 
                                        implementing changes to 
                                        the blockchain system 
                                        or forming consensus 
                                        among holders of the 
                                        digital assets; and
                                          (dd) sufficient 
                                        information for a third 
                                        party to create a tool 
                                        for verifying the 
                                        transaction history of 
                                        the digital asset.
                                  (IV) Additional 
                                information.--Such additional 
                                information as the Commission 
                                may, by rule, determine to be 
                                necessary for a customer to 
                                understand the financial and 
                                operational risks of a digital 
                                commodity, and to be in the 
                                public interest or in 
                                furtherance of the requirements 
                                of this Act.
                  (C) Additional listing considerations.--In 
                addition to the requirements of subparagraphs 
                (A) and (B), a digital commodity exchange shall 
                consider--
                          (i) if a sufficient percentage of the 
                        units of the digital asset are units of 
                        a digital commodity to permit robust 
                        price discovery;
                          (ii) if it is reasonably unlikely 
                        that the transaction history can be 
                        fraudulently altered by any person or 
                        group of persons acting collectively;
                          (iii) if the operating structure and 
                        system of the digital commodity is 
                        secure from cybersecurity threats;
                          (iv) if the functionality of the 
                        digital commodity will protect holders 
                        from operational failures;
                          (v) if sufficient public information 
                        about the operation, functionality, and 
                        use of the digital commodity is 
                        available; and
                          (vi) any other factor which the 
                        Commission has, by rule, determined to 
                        be in the public interest or in 
                        furtherance of the requirements of this 
                        Act.
                  (D) Restricted digital assets.--A digital 
                commodity exchange shall not permit the trading 
                of a unit of a digital asset that is a 
                restricted digital asset.
          (4) Treatment of customer assets.--A digital 
        commodity exchange shall establish standards and 
        procedures that are designed to protect and ensure the 
        safety of customer money, assets, and property.
          (5) Monitoring of trading and trade processing.--
                  (A) In general.--A digital commodity exchange 
                shall provide a competitive, open, and 
                efficient market and mechanism for executing 
                transactions that protects the price discovery 
                process of trading on the exchange.
                  (B) Protection of markets and market 
                participants.--A digital commodity exchange 
                shall establish and enforce rules--
                          (i) to protect markets and market 
                        participants from abusive practices 
                        committed by any party, including 
                        abusive practices committed by a party 
                        acting as an agent for a participant; 
                        and
                          (ii) to promote fair and equitable 
                        trading on the exchange.
                  (C) Trading procedures.--A digital commodity 
                exchange shall--
                          (i) establish and enforce rules or 
                        terms and conditions defining, or 
                        specifications detailing--
                                  (I) trading procedures to be 
                                used in entering and executing 
                                orders traded on or through the 
                                facilities of the digital 
                                commodity exchange; and
                                  (II) procedures for trade 
                                processing of digital 
                                commodities on or through the 
                                facilities of the digital 
                                commodity exchange; and
                          (ii) monitor trading in digital 
                        commodities to prevent manipulation, 
                        price distortion, and disruptions of 
                        the delivery or cash settlement process 
                        through surveillance, compliance, and 
                        disciplinary practices and procedures, 
                        including methods for conducting real-
                        time monitoring of trading and 
                        comprehensive and accurate trade 
                        reconstructions.
          (6) Ability to obtain information.--A digital 
        commodity exchange shall--
                  (A) establish and enforce rules that will 
                allow the facility to obtain any necessary 
                information to perform any of the functions 
                described in this section;
                  (B) provide the information to the Commission 
                on request; and
                  (C) have the capacity to carry out such 
                international information-sharing agreements as 
                the Commission may require.
          (7) Emergency authority.--A digital commodity 
        exchange shall adopt rules to provide for the exercise 
        of emergency authority, in consultation or cooperation 
        with the Commission or a registered entity, as is 
        necessary and appropriate, including the authority to 
        facilitate the liquidation or transfer of open 
        positions in any digital commodity or to suspend or 
        curtail trading in a digital commodity.
          (8) Timely publication of trading information.--
                  (A) In general.--A digital commodity exchange 
                shall make public timely information on price, 
                trading volume, and other trading data on 
                digital commodities to the extent prescribed by 
                the Commission.
                  (B) Capacity of digital commodity exchange.--
                A digital commodity exchange shall have the 
                capacity to electronically capture and transmit 
                trade information with respect to transactions 
                executed on the exchange.
          (9) Recordkeeping and reporting.--
                  (A) In general.--A digital commodity exchange 
                shall--
                          (i) maintain records of all 
                        activities relating to the business of 
                        the facility, including a complete 
                        audit trail, in a form and manner 
                        acceptable to the Commission for a 
                        period of 5 years;
                          (ii) report to the Commission, in a 
                        form and manner acceptable to the 
                        Commission, such information as the 
                        Commission determines to be necessary 
                        or appropriate for the Commission to 
                        perform the duties of the Commission 
                        under this Act; and
                          (iii) keep any such records of 
                        digital commodities which relate to a 
                        security open to inspection and 
                        examination by the Securities and 
                        Exchange Commission.
                  (B) Information sharing.--Subject to section 
                8, and on request, the Commission shall share 
                information collected under subparagraph (A) 
                with--
                          (i) the Board;
                          (ii) the Securities and Exchange 
                        Commission;
                          (iii) each appropriate Federal 
                        banking agency;
                          (iv) each appropriate State bank 
                        supervisor (within the meaning of 
                        section 3 of the Federal Deposit 
                        Insurance Act);
                          (v) the Financial Stability Oversight 
                        Council;
                          (vi) the Department of Justice; and
                          (vii) any other person that the 
                        Commission determines to be 
                        appropriate, including--
                                  (I) foreign financial 
                                supervisors (including foreign 
                                futures authorities);
                                  (II) foreign central banks; 
                                and
                                  (III) foreign ministries.
                  (C) Confidentiality agreement.--Before the 
                Commission may share information with any 
                entity described in subparagraph (B), the 
                Commission shall receive a written agreement 
                from the entity stating that the entity shall 
                abide by the confidentiality requirements 
                described in section 8 relating to the 
                information on digital commodities that is 
                provided.
                  (D) Providing information.--A digital 
                commodity exchange shall provide to the 
                Commission (including any designee of the 
                Commission) information under subparagraph (A) 
                in such form and at such frequency as is 
                required by the Commission.
          (10) Antitrust considerations.--Unless necessary or 
        appropriate to achieve the purposes of this Act, a 
        digital commodity exchange shall not--
                  (A) adopt any rules or take any actions that 
                result in any unreasonable restraint of trade; 
                or
                  (B) impose any material anticompetitive 
                burden on trading.
          (11) Conflicts of interest.--A registered digital 
        commodity exchange shall implement conflict-of-interest 
        systems and procedures that--
                  (A) establish structural and institutional 
                safeguards--
                          (i) to minimize conflicts of interest 
                        that might potentially bias the 
                        judgment or supervision of the digital 
                        commodity exchange and contravene the 
                        principles of fair and equitable 
                        trading and the business conduct 
                        standards described in this Act, 
                        including conflicts arising out of 
                        transactions or arrangements with 
                        affiliates (including affiliates 
                        engaging in digital commodity 
                        activities) which may include 
                        information partitions and the legal 
                        separation of different persons or 
                        entities involved in digital commodity 
                        activities; and
                          (ii) to ensure that the activities of 
                        any person within the digital commodity 
                        exchange or any affiliated entity 
                        relating to research or analysis of the 
                        price or market for any digital 
                        commodity or acting in a role of 
                        providing dealing, brokering, or 
                        advising activities are separated by 
                        appropriate informational partitions 
                        within the digital commodity exchange 
                        or any affiliated entity from the 
                        review, pressure, or oversight of 
                        persons whose involvement in pricing, 
                        trading, exchange, or clearing 
                        activities might potentially bias their 
                        judgment or supervision and contravene 
                        the core principles of open access and 
                        the business conduct standards 
                        described in this Act; and
                  (B) address such other issues as the 
                Commission determines to be appropriate.
          (12) Financial resources.--
                  (A) In general.--A digital commodity exchange 
                shall have adequate financial, operational, and 
                managerial resources, as determined by the 
                Commission, to discharge each responsibility of 
                the digital commodity exchange.
                  (B) Minimum amount of financial resources.--A 
                digital commodity exchange shall possess 
                financial resources that, at a minimum, exceed 
                the total amount that would enable the digital 
                commodity exchange to conduct an orderly wind-
                down of its activities.
          (13) Disciplinary procedures.--A digital commodity 
        exchange shall establish and enforce disciplinary 
        procedures that authorize the digital commodity 
        exchange to discipline, suspend, or expel members or 
        market participants that violate the rules of the 
        digital commodity exchange, or similar methods for 
        performing the same functions, including delegation of 
        the functions to third parties.
          (14) Governance fitness standards.--
                  (A) Governance arrangements.--A digital 
                commodity exchange shall establish governance 
                arrangements that are transparent to fulfill 
                public interest requirements.
                  (B) Fitness standards.--A digital commodity 
                exchange shall establish and enforce 
                appropriate fitness standards for--
                          (i) directors; and
                          (ii) any individual or entity with 
                        direct access to, or control of, 
                        customer assets.
          (15) System safeguards.--A digital commodity exchange 
        shall--
                  (A) establish and maintain a program of risk 
                analysis and oversight to identify and minimize 
                sources of operational and security risks, 
                through the development of appropriate controls 
                and procedures, and automated systems, that--
                          (i) are reliable and secure; and
                          (ii) have adequate scalable capacity;
                  (B) establish and maintain emergency 
                procedures, backup facilities, and a plan for 
                disaster recovery that allow for--
                          (i) the timely recovery and 
                        resumption of operations; and
                          (ii) the fulfillment of the 
                        responsibilities and obligations of the 
                        digital commodity exchange; and
                  (C) periodically conduct tests to verify that 
                the backup resources of the digital commodity 
                exchange are sufficient to ensure continued--
                          (i) order processing and trade 
                        matching;
                          (ii) price reporting;
                          (iii) market surveillance; and
                          (iv) maintenance of a comprehensive 
                        and accurate audit trail.
  (d) Holding of Customer Assets.--
          (1) In general.--A digital commodity exchange shall 
        hold customer money, assets, and property in a manner 
        to minimize the risk of loss to the customer or 
        unreasonable delay in the access to the money, assets, 
        and property of the customer.
                  (A) Segregation of funds.--
                          (i) In general.--A digital commodity 
                        exchange shall treat and deal with all 
                        money, assets, and property that is 
                        received by the digital commodity 
                        exchange, or accrues to a customer as 
                        the result of trading in digital 
                        commodities, as belonging to the 
                        customer.
                          (ii) Commingling prohibited.--Money, 
                        assets, and property of a customer 
                        described in clause (i) shall be 
                        separately accounted for and shall not 
                        be commingled with the funds of the 
                        digital commodity exchange or be used 
                        to margin, secure, or guarantee any 
                        trades or accounts of any customer or 
                        person other than the person for whom 
                        the same are held.
                  (B) Exceptions.--
                          (i) Use of funds.--
                                  (I) In general.--
                                Notwithstanding subparagraph 
                                (A), money, assets, and 
                                property of customers of a 
                                digital commodity exchange 
                                described in subparagraph (A) 
                                may, for convenience, be 
                                commingled and deposited in the 
                                same account or accounts with 
                                any bank, trust company, 
                                derivatives clearing 
                                organization, or qualified 
                                digital commodity custodian.
                                  (II) Withdrawal.--
                                Notwithstanding subparagraph 
                                (A), such share of the money, 
                                assets, and property described 
                                in item (aa) as in the normal 
                                course of business shall be 
                                necessary to margin, guarantee, 
                                secure, transfer, adjust, or 
                                settle a contract of sale of a 
                                digital commodity with a 
                                registered entity may be 
                                withdrawn and applied to such 
                                purposes, including the payment 
                                of commissions, brokerage, 
                                interest, taxes, storage, and 
                                other charges, lawfully 
                                accruing in connection with the 
                                contract of sale of a digital 
                                commodity.
                          (ii) Commission action.--
                        Notwithstanding subparagraph (A), in 
                        accordance with such terms and 
                        conditions as the Commission may 
                        prescribe by rule, regulation, or 
                        order, any money, assets, or property 
                        of the customers of a digital commodity 
                        exchange described in subparagraph (A) 
                        may be commingled and deposited in 
                        customer accounts with any other money, 
                        assets, or property received by the 
                        digital commodity exchange and required 
                        by the Commission to be separately 
                        accounted for and treated and dealt 
                        with as belonging to the customer of 
                        the digital commodity exchange.
          (2) Permitted investments.--Money described in 
        subparagraph (A) may be invested in obligations of the 
        United States, in general obligations of any State or 
        of any political subdivision of a State, and in 
        obligations fully guaranteed as to principal and 
        interest by the United States, or in any other 
        investment that the Commission may by rule or 
        regulation prescribe, and such investments shall be 
        made in accordance with such rules and regulations and 
        subject to such conditions as the Commission may 
        prescribe.
          (3) Customer protection during bankruptcy.--
                  (A) Customer property.--All assets held on 
                behalf of a customer by a digital commodity 
                exchange, and all money, assets, and property 
                of any customer received by a digital commodity 
                exchange registered under section 5i of this 
                Act for trading or custody, or to facilitate, 
                margin, guarantee, or secure contracts of sale 
                of a digital commodity (including money, 
                assets, or property accruing to the customer as 
                the result of the transactions), shall be 
                considered customer property for purposes of 
                section 761 of title 11, United States Code.
                  (B) Transactions.--A transaction involving a 
                unit of a digital commodity occurring on or 
                subject to the rules of a digital commodity 
                exchange shall be considered a ``contract for 
                the purchase or sale of a commodity for future 
                delivery, on or subject to the rules of, a 
                contract market or board of trade'' for the 
                purposes of the definition of a ``commodity 
                contract'' in section 761 of title 11, United 
                States Code.
                  (C) Exchanges.--A digital commodity exchange 
                shall be considered a futures commission 
                merchant for purposes of section 761 of title 
                11, United States Code.
          (4) Misuse of customer property.--
                  (A) In general.--It shall be unlawful--
                          (i) for any digital commodity 
                        exchange that has received any customer 
                        money, assets, or property for custody 
                        to dispose of, or use any such money, 
                        assets, or property as belonging to the 
                        digital commodity exchange; or
                          (ii) for any other person, including 
                        any depository, other digital commodity 
                        exchange, or digital commodity 
                        custodian that has received any 
                        customer money, assets, or property for 
                        deposit, to hold, dispose of, or use 
                        any such money, assets, or property, or 
                        property, as belonging to the 
                        depositing digital commodity exchange 
                        or any person other than the customers 
                        of the digital commodity exchange.
                  (B) Use further defined.--For purposes of 
                this section, ``use'' of a digital commodity 
                includes utilizing any unit of a digital asset 
                to participate in a blockchain service defined 
                in paragraph (5) or a decentralized governance 
                system associated with the digital commodity or 
                the blockchain system to which the digital 
                commodity relates in any manner other than that 
                expressly directed by the customer from whom 
                the unit of a digital commodity was received.
          (5) Participation in blockchain services.--
                  (A) In general.--A customer shall have the 
                right to waive the restrictions in paragraph 
                (1) for any unit of a digital commodity, by 
                affirmatively electing, in writing to the 
                digital commodity exchange, to waive the 
                restrictions.
                  (B) Use of funds.--Customer digital 
                commodities removed from segregation under 
                subparagraph (A) may be pooled and used by the 
                digital commodity exchange or its designee to 
                provide a blockchain service for a blockchain 
                system to which the unit of the digital asset 
                removed from segregation in subparagraph (A) 
                relates.
                  (C) Limitations.--The Commission may, by 
                rule, establish notice and disclosure 
                requirements, and any other limitations and 
                rules related to the waiving of any 
                restrictions under this paragraph that are 
                reasonably necessary to protect customers, 
                including eligible contract participants, non-
                eligible contract participants, or any other 
                class of customers.
                  (D) Blockchain service defined.--In this 
                subparagraph, the term ``blockchain service'' 
                means any activity relating to validating 
                transactions on a blockchain system, providing 
                security for a blockchain system, or other 
                similar activity required for the ongoing 
                operation of a blockchain system.
  (e) Market Access Requirements.--
          (1) In general.--A digital commodity exchange shall 
        require any person who is not an eligible contract 
        participant to access trading on the exchange through a 
        digital commodity broker.
          (2) Affiliated commodity brokers.--A registered 
        digital commodity exchange may maintain an affiliated 
        digital commodity broker to facilitate access to the 
        digital commodity exchange, if--
                  (A) no other digital commodity brokers are 
                permitted to facilitate access to the exchange;
                  (B) the affiliated digital commodity broker 
                limits its activities only to providing 
                customer access to the digital commodity 
                exchange; and
                  (C) the affiliated digital commodity broker 
                is not also registered as a digital commodity 
                dealer.
          (3) Direct access for eligible contract 
        participants.--Nothing in this section shall prohibit a 
        digital commodity exchange in compliance with this 
        section from permitting direct access for eligible 
        contract participants.
          (4) Additional requirements.--
                  (A) In general.--The Commission may, by rule, 
                impose any additional requirements related to 
                the operations and activities of the digital 
                commodity exchange and the affiliated digital 
                commodity broker necessary to protect market 
                participants, promote fair and equitable 
                trading on the digital commodity exchange, and 
                promote responsible economic or financial 
                innovation.
                  (B) Delegation of authority.--The Commission 
                may delegate to a registered futures 
                association such oversight and regulatory 
                requirements as the Commission determines are 
                necessary to--
                          (i) supervise the activities of the 
                        digital commodity exchange and an 
                        affiliated digital commodity broker; 
                        and
                          (ii) protect market participants, 
                        promote fair and equitable trading on 
                        the digital commodity exchange, and 
                        promote responsible economic or 
                        financial innovation.
  (f) Designation of Chief Compliance Officer.--
          (1) In general.--A digital commodity exchange shall 
        designate an individual to serve as a chief compliance 
        officer.
          (2) Duties.--The chief compliance officer shall--
                  (A) report directly to the board or to the 
                senior officer of the exchange;
                  (B) review compliance with the core 
                principles in this subsection;
                  (C) in consultation with the board of the 
                exchange, a body performing a function similar 
                to that of a board, or the senior officer of 
                the exchange, resolve any conflicts of interest 
                that may arise;
                  (D) establish and administer the policies and 
                procedures required to be established pursuant 
                to this section;
                  (E) ensure compliance with this Act and the 
                rules and regulations issued under this Act, 
                including rules prescribed by the Commission 
                pursuant to this section; and
                  (F) establish procedures for the remediation 
                of noncompliance issues found during compliance 
                office reviews, look backs, internal or 
                external audit findings, self-reported errors, 
                or through validated complaints.
          (3) Requirements for procedures.--In establishing 
        procedures under paragraph (2)(F), the chief compliance 
        officer shall design the procedures to establish the 
        handling, management response, remediation, retesting, 
        and closing of noncompliance issues.
          (4) Annual reports.--
                  (A) In general.--In accordance with rules 
                prescribed by the Commission, the chief 
                compliance officer shall annually prepare and 
                sign a report that contains a description of--
                          (i) the compliance of the digital 
                        commodity exchange with this Act; and
                          (ii) the policies and procedures, 
                        including the code of ethics and 
                        conflict of interest policies, of the 
                        digital commodity exchange.
                  (B) Requirements.--The chief compliance 
                officer shall--
                          (i) submit each report described in 
                        subparagraph (A) with the appropriate 
                        financial report of the digital 
                        commodity exchange that is required to 
                        be submitted to the Commission pursuant 
                        to this section; and
                          (ii) include in the report a 
                        certification that, under penalty of 
                        law, the report is accurate and 
                        complete.
  (g) Appointment of Trustee.--
          (1) In general.--If a proceeding under section 5e 
        results in the suspension or revocation of the 
        registration of a digital commodity exchange, or if a 
        digital commodity exchange withdraws from registration, 
        the Commission, on notice to the digital commodity 
        exchange, may apply to the appropriate United States 
        district court where the digital commodity exchange is 
        located for the appointment of a trustee.
          (2) Assumption of jurisdiction.--If the Commission 
        applies for appointment of a trustee under paragraph 
        (1)--
                  (A) the court may take exclusive jurisdiction 
                over the digital commodity exchange and the 
                records and assets of the digital commodity 
                exchange, wherever located; and
                  (B) if the court takes jurisdiction under 
                subparagraph (A), the court shall appoint the 
                Commission, or a person designated by the 
                Commission, as trustee with power to take 
                possession and continue to operate or terminate 
                the operations of the digital commodity 
                exchange in an orderly manner for the 
                protection of customers subject to such terms 
                and conditions as the court may prescribe.
  (h) Qualified Digital Commodity Custodian.--A digital 
commodity exchange shall hold in a qualified digital commodity 
custodian each unit of a digital commodity that is--
          (1) the property of a customer of the digital 
        commodity exchange;
          (2) required to be held by the digital commodity 
        exchange under subsection (c)(12) of this section; or
          (3) otherwise so required by the Commission to 
        reasonably protect customers or promote the public 
        interest.
  (i) Exemptions.--In order to promote responsible economic or 
financial innovation and fair competition, or protect 
customers, the Commission may (on its own initiative or on 
application of the registered digital commodity exchange) 
exempt, either unconditionally or on stated terms or conditions 
or for stated periods and either retroactively or 
prospectively, or both, a registered digital commodity exchange 
from the requirements of this section, if the Commission 
determines that--
          (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 or the digital 
        commodity exchange to discharge regulatory or self-
        regulatory duties under this Act; or
          (2) the digital commodity exchange is subject to 
        comparable, comprehensive supervision and regulation by 
        the appropriate government authorities in the home 
        country of the exchange.
  (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 other any person.
  (k) Federal Preemption.--Notwithstanding any other provision 
of law, the Commission shall have exclusive jurisdiction over 
any digital commodity exchange registered under this section.
  (l) Treatment Under the Bank Secrecy Act.--A registered 
digital commodity exchange shall be treated as a financial 
institution for purposes of the Bank Secrecy Act.

SEC. 5J. QUALIFIED DIGITAL COMMODITY CUSTODIANS.

  (a) In General.--For purposes of this Act, a qualified 
digital commodity custodian is a digital commodity custodian 
who meets the following conditions:
          (1) Supervision.--The digital commodity custodian is 
        subject to adequate supervision and appropriate 
        regulation.
          (2) No prohibition.--The digital commodity custodian 
        is--
                  (A) subject to the supervision of--
                          (i) an appropriate Federal banking 
                        agency;
                          (ii) a State bank supervisor (within 
                        the meaning of section 3 of the Federal 
                        Deposit Insurance Act); or
                          (iii) an appropriate foreign 
                        governmental authority in the home 
                        country of the digital commodity 
                        custodian; and
                  (B) not prohibited by the applicable 
                supervisor referred to in subparagraph (A) from 
                engaging in any activity with respect to the 
                holding of digital commodities.
          (3) Information sharing.--
                  (A) In general.--The digital commodity 
                custodian agrees to such periodic sharing of 
                information regarding customer accounts the 
                digital commodity custodian holds on behalf of 
                an entity registered with the Commission, as 
                the Commission determines by rule shall be 
                reasonably necessary to effectuate any of the 
                provisions, or to accomplish any of the 
                purposes, of this Act.
                  (B) Provision of information.--Any person 
                that is subject to regulation and examination 
                by a prudential regulator may satisfy any 
                information request described in subparagraph 
                (A), by providing the Commission with a 
                detailed listing, in writing, of the digital 
                commodities of a customer within the custody or 
                use of the person.
  (b) Adequate Supervision and Appropriate Regulation Further 
Defined.--
          (1) In general.--In subsection (a), the terms 
        ``adequate supervision'' and ``appropriate regulation'' 
        mean such minimum standards for supervision and 
        regulation as are reasonably necessary to protect the 
        digital commodities of customers of an entity 
        registered with the Commission, including minimum 
        standards relating to--
                  (A) accessibility of customer assets;
                  (B) financial resources;
                  (C) risk management requirements;
                  (D) governance arrangements;
                  (E) fitness standards;
                  (F) recordkeeping;
                  (G) information sharing; and
                  (H) conflicts of interest.
          (2) Deemed compliance.--For purposes of subsection 
        (a), a bank subject to the supervision of an 
        appropriate Federal banking agency or a State bank 
        supervisor (within the meaning of section 3 of the 
        Federal Deposit Insurance Act) is deemed to be subject 
        to adequate supervision and appropriate regulation.
          (3) Rulemaking authority.--For purposes of subsection 
        (a), the Commission, by rule or order, may further 
        define the terms ``adequate supervision'' and 
        ``appropriate regulation'' as necessary in the public 
        interest, as appropriate for the protection of 
        customers, and consistent with the purposes of this 
        Act.
  (c) Authority To Temporarily Suspend Standards.--The 
Commission may, by rule or order, temporarily suspend, in whole 
or in part, any requirement imposed under, or any standard 
referred to in, this section if the Commission determines that 
the suspension would be consistent with the public interest and 
the purposes of this Act.
  Sec. 6. (a) Any person desiring to be designated or 
registered as a contract market or derivatives transaction 
execution facility shall make application to the Commission for 
the designation or registration and accompany the same with a 
showing that it complies with the conditions set forth in this 
Act, and with a sufficient assurance that it will continue to 
comply with the the requirements of this Act. The Commission 
shall approve or deny an application for designation or 
registration as a contract market or derivatives transaction 
execution facility within 180 days of the filing of the 
application. If the Commission notifies the person that its 
application is materially incomplete and specifies the 
deficiencies in the application, the running of the 180-day 
period shall be stayed from the time of such notification until 
the application is resubmitted in completed form: Provided, 
That the Commission shall have not less than sixty days to 
approve or deny the application from the time the application 
is resubmitted in completed form. If the Commission denies an 
application, it shall specify the grounds for the denial. In 
the event of a refusal to designate or register as a contract 
market or derivatives transaction execution facility any person 
that has made application therefor, the person shall be 
afforded an opportunity for a hearing on the record before the 
Commission, with the right to appeal an adverse decision after 
such hearing to the court of appeals as provided for in other 
cases in subsection (b) of this section.
  (b) The Commission is authorized to suspend for a period not 
to exceed 6 months or to revoke the designation or registration 
of any contract market or derivatives transaction execution 
facility on a showing that the contract market or derivatives 
transaction execution facility is not enforcing or has not 
enforced its rules of government, made a condition of its 
designation or registration as set forth in sections 5 through 
5b or section 5f, or that the contract market or derivatives 
transaction execution facility or electronic trading facility, 
or any director, officer, agent, or employee thereof, otherwise 
is violating or has violated any of the provisions of this Act 
or any of the rules, regulations, or orders of the Commission 
thereunder. Such suspension or revocation shall only be made 
after a notice to the officers of the contract market or 
derivatives transaction execution facility or electronic 
trading facility affected and upon a hearing on the record: 
Provided, That such suspension or revocation shall be final and 
conclusive, unless within fifteen days after such suspension or 
revocation by the Commission such person appeals to the court 
of appeals for the circuit in which it has its principal place 
of business, by filing with the clerk of such court a written 
petition praying that the order of the Commission be set aside 
or modified in the manner stated in the petition, together with 
a bond in such sum as the court may determine, conditioned that 
such person will pay the costs of the proceedings if the court 
so directs. The clerk of the court in which such a petition is 
filed shall immediately cause a copy thereof to be delivered to 
the Commission and file in the court the record in such 
proceedings, as provided in section 2112 of title 28, United 
States Code. The testimony and evidence taken or submitted 
before the Commission, duly filed as aforesaid as a part of the 
record, shall be considered by the court of appeals as the 
evidence in the case. Such a court may affirm or set aside the 
order of the Commission or may direct it to modify its order. 
No such order of the Commission shall be modified or set aside 
by the court of appeals unless it is shown by the person that 
the order is unsupported by the weight of the evidence or was 
issued without due notice and a reasonable opportunity having 
been afforded to such person for a hearing, or infringes the 
Constitution of the United States, or is beyond the 
jurisdiction of the Commission.
  (c) Prohibition Regarding Manipulation and False 
Information.--
          (1) Prohibition against manipulation.--It shall be 
        unlawful for any person, directly or indirectly, to use 
        or employ, or attempt to use or employ, in connection 
        with any swap, or a contract of sale of any commodity 
        in interstate commerce, or for future delivery on or 
        subject to the rules of any registered entity, any 
        manipulative or deceptive device or contrivance, in 
        contravention of such rules and regulations as the 
        Commission shall promulgate by not later than 1 year 
        after the date of enactment of the Dodd-Frank Wall 
        Street Reform and Consumer Protection Act, provided no 
        rule or regulation promulgated by the Commission shall 
        require any person to disclose to another person 
        nonpublic information that may be material to the 
        market price, rate, or level of the commodity 
        transaction, except as necessary to make any statement 
        made to the other person in or in connection with the 
        transaction not misleading in any material respect.
                  (A) Special provision for manipulation by 
                false reporting.--Unlawful manipulation for 
                purposes of this paragraph shall include, but 
                not be limited to, delivering, or causing to be 
                delivered for transmission through the mails or 
                interstate commerce, by any means of 
                communication whatsoever, a false or misleading 
                or inaccurate report concerning crop or market 
                information or conditions that affect or tend 
                to affect the price of any commodity in 
                interstate commerce, knowing, or acting in 
                reckless disregard of the fact that such report 
                is false, misleading or inaccurate.
                  (B) Effect on other law.--Nothing in this 
                paragraph shall affect, or be construed to 
                affect, the applicability of section 9(a)(2).
                  (C) Good faith mistakes.--Mistakenly 
                transmitting, in good faith, false or 
                misleading or inaccurate information to a price 
                reporting service would not be sufficient to 
                violate subsection (c)(1)(A).
          (2) Prohibition regarding false information.--It 
        shall be unlawful for any person to make any false or 
        misleading statement of a material fact to the 
        Commission, including in any registration application 
        or any report filed with the Commission under this Act, 
        or any other information relating to a swap, or a 
        contract of sale of a commodity, in interstate 
        commerce, or for future delivery on or subject to the 
        rules of any registered entity, or to omit to state in 
        any such statement any material fact that is necessary 
        to make any statement of a material fact made not 
        misleading in any material respect, if the person knew, 
        or reasonably should have known, the statement to be 
        false or misleading.
          (3) Other manipulation.--In addition to the 
        prohibition in paragraph (1), it shall be unlawful for 
        any person, directly or indirectly, to manipulate or 
        attempt to manipulate the price of any swap, or of any 
        commodity in interstate commerce, or for future 
        delivery on or subject to the rules of any registered 
        entity.
          (4) Enforcement.--
                  (A) Authority of commission.--If the 
                Commission has reason to believe that any 
                person (other than a registered entity) is 
                violating or has violated this subsection, or 
                any other provision of this Act (including any 
                rule, regulation, or order of the Commission 
                promulgated in accordance with this subsection 
                or any other provision of this Act), the 
                Commission may serve upon the person a 
                complaint.
                  (B) Contents of complaint.--A complaint under 
                subparagraph (A) shall--
                          (i) contain a description of the 
                        charges against the person that is the 
                        subject of the complaint; and
                          (ii) have attached or contain a 
                        notice of hearing that specifies the 
                        date and location of the hearing 
                        regarding the complaint.
                  (C) Hearing.--A hearing described in 
                subparagraph (B)(ii)--
                          (i) shall be held not later than 3 
                        days after service of the complaint 
                        described in subparagraph (A);
                          (ii) shall require the person to show 
                        cause regarding why--
                                  (I) an order should not be 
                                made--
                                          (aa) to prohibit the 
                                        person from trading on, 
                                        or subject to the rules 
                                        of, any registered 
                                        entity; and
                                          (bb) to direct all 
                                        registered entities to 
                                        refuse all privileges 
                                        to the person until 
                                        further notice of the 
                                        Commission; and
                                  (II) the registration of the 
                                person, if registered with the 
                                Commission in any capacity, 
                                should not be suspended or 
                                revoked; and
                          (iii) may be held before--
                                  (I) the Commission; or
                                  (II) an administrative law 
                                judge designated by the 
                                Commission, under which the 
                                administrative law judge shall 
                                ensure that all evidence is 
                                recorded in written form and 
                                submitted to the Commission.
          (5) Subpoena.--For the purpose of securing effective 
        enforcement of the provisions of this Act, for the 
        purpose of any investigation or proceeding under this 
        Act, and for the purpose of any action taken under 
        section 12(f), any member of the Commission or any 
        Administrative Law Judge or other officer designated by 
        the Commission (except as provided in paragraph (7)) 
        may administer oaths and affirmations, subpoena 
        witnesses, compel their attendance, take evidence, and 
        require the production of any books, papers, 
        correspondence, memoranda, or other records that the 
        Commission deems relevant or material to the inquiry.
          (6) Witnesses.--The attendance of witnesses and the 
        production of any such records may be required from any 
        place in the United States, any State, or any foreign 
        country or jurisdiction at any designated place of 
        hearing.
          (7) Service.--A subpoena issued under this section 
        may be served upon any person who is not to be found 
        within the territorial jurisdiction of any court of the 
        United States in such manner as the Federal Rules of 
        Civil Procedure prescribe for service of process in a 
        foreign country, except that a subpoena to be served on 
        a person who is not to be found within the territorial 
        jurisdiction of any court of the United States may be 
        issued only on the prior approval of the Commission.
          (8) Refusal to obey.--In case of contumacy by, or 
        refusal to obey a subpoena issued to, any person, the 
        Commission may invoke the aid of any court of the 
        United States within the jurisdiction in which the 
        investigation or proceeding is conducted, or where such 
        person resides or transacts business, in requiring the 
        attendance and testimony of witnesses and the 
        production of books, papers, correspondence, memoranda, 
        and other records. Such court may issue an order 
        requiring such person to appear before the Commission 
        or member or Administrative Law Judge or other officer 
        designated by the Commission, there to produce records, 
        if so ordered, or to give testimony touching the matter 
        under investigation or in question.
          (9) Failure to obey.--Any failure to obey such order 
        of the court may be punished by the court as a contempt 
        thereof. All process in any such case may be served in 
        the judicial district wherein such person is an 
        inhabitant or transacts business or wherever such 
        person may be found.
          (10) Evidence.--On the receipt of evidence under 
        paragraph (4)(C)(iii), the Commission may--
                  (A) prohibit the person that is the subject 
                of the hearing from trading on, or subject to 
                the rules of, any registered entity and require 
                all registered entities to refuse the person 
                all privileges on the registered entities for 
                such period as the Commission may require in 
                the order;
                  (B) if the person is registered with the 
                Commission in any capacity, suspend, for a 
                period not to exceed 180 days, or revoke, the 
                registration of the person;
                  (C) assess such person--
                          (i) a civil penalty of not more than 
                        an amount equal to the greater of--
                                  (I) $140,000; or
                                  (II) triple the monetary gain 
                                to such person for each such 
                                violation; or
                          (ii) in any case of manipulation or 
                        attempted manipulation in violation of 
                        this subsection or section 9(a)(2), a 
                        civil penalty of not more than an 
                        amount equal to the greater of--
                                  (I) $1,000,000; or
                                  (II) triple the monetary gain 
                                to the person for each such 
                                violation; and
                  (D) require restitution to customers of 
                damages proximately caused by violations of the 
                person.
          (11) Orders.--
                  (A) Notice.--The Commission shall provide to 
                a person described in paragraph (10) and the 
                appropriate governing board of the registered 
                entity notice of the order described in 
                paragraph (10) by--
                          (i) registered mail;
                          (ii) certified mail; or
                          (iii) personal delivery.
                  (B) Review.--
                          (i) In general.--A person described 
                        in paragraph (10) may obtain a review 
                        of the order or such other equitable 
                        relief as determined to be appropriate 
                        by a court described in clause (ii).
                          (ii) Petition.--To obtain a review or 
                        other relief under clause (i), a person 
                        may, not later than 15 days after 
                        notice is given to the person under 
                        clause (i), file a written petition to 
                        set aside the order with the United 
                        States Court of Appeals--
                                  (I) for the circuit in which 
                                the petitioner carries out the 
                                business of the petitioner; or
                                  (II) in the case of an order 
                                denying registration, the 
                                circuit in which the principal 
                                place of business of the 
                                petitioner is located, as 
                                listed on the application for 
                                registration of the petitioner.
                  (C) Procedure.--
                          (i) Duty of clerk of appropriate 
                        court.--The clerk of the appropriate 
                        court under subparagraph (B)(ii) shall 
                        transmit to the Commission a copy of a 
                        petition filed under subparagraph 
                        (B)(ii).
                          (ii) Duty of commission.--In 
                        accordance with section 2112 of title 
                        28, United States Code, the Commission 
                        shall file in the appropriate court 
                        described in subparagraph (B)(ii) the 
                        record theretofore made.
                          (iii) Jurisdiction of appropriate 
                        court.--Upon the filing of a petition 
                        under subparagraph (B)(ii), the 
                        appropriate court described in 
                        subparagraph (B)(ii) may affirm, set 
                        aside, or modify the order of the 
                        Commission.
  (d) If any person (other than a registered entity), is 
violating or has violated subsection (c) or any other 
provisions of this Act or of the rules, regulations, or orders 
of the Commission thereunder, the Commission may, upon notice 
and hearing, and subject to appeal as in other cases provided 
for in subsection (c), make and enter an order directing that 
such person shall cease and desist therefrom and, if such 
person thereafter and after the lapse of the period allowed for 
appeal of such order or after the affirmance of such order, 
shall knowingly fail or refuse to obey or comply with such 
order, such person, upon conviction thereof, shall be fined not 
more than the higher of $140,000 or triple the monetary gain to 
such person, or imprisoned for not more than 1 year, or both, 
except that if such knowing failure or refusal to obey or 
comply with such order involves any offense within subsection 
(a) or (b) of section 9, such person, upon conviction thereof, 
shall be subject to the penalties of said subsection (a) or 
(b):  Provided, That any such cease and desist order under this 
subsection against any respondent in any case of manipulation 
shall be issued only in conjunction with an order issued 
against such respondent under subsection (c).
  (e)(1) In determining the amount of the money penalty 
assessed under subsection (c), the Commission shall consider 
the appropriateness of such penalty to the gravity of the 
violation.
  (2) Unless the person against whom a money penalty is 
assessed under subsection (c) shows to the satisfaction of the 
Commission within fifteen days from the expiration of the 
period allowed for payment of such penalty that either an 
appeal as authorized by subsection (c) has been taken or 
payment of the full amount of the penalty then due has been 
made, at the end of such fifteen-day period and until such 
person shows to the satisfaction of the Commission that payment 
of such amount with interest thereon to date of payment has 
been made--
          (A) such person shall be prohibited automatically 
        from the privileges of all registered entities; and
          (B) if such person is registered with the Commission, 
        such registration shall be suspended automatically.
  (3) If a person against whom a money penalty is assessed 
under subsection (c) takes an appeal and if the Commission 
prevails or the appeal is dismissed, unless such person shows 
to the satisfaction of the Commission that payment of the full 
amount of the penalty then due has been made by the end of 
thirty days from the date of entry of judgment on the appeal--
          (A) such person shall be prohibited automatically 
        from the privileges of all registered entities; and
          (B) if such person is registered with the Commission, 
        such registration shall be suspended automatically.
If the person against whom the money penalty is assessed fails 
to pay such penalty after the lapse of the period allowed for 
appeal or after the affirmance of such penalty, the Commission 
may refer the matter to the Attorney General who shall recover 
such penalty by action in the appropriate United States 
district court.
          (4) Any designated clearing organization that 
        knowingly or recklessly evades or participates in or 
        facilitates an evasion of the requirements of section 
        2(h) shall be liable for a civil money penalty in twice 
        the amount otherwise available for a violation of 
        section 2(h).
          (5) Any swap dealer or major swap participant that 
        knowingly or recklessly evades or participates in or 
        facilitates an evasion of the requirements of section 
        2(h) shall be liable for a civil money penalty in twice 
        the amount otherwise available for a violation of 
        section 2(h).
  (f)(1) Except as provided in paragraph (2), not later than 
six months after the effective date of rules promulgated by the 
Federal Trade Commission under section 3(a) of the 
Telemarketing and Consumer Fraud and Abuse Prevention Act, the 
Commission shall promulgate, or require each registered futures 
association to promulgate, rules substantially similar to such 
rules to prohibit deceptive and other abusive telemarketing 
acts or practices by any person registered or exempt from 
registration under this Act in connection with such person's 
business as a futures commission merchant, introducing broker, 
commodity trading advisor, commodity pool operator, leverage 
transaction merchant, floor broker, or floor trader, or a 
person associated with any such person.
  (2) The Commission is not required to promulgate rules under 
paragraph (1) if it determines that--
          (A) rules adopted by the Commission under this Act 
        provide protection from deceptive and abusive 
        telemarketing by persons described under paragraph (1) 
        substantially similar to that provided by rules 
        promulgated by the Federal Trade Commission under 
        section 3(a) of the Telemarketing and Consumer Fraud 
        and Abuse Prevention Act; or
          (B) such a rule promulgated by the Commission is not 
        necessary or appropriate in the public interest, or for 
        the pro- tection of customers in the futures and 
        options markets, or would be inconsistent with the 
        maintenance of fair and orderly markets.
If the Commission determines that an exception described in 
subparagraph (A) or (B) applies, the Commission shall publish 
in the Federal Register its determination with the reasons for 
it.
  (g) The Commission shall provide the Securities and Exchange 
Commission with notice of the commencement of any proceeding 
and a copy of any order entered by the Commission pursuant to 
subsections (c) and (d) of this section against any futures 
commission merchant or introducing broker registered pursuant 
to section 4f(a)(2), any floor broker or floor trader exempt 
from registration pursuant to section 4f(a)(3), any associated 
person exempt from registration pursuant to [section 4k(6)] 
section 4k(7), or any board of trade designated as a contract 
market pursuant to section 5f.

           *       *       *       *       *       *       *

  Sec. 6c. (a) Whenever it shall appear to the Commission that 
any registered entity or other person has engaged, is engaging, 
or is about to engage in any act or practice constituting a 
violation of any provision of this Act or any rule, regulation, 
or order thereunder, or is restraining trading in any commodity 
for future delivery or any swap, the Commission may bring an 
action in the proper district court of the United States or the 
proper United States court of any territory or other place 
subject to the jurisdiction of the United States, to enjoin 
such act or practice, or to enforce compliance with this Act, 
or any rule, regulation or order thereunder, and said courts 
shall have jurisdiction to entertain such actions: Provided, 
That no restraining order (other than a restraining order which 
prohibits any person from destroying, altering or disposing of, 
or refusing to permit authorized representatives of the 
Commission to inspect, when and as requested, any books and 
records or other documents or which prohibits any person from 
withdrawing, transferring, removing, dissipating, or disposing 
of any funds, assets, or other property, and other than an 
order appointing a temporary receiver to administer such 
restraining order and to perform such other duties as the court 
may consider appropriate) or injunction for violation of the 
provisions of this Act shall be issued ex parte by said court.
  (b) Upon a proper showing, a permanent or temporary 
injunction or restraining order shall be granted without bond.
  (c) Upon application of the Commission, the district courts 
of the United States and the United States courts of any 
territory or other place subject to the jurisdiction of the 
United States shall also have jurisdiction to issue writs of 
mandamus, or orders affording like relief, commanding any 
person to comply with the provisions of this Act or any rule, 
regulation, or order of the Commission thereunder, including 
the requirement that such person take action as is necessary to 
remove the danger of violation of this Act or any such rule, 
regulation, or order: Provided, That no such writ of mandamus, 
or order affording like relief, shall be issued ex parte.
  (d) Civil Penalties.--
          (1) In general.--In any action brought under this 
        section, the Commission may seek and the court shall 
        have jurisdiction to impose, on a proper showing, on 
        any person found in the action to have committed any 
        violation--
                  (A) a civil penalty in the amount of not more 
                than the greater of $100,000 or triple the 
                monetary gain to the person for each violation; 
                or
                  (B) in any case of manipulation or attempted 
                manipulation in violation of section 6(c), 
                6(d), or 9(a)(2), a civil penalty in the amount 
                of not more than the greater of $1,000,000 or 
                triple the monetary gain to the person for each 
                violation.
  (2) If a person on whom such a penalty is imposed fails to 
pay the penalty within the time prescribed in the court's 
order, the Commission may refer the matter to the Attorney 
General who shall recover the penalty by action in the 
appropriate United States district court.
          (3) Equitable remedies.--In any action brought under 
        this section, the Commission may seek, and the court 
        may impose, on a proper showing, on any person found in 
        the action to have committed any violation, equitable 
        remedies including--
                  (A) restitution to persons who have sustained 
                losses proximately caused by such violation (in 
                the amount of such losses); and
                  (B) disgorgement of gains received in 
                connection with such violation.
  (e) Any action under this section may be brought in the 
district wherein the defendant is found or is an inhabitant or 
transacts business or in the district where the act or practice 
occurred, is occurring, or is about to occur, and process in 
such cases may be served in any district in which the defendant 
is an inhabitant or wherever the defendant may be found.
  (f) In lieu of bringing actions itself pursuant to this 
section, the Commission may request the Attorney General to 
bring the action.
  (g) Where the Commission elects to bring the action, it shall 
inform the Attorney General of such suit and advise him of 
subsequent developments.
  (h) The Commission shall provide the Securities and Exchange 
Commission with notice of the commencement of any proceeding 
and a copy of any order entered by the Commission against any 
futures commission merchant or introducing broker registered 
pursuant to section 4f(a)(2), any floor broker or floor trader 
exempt from registration pursuant to section 4f(a)(3), any 
associated person exempt from registration pursuant to [section 
4k(6)] section 4k(7), or any board of trade designated as a 
contract market pursuant to section 5f.

           *       *       *       *       *       *       *

  Sec. 8. (a)(1) For the efficient execution of the provisions 
of this Act, and in order to provide information for the use of 
Congress, the Commission may make such investigations as it 
deems necessary to ascertain the facts regarding the operations 
of boards of trade and other persons subject to the provisions 
of this Act. The Commission may publish from time to time the 
results of any such investigation and such general statistical 
information gathered therefrom as it deems of interest to the 
public: Provided, That except as otherwise specifically 
authorized in this Act, the Commission may not publish data and 
information that would separately disclose the business 
transactions or market positions of any person and trade 
secrets or names of customers: Provided further, That the 
Commission may withhold from public disclosure any data or 
information concerning or obtained in connection with any 
pending investigation of any person. The Commission shall not 
be compelled to disclose any information or data obtained from 
a foreign futures authority if--
          (A) the foreign futures authority has in good faith 
        determined and represented to the Commission that 
        disclosure of such information or data by that foreign 
        futures authority would violate the laws applicable to 
        that foreign futures authority; and
          (B) the Commission obtains such information pursuant 
        to--
                  (i) such procedure as the Commission may 
                authorize for use in connection with the 
                administration or enforcement of this Act; or
                  (ii) a memorandum of understanding with that 
                foreign futures authority;
        except that nothing in this subsection shall prevent 
        the Commission from disclosing publicly any information 
        or data obtained by the Commission from a foreign 
        futures authority when such disclosure is made in 
        connection with a congressional proceeding, an 
        administrative or judicial proceeding commenced by the 
        United States or the Commission, in any receivership 
        proceeding involving a receiver appointed in a judicial 
        proceeding commenced by the United States or the 
        Commission, or in any proceeding under title 11 of the 
        United States Code in which the Commission has 
        intervened or in which the Commission has the right to 
        appear and be heard. Nothing in this subsection shall 
        be construed to authorize the Commission to withhold 
        information or data from Congress. For purposes of 
        section 552 of title 5, United States Code, this 
        subsection shall be considered a statute described in 
        subsection (b)(3)(B) of section 552.
  (2) In conducting investigations authorized under this 
subsection or any other provision of this Act, the Commission 
shall continue, as the Commission determines necessary, to 
request the assistance of and cooperate with the appropriate 
Federal agencies in the conduct of such investigations, 
including undercover operations by such agencies. The 
Commission and the Department of Justice shall assess the 
effectiveness of such undercover operations and, within two 
years of the date of enactment of the Futures Trading Practices 
Act of 1992, shall recommend to Congress any additional 
undercover or other authority for the Commission that the 
Commission or the Department of Justice believes to be 
necessary.
  (3) The Commission shall provide the Securities and Exchange 
Commission with notice of the commencement of any proceeding 
and a copy of any order entered by the Commission against any 
futures commission merchant or introducing broker registered 
pursuant to section 4f(a)(2), any floor broker or floor trader 
exempt from registration pursuant to section 4f(a)(3), any 
associated person exempt from registration pursuant to [section 
4k(6)] section 4k(7), or any board of trade designated as a 
contract market pursuant to section 5f.
  (b) The Commission may disclose publicly any data or 
information that would separately disclose the market 
positions, business transactions, trade secrets, or names of 
customers of any person when such disclosure is made in 
connection with a congressional proceeding, in an 
administrative or judicial proceeding brought under this Act, 
in any receivership proceeding involving a receiver appointed 
in a judicial proceeding brought under this Act, or in any 
bankruptcy proceeding in which the Commission has intervened or 
in which the Commission has the right to appear and be heard 
under title 11 of the United States Code. This subsection shall 
not apply to the disclosure of data or information obtained by 
the Commission from a foreign futures authority.
  (c) The Commission may make or issue such reports as it deems 
necessary, or such opinions or orders as may be required under 
other provisions of law, relative to the conduct of any 
registered entity or to the transactions of any person found 
guilty of violating the provisions of this Act or the rules, 
regulations, or orders of the Commission thereunder in 
proceedings brought under section 6 of this Act. In any such 
report or opinion, the Commission may set forth the facts as to 
any actual transaction or any information referred to in 
subsection (b) of this section, if such facts or information 
have previously been disclosed publicly in connection with a 
congressional proceeding, or in an administrative or judicial 
proceeding brought under this Act.
  (d) The Commission, upon its own initiative or in cooperation 
with existing governmental agencies, shall investigate the 
marketing conditions of commodities and commodity products and 
byproducts, including supply and demand for these commodities, 
cost to the consumer, and handling and transportation charges. 
It shall also compile and furnish to producers, consumers, and 
distributors, by means of regular or special reports, or by 
such other methods as it deems most effective, information 
respecting the commodity markets, together with information on 
supply, demand, prices, and other conditions in this and other 
countries that affect the markets.
  (e) The Commission may disclose and make public, where such 
information has previously been disclosed publicly in 
accordance with the provisions of this section, the names and 
addresses of all traders on the boards of trade on the 
commodity markets with respect to whom the Commission has 
information, and any other information in the possession of the 
Commission relating to the amount of commodities purchased or 
sold by each such trader. Upon the request of any committee of 
either House of Congress, acting within the scope of its 
jurisdiction, the Commission shall furnish to such committee 
the names and addresses of all traders on such boards of trade 
with respect to whom the Commission has information, and any 
other information in the possession of the Commission relating 
to the amount of any commodity purchased or sold by each such 
trader. Upon the request of any department or agency of the 
Government of the United States, acting within the scope of its 
jurisdiction, the Commission may furnish to such department or 
agency any information in the possession of the Commission 
obtained in connection with the administration of this Act. 
However, any information furnished under this subsection to any 
Federal department or agency shall not be disclosed by such 
department or agency except in any action or proceeding under 
the laws of the United States to which it, the Commission, or 
the United States is a party. Upon the request of any 
department or agency of any State or any political subdivision 
thereof, acting within the scope of its jurisdiction, any 
foreign futures authority, or any department or agency of any 
foreign government or any political subdivision thereof, acting 
within the scope of its jurisdiction, the Commission may 
furnish to such foreign futures authority, department or agency 
any information in the possession of the Commission obtained in 
connection with the administration of this Act. Any information 
furnished to any department or agency of any State or political 
subdivision thereof shall not be disclosed by such department 
or agency except in connection with an adjudicatory action or 
proceeding brought under this Act or the laws of such State or 
political subdivision to which such State or political 
subdivision or any department or agency thereof is a party. The 
Commission shall not furnish any information to a foreign 
futures authority or to a department, central bank and 
ministries, or agency of a foreign government or political 
subdivision thereof unless the Commission is satisfied that the 
information will not be disclosed by such foreign futures 
authority, department, central bank and ministries, or agency 
except in connection with an adjudicatory action or proceeding 
brought under the laws of such foreign government or political 
subdivision to which such foreign government or political 
subdivision or any department or agency thereof, or foreign 
futures authority is a party.
  (f) The Commission shall disclose information in its 
possession pursuant to a subpoena or summons only if--
          (1) a copy of the subpoena or summons has been mailed 
        to the last known home or business address of the 
        person who submitted the information that is the 
        subject of the subpoena or summons, if the address is 
        known to the Commission, or, if such mailing would be 
        unduly burdensome, the Commission provides other 
        appropriate notice of the subpoena or summons to such 
        person, and
          (2) at least fourteen days have expired from the date 
        of such mailing of the subpoena or summons, or such 
        other notice.
This subsection shall not apply to congressional subpoenas or 
congressional requests for information.
  (g) The Commission shall provide any registration information 
maintained by the Commission on any registrant upon reasonable 
request made by any department or agency of any State or any 
political subdivision thereof. Whenever the Commission 
determines that such information may be appropriate for use by 
any department or agency of a State or political subdivision 
thereof, the Commission shall provide such information without 
request.
  (h) The Commission shall submit to Congress a written report 
within one hundred and twenty days after the end of each fiscal 
year detailing the operations of the Commission during such 
fiscal year. The Commission shall include in such report such 
information, data, and legislative recommendations as it deems 
advisable with respect to the administration of this Act and 
its powers and functions under this Act.
  (i) The Comptroller General of the United States shall 
conduct reviews and audits of the Commission and make reports 
thereon. For the purpose of conducting such reviews and audits, 
the Comptroller General shall be furnished such information 
regarding the powers, duties, organizations, transactions, 
operations, and activities of the Commission as the Comptroller 
General may require and the Comptroller General and the duly 
authorized representatives of the Comptroller General shall, 
for the purpose of securing such information, have access to 
and the right to examine any books, documents, papers, or 
records of the Commission, except that in reports the 
Comptroller General shall not include data and information that 
would separately disclose the business transactions of any 
person and trade secrets or names of customers, although such 
data shall be provided upon request by any committee of either 
House of Congress acting within the scope of its jurisdiction.

           *       *       *       *       *       *       *

  Sec. 18. (a) The Commission shall establish and maintain, as 
part of its ongoing operations, research and information 
programs to (1) determine the feasibility of trading by 
computer, and the expanded use of modern information system 
technology, electronic data processing, and modern 
communication systems by commodity exchanges, boards of trade, 
and by the Commission itself for purposes of improving, 
strengthening, facilitating, or regulating futures trading 
operations; (2) assist in the development of educational and 
other informational materials regarding futures trading for 
dissemination and use among producers, market users, and the 
general public; and (3) carry out the general purposes of this 
Act.
  (b) The Commission shall include in its annual reports to 
Congress plans and findings with respect to implementing this 
section.
  (c) LabCFTC.--
          (1) Establishment.--There is established in the 
        Commission LabCFTC.
          (2) Purpose.--The purposes of LabCFTC are to--
                  (A) promote responsible financial technology 
                innovation and fair competition for the benefit 
                of the American public;
                  (B) serve as an information platform to 
                inform the Commission about new financial 
                technology innovation; and
                  (C) provide outreach to financial technology 
                innovators to discuss their innovations and the 
                regulatory framework established by this Act 
                and the regulations promulgated thereunder.
          (3) Director.--LabCFTC shall have a Director, who 
        shall be appointed by the Commission and serve at the 
        pleasure of the Commission. Notwithstanding section 
        2(a)(6)(A), the Director shall report directly to the 
        Commission and perform such functions and duties as the 
        Commission may prescribe.
          (4) Duties.--LabCFTC shall--
                  (A) advise the Commission with respect to 
                rulemakings or other agency or staff action 
                regarding financial technology;
                  (B) provide internal education and training 
                to the Commission regarding financial 
                technology;
                  (C) advise the Commission regarding financial 
                technology that would bolster the Commission's 
                oversight functions;
                  (D) engage with academia, students, and 
                professionals on financial technology issues, 
                ideas, and technology relevant to activities 
                under this Act;
                  (E) provide persons working in emerging 
                technology fields with information on the 
                Commission, its rules and regulations, and the 
                role of a registered futures association; and
                  (F) encourage persons working in emerging 
                technology fields to engage with the Commission 
                and obtain feedback from the Commission on 
                potential regulatory issues.
          (5) Access to documents.--The Commission shall ensure 
        that LabCFTC has full access to the documents and 
        information of the Commission and any self-regulatory 
        organization or registered futures association, as 
        necessary to carry out the functions of LabCFTC.
          (6) Report to congress.--
                  (A) In general.--Not later than October 31 of 
                each year after 2024, LabCFTC shall submit to 
                the Committee on Agriculture of the House of 
                Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry of the 
                Senate a report on its activities.
                  (B) Contents.--Each report required under 
                paragraph (1) shall include--
                          (i) the total number of persons that 
                        met with LabCFTC;
                          (ii) a summary of general issues 
                        discussed during meetings with the 
                        person;
                          (iii) information on steps LabCFTC 
                        has taken to improve Commission 
                        services, including responsiveness to 
                        the concerns of persons;
                          (iv) recommendations made to the 
                        Commission with respect to the 
                        regulations, guidance, and orders of 
                        the Commission and such legislative 
                        actions as may be appropriate; and
                          (v) any other information determined 
                        appropriate by the Director of LabCFTC.
                  (C) Confidentiality.--A report under 
                paragraph (A) shall abide by the 
                confidentiality requirements in section 8.
          (7) Systems of records.--
                  (A) In general.--The Commission shall 
                establish a detailed system of records (as 
                defined in section 552a of title 5, United 
                States Code) to assist LabCFTC in communicating 
                with interested parties.
                  (B) Persons covered by the system.--The 
                persons covered by the system of records shall 
                include persons submitting requests or 
                inquiries and other information to the 
                Commission through LabCFTC.
                  (C) Security and storage of records.--The 
                system of records shall store records 
                electronically or on paper in secure 
                facilities, and shall store electronic records 
                on the secure network of the Commission and on 
                other electronic media, such as encrypted hard 
                drives and back-up media, as needed.

           *       *       *       *       *       *       *

                              ----------                              


                    INVESTMENT ADVISERS ACT OF 1940



           *       *       *       *       *       *       *
TITLE II--INVESTMENT ADVISERS

           *       *       *       *       *       *       *


                              definitions

  Sec. 202. (a) When used in this title, unless the context 
otherwise requires, the following definitions shall apply:
          (1) ``Assignment'' includes any direct or indirect 
        transfer or hypothecation of an investment advisory 
        contract by the assignor or of a controlling block of 
        the assignor's outstanding voting securities by a 
        security holder of the assignor; but if the investment 
        adviser is a partnership, no assignment of an 
        investment advisory contract shall be deemed to result 
        from the death or withdrawal of a minority of the 
        members of the investment adviser having only a 
        minority interest in the business of the investment 
        adviser, or from the admission to the investment 
        adviser of one or more members who, after such 
        admission, shall be only a minority of the members and 
        shall have only a minority interest in the business.
          (2) ``Bank'' means (A) a banking institution 
        organized under the laws of the United States or a 
        Federal savings association, as defined in section 2(5) 
        of the Home Owners' Loan Act, (B) a member bank of the 
        Federal Reserve System, (C) any other banking 
        institution, savings association, as defined in section 
        2(4) of the Home Owners' Loan Act, or trust company, 
        whether incorporated or not, doing business under the 
        laws of any State or of the United States, a 
        substantial portion of the business of which consists 
        of receiving deposits or exercising fiduciary powers 
        similar to those permitted to national banks under the 
        authority of the Comptroller of the Currency, and which 
        is supervised and examined by State or Federal 
        authority having supervision over banks or savings 
        associations, and which is not operated for the purpose 
        of evading the provisions of this title, and (D) a 
        receiver, conservator, or other liquidating agent of 
        any institution or firm included in clauses (A), (B), 
        or (C) of this paragraph.
          (3) The term ``broker'' has the same meaning as given 
        in section 3 of the Securities Exchange Act of 1934.
          (4) ``Commission'' means the Securities and Exchange 
        Commission.
          (5) ``Company'' means a corporation, a partnership, 
        an association, a joint-stock company, a trust, or any 
        organized group of persons, whether incorporated or 
        not; or any receiver, trustee in a case under title 11 
        of the United States Code, or similar official, or any 
        liquidating agent for any of the foregoing, in his 
        capacity as such.
          (6) ``Convicted'' includes a verdict, judgment, or 
        plea of guilty, or a finding of guilt on a plea of nolo 
        contendere, if such verdict, judgment, plea, or finding 
        has not been reversed, set aside, or withdrawn, whether 
        or not sentence has been imposed.
          (7) The term ``dealer'' has the same meaning as given 
        in section 3 of the Securities Exchange Act of 1934, 
        but does not include an insurance company or investment 
        company.
          (8) ``Director'' means any director of a corporation 
        or any person performing similar functions, with 
        respect to any organization, whether incorporated or 
        unincorporated.
          (9) ``Exchange'' means any organization, association, 
        or group of persons, whether incorporated or 
        unincorporated, which constitutes, maintains, or 
        provides a market place or facilities for bringing 
        together purchasers and sellers of securities or for 
        otherwise performing with respect to securities the 
        functions commonly performed by a stock exchange as 
        that term is generally understood, and includes the 
        market place and the market facilities maintained by 
        such exchange.
          (10) ``Interstate commerce'' means trade, commerce, 
        transportation, or communication among the several 
        States, or between any foreign country and any State, 
        or between any State and any place or ship outside 
        thereof.
          (11) ``Investment adviser'' means any person who, for 
        compensation, engages in the business of advising 
        others, either directly or through publications or 
        writings, as to the value of securities or as to the 
        advisability of investing in, purchasing, or selling 
        securities, or who, for compensation and as part of a 
        regular business, issues or promulgates analyses or 
        reports concerning securities; but does not include (A) 
        a bank, or any bank holding company as defined in the 
        Bank Holding Company Act of 1956, which is not an 
        investment company, except that the term ``investment 
        adviser'' includes any bank or bank holding company to 
        the extent that such bank or bank holding company 
        serves or acts as an investment adviser to a registered 
        investment company, but if, in the case of a bank, such 
        services or actions are performed through a separately 
        identifiable department or division, the department or 
        division, and not the bank itself, shall be deemed to 
        be the investment adviser; (B) any lawyer, accountant, 
        engineer, or teacher whose performance of such services 
        is solely incidental to the practice of his profession; 
        (C) any broker or dealer whose performance of such 
        services is solely incidental to the conduct of his 
        business as a broker or dealer and who receives no 
        special compensation therefor; (D) the publisher of any 
        bona fide newspaper, news magazine or business or 
        financial publication of general and regular 
        circulation; (E) any person whose advice, analyses, or 
        reports relate to no securities other than securities 
        which are direct obligations of or obligations 
        guaranteed as to principal or interest by the United 
        States, or securities issued or guaranteed by 
        corporations in which the United States has a direct or 
        indirect interest which shall have been designated by 
        the Secretary of the Treasury, pursuant to section 
        3(a)(12) of the Securities Exchange Act of 1934, as 
        exempted securities for the purposes of that Act; (F) 
        any nationally recognized statistical rating 
        organization, as that term is defined in section 
        3(a)(62) of the Securities Exchange Act of 1934, unless 
        such organization engages in issuing recommendations as 
        to purchasing, selling, or holding securities or in 
        managing assets, consisting in whole or in part of 
        securities, on behalf of others;; (G) any family 
        office, as defined by rule, regulation, or order of the 
        Commission, in accordance with the purposes of this 
        title; or (H) such other persons not within the intent 
        of this paragraph, as the Commission may designate by 
        rules and regulations or order.
          (12) ``Investment company'', affiliated person, and 
        ``insurance company'' have the same meanings as in the 
        Investment Company Act of 1940. ``Control'' means the 
        power to exercise a controlling influence over the 
        management or policies of a company, unless such power 
        is solely the result of an official position with such 
        company.
          (13) ``Investment supervisory services'' means the 
        giving of continuous advice as to the investment of 
        funds on the basis of the individual needs of each 
        client.
          (14) ``Means or instrumentality of interstate 
        commerce'' includes any facility of a national 
        securities exchange.
          (15) ``National securities exchange'' means an 
        exchange registered under section 6 of the Securities 
        Exchange Act of 1934.
          (16) ``Person'' means a natural person or a company.
          (17) The term ``person associated with an investment 
        adviser'' means any partner, officer, or director of 
        such investment adviser (or any person performing 
        similar functions), or any person directly or 
        indirectly controlling or controlled by such investment 
        adviser, including any employee of such investment 
        adviser, except that for the purposes of section 203 of 
        this title (other than subsection (f) thereof), persons 
        associated with an investment adviser whose functions 
        are clerical or ministerial shall not be included in 
        the meaning of such term. The Commission may by rules 
        and regulations classify, for the purposes of any 
        portion or portions of this title, persons, including 
        employees controlled by an investment adviser.
          (18) ``Security'' means any note, stock, treasury 
        stock, security future, bond, debenture, evidence of 
        indebtedness, certificate of interest or participation 
        in any profit-sharing agreement, collateral-trust 
        certificate, preorganization certificate or 
        subscription, transferable share, investment contract, 
        voting-trust certificate, certificate of deposit for a 
        security, fractional undivided interest in oil, gas, or 
        other mineral rights, any put, call, straddle, option, 
        or privilege on any security (including a certificate 
        of deposit) or on any group or index of securities 
        (including any interest therein or based on the value 
        thereof), or any put, call, straddle, option, or 
        privilege entered into on a national securities 
        exchange relating to foreign currency, or, in general, 
        any interest or instrument commonly known as a 
        ``security'', or any certificate of interest or 
        participation in, temporary or interim certificate for, 
        receipt for, guaranty of, or warrant or right to 
        subscribe to or purchase any of the foregoing. The term 
        does not include a digital commodity or permitted 
        payment stablecoin.
          (19) ``State'' means any State of the United States, 
        the District of Columbia, Puerto Rico, the Virgin 
        Islands, or any other possession of the United States.
          (20) ``Underwriter'' means any person who has 
        purchased from an issuer with a view to, or sells for 
        an issuer in connection with, the distribution of any 
        security, or participates or has a direct or indirect 
        participation in any such undertaking, or participates 
        or has a participation in the direct or indirect 
        underwriting of any such undertaking; but such term 
        shall not include a person whose interest is limited to 
        a commission from an underwriter or dealer not in 
        excess of the usual and customary distributor's or 
        seller's commission. As used in this paragraph the term 
        ``issuer'' shall include in addition to an issuer, any 
        person directly or indirectly controlling or controlled 
        by the issuer, or any person under direct or indirect 
        common control with the issuer.
          (21) ``Securities Act of 1933'', ``Securities 
        Exchange Act of 1934'', and ``Trust Indenture Act of 
        1939'', mean those Acts, respectively, as heretofore or 
        hereafter amended.
          (22) ``Business development company'' means any 
        company which is a business development company as 
        defined in section 2(a)(48) of title I of this Act and 
        which complies with section 55 of title I of this Act, 
        except that--
                  (A) the 70 per centum of the value of the 
                total assets condition referred to in sections 
                2(a)(48) and 55 of title I of this Act shall be 
                60 per centum for purposes of determining 
                compliance therewith;
                  (B) such company need not be a closed-end 
                company and need not elect to be subject to the 
                provisions of sections 55 through 65 of title I 
                of this Act; and
                  (C) the securities which may be purchased 
                pursuant to section 55(a) of title I of this 
                Act may be purchased from any person.
        For purposes of this paragraph, all terms in sections 
        2(a)(48) and 55 of title I of this Act shall have the 
        same meaning set forth in such title as if such company 
        were a registered closed-end investment company, except 
        that the value of the assets of a business development 
        company which is not subject to the provisions of 
        sections 55 through 65 of title I of this Act shall be 
        determined as of the date of the most recent financial 
        statements which it furnished to all holders of its 
        securities, and shall be determined no less frequently 
        than annually.
          (23) ``Foreign securities authority'' means any 
        foreign government, or any governmental body or 
        regulatory organization empowered by a foreign 
        government to administer or enforce its laws as they 
        relate to securities matters.
          (24) ``Foreign financial regulatory authority'' means 
        any (A) foreign securities authority, (B) other 
        governmental body or foreign equivalent of a self-
        regulatory organization empowered by a foreign 
        government to administer or enforce its laws relating 
        to the regulation of fiduciaries, trusts, commercial 
        lending, insurance, trading in contracts of sale of a 
        commodity for future delivery, or other instruments 
        traded on or subject to the rules of a contract market, 
        board of trade or foreign equivalent, or other 
        financial activities, or (C) membership organization a 
        function of which is to regulate the participation of 
        its members in activities listed above.
          (25) ``Supervised person'' means any partner, 
        officer, director (or other person occupying a similar 
        status or performing similar functions), or employee of 
        an investment adviser, or other person who provides 
        investment advice on behalf of the investment adviser 
        and is subject to the supervision and control of the 
        investment adviser.
          (26) The term ``separately identifiable department or 
        division'' of a bank means a unit--
                  (A) that is under the direct supervision of 
                an officer or officers designated by the board 
                of directors of the bank as responsible for the 
                day-to-day conduct of the bank's investment 
                adviser activities for one or more investment 
                companies, including the supervision of all 
                bank employees engaged in the performance of 
                such activities; and
                  (B) for which all of the records relating to 
                its investment adviser activities are 
                separately maintained in or extractable from 
                such unit's own facilities or the facilities of 
                the bank, and such records are so maintained or 
                otherwise accessible as to permit independent 
                examination and enforcement by the Commission 
                of this Act or the Investment Company Act of 
                1940 and rules and regulations promulgated 
                under this Act or the Investment Company Act of 
                1940.
          (27) The terms ``security future'' and ``narrow-based 
        security index'' have the same meanings as provided in 
        section 3(a)(55) of the Securities Exchange Act of 
        1934.
          (28) The term ``credit rating agency'' has the same 
        meaning as in section 3 of the Securities Exchange Act 
        of 1934.
          (29) The term ``private fund'' means an issuer that 
        would be an investment company, as defined in section 3 
        of the Investment Company Act of 1940 (15 U.S.C. 80a-
        3), but for section 3(c)(1) or 3(c)(7) of that Act.
          (30) The term ``foreign private adviser'' means any 
        investment adviser who--
                  (A) has no place of business in the United 
                States;
                  (B) has, in total, fewer than 15 clients and 
                investors in the United States in private funds 
                advised by the investment adviser;
                  (C) has aggregate assets under management 
                attributable to clients in the United States 
                and investors in the United States in private 
                funds advised by the investment adviser of less 
                than $25,000,000, or such higher amount as the 
                Commission may, by rule, deem appropriate in 
                accordance with the purposes of this title; and
                  (D) neither--
                          (i) holds itself out generally to the 
                        public in the United States as an 
                        investment adviser; nor
                          (ii) acts as--
                                  (I) an investment adviser to 
                                any investment company 
                                registered under the Investment 
                                Company Act of 1940; or
                                  (II) a company that has 
                                elected to be a business 
                                development company pursuant to 
                                section 54 of the Investment 
                                Company Act of 1940 (15 U.S.C. 
                                80a-53), and has not withdrawn 
                                its election.
          [(29)] (31) The terms ``commodity pool'', ``commodity 
        pool operator'', ``commodity trading advisor'', ``major 
        swap participant'', ``swap'', ``swap dealer'', and 
        ``swap execution facility'' have the same meanings as 
        in section 1a of the Commodity Exchange Act (7 U.S.C. 
        1a).
          (32) Digital asset-related terms.--The terms 
        ``digital commodity'' and ``permitted payment 
        stablecoin'' have the meaning given those terms, 
        respectively, under section 2(a) of the Securities Act 
        of 1933 (15 U.S.C. 77b(a)).
  (b) No provision in this title shall apply to, or be deemed 
to include, the United States, a State, or any political 
subdivision of a State, or any agency, authority, or 
instrumentality of any one or more of the foregoing, or any 
corporation which is wholly owned directly or indirectly by any 
one or more of the foregoing, or any officer, agent, or 
employee of any of the foregoing acting as such in the course 
of his official duty, unless such provision makes specific 
reference thereto.
  (c) Consideration of Promotion of Efficiency, Competition, 
and Capital Formation.--Whenever pursuant to this title the 
Commission is engaged in rulemaking and is required to consider 
or determine whether an action is necessary or appropriate in 
the public interest, the Commission shall also consider, in 
addition to the protection of investors, whether the action 
will promote efficiency, competition, and capital formation.

           *       *       *       *       *       *       *

                              ----------                              


                     INVESTMENT COMPANY ACT OF 1940

TITLE I--INVESTMENT COMPANIES

           *       *       *       *       *       *       *


                          general definitions

  Sec. 2. (a) When used in this title, unless the context 
otherwise requires--
          (1) ``Advisory board'' means a board, whether elected 
        or appointed, which is distinct from the board of 
        directors or board of trustees, of an investment 
        company, and which is composed solely of persons who do 
        not serve such company in any other capacity, whether 
        or not the functions of such board are such as to 
        render its members ``directors'' within the definition 
        of that term, which board has advisory functions as to 
        investments but has no power to determine that any 
        security or other investment shall be purchased or sold 
        by such company.
          (2) ``Affiliated company'' means a company which is 
        an affiliated person.
          (3) ``Affiliated person'' of another person means (A) 
        any person directly or indirectly owning, controlling, 
        or holding with power to vote, 5 per centum or more of 
        the outstanding voting securities of such other person; 
        (B) any person 5 per centum or more of whose 
        outstanding voting securities are directly or 
        indirectly owned, controlled, or held with power to 
        vote, by such other person; (C) any person directly or 
        indirectly controlling, controlled by, or under common 
        control with, such other person; (D) any officer, 
        director, partner, copartner, or employee of such other 
        person; (E) if such other person is an investment 
        company, any investment adviser thereof or any member 
        of an advisory board thereof; and (F) if such other 
        person is an unincorporated investment company not 
        having a board of directors, the depositor thereof.
          (4) ``Assignment'' includes any direct or indirect 
        transfer or hypothecation of a contract or chose in 
        action by the assignor, or of a controlling block of 
        the assignor's outstanding voting securities by a 
        security holder of the assignor; but does not include 
        an assignment of partnership interests incidental to 
        the death or withdrawal of a minority of the members of 
        the partnership having only a minority interest in the 
        partnership business or to the admission to the 
        partnership of one or more members who, after such 
        admission, shall be only a minority of the members and 
        shall have only a minority interest in the business.
          (5) ``Bank'' means (A) a depository institution (as 
        defined in section 3 of the Federal Deposit Insurance 
        Act) or a branch or agency of a foreign bank (as such 
        terms are defined in section 1(b) of the International 
        Banking Act of 1978), (B) a member bank of the Federal 
        Reserve System, (C) any other banking institution or 
        trust company, whether incorporated or not, doing 
        business under the laws of any State or of the United 
        States, a substantial portion of the business of which 
        consists of receiving deposits or exercising fiduciary 
        powers similar to those permitted to national banks 
        under the authority of the Comptroller of the Currency, 
        and which is supervised and examined by State or 
        Federal authority having supervision over banks, and 
        which is not operated for the purpose of evading the 
        provisions of this title, and (D) a receiver, 
        conservator, or other liquidating agent of any 
        institution or firm included in clause (A), (B), or (C) 
        of this paragraph.
          (6) The term ``broker'' has the same meaning as given 
        in section 3 of the Securities Exchange Act of 1934, 
        except that such term does not include any person 
        solely by reason of the fact that such person is an 
        underwriter for one or more investment companies.
          (7) ``Commission'' means the Securities and Exchange 
        Commission.
          (8) ``Company'' means a corporation, a partnership, 
        an association, a joint-stock company, a trust, a fund, 
        or any organized group of persons whether incorporated 
        or not; or any receiver, trustee in a case under title 
        11 of the United States Code or similar official or any 
        liquidating agent for any of the foregoing, in his 
        capacity as such.
          (9) ``Control'' means the power to exercise a 
        controlling influence over the management or policies 
        of a company, unless such power is solely the result of 
        an official position with such company.
          Any person who owns beneficially, either directly or 
        through one or more controlled companies, more than 25 
        per centum of the voting securities of a company shall 
        be presumed to control such company. Any person who 
        does not so own more than 25 per centum of the voting 
        securities of any company shall be presumed not to 
        control such company. A natural person shall be 
        presumed not to be a controlled person within the 
        meaning of this title. Any such presumption may be 
        rebutted by evidence, but except as hereinafter 
        provided, shall continue until a determination to the 
        contrary made by the Commission by order either on its 
        own motion or on application by an interested person. 
        If an application filed hereunder is not granted or 
        denied by the Commission within sixty days after filing 
        thereof, the determination sought by the application 
        shall be deemed to have been temporarily granted 
        pending final determination of the Commission thereon. 
        The Commission, upon its own motion or upon 
        application, may by order revoke or modify any order 
        issued under this paragraph whenever it shall find that 
        the determination embraced in such original order is no 
        longer consistent with the facts.
          (10) ``Convicted'' includes a verdict, judgment, or 
        plea of guilty, or a finding of guilt on a plea of nolo 
        contendere, if such verdict, judgment, plea, or finding 
        has not been reversed, set aside, or withdrawn, whether 
        or not sentence has been imposed.
          (11) The term ``dealer'' has the same meaning as 
        given in the Securities Exchange Act of 1934, but does 
        not include an insurance company or investment company.
          (12) ``Director'' means any director of a corporation 
        or any person performing similar functions with respect 
        to any organization, whether incorporated or 
        unincorporated, including any natural person who is a 
        member of a board of trustees of a management company 
        created as a common-law trust.
          (13) ``Employees' securities company'' means any 
        investment company or similar issuer all of the 
        outstanding securities of which (other than short-term 
        paper) are beneficially owned (A) by the employees or 
        persons on retainer of a single employer or of two or 
        more employers each of which is an affiliated company 
        of the other, (B) by former employees of such employer 
        or employers, (C) by members of the immediate family of 
        such employees, persons on retainer, or former 
        employees, (D) by any two or more of the foregoing 
        classes of persons, or (E) by such employer or 
        employers together with any one or more of the 
        foregoing classes of persons.
          (14) ``Exchange'' means any organization, 
        association, or group of persons, whether incorporated 
        or unincorporated, which constitutes, maintains, or 
        provides a market place or facilities for bringing 
        together purchasers and sellers of securities or for 
        otherwise performing with respect to securities the 
        functions commonly performed by a stock exchange as 
        that term is generally understood, and includes the 
        market place and the market facilities maintained by 
        such exchange.
          (15) ``Face-amount certificate'' means any 
        certificate, investment contract, or other security 
        which represents an obligation on the part of its 
        issuer to pay a stated or determinable sum or sums at a 
        fixed or determinable date or dates more than twenty-
        four months after the date of issuance, in 
        consideration of the payment of periodic installments 
        of a stated or determinable amount (which security 
        shall be known as a face-amount certificate of the 
        ``installment type''); or any security which represents 
        a similar obligation on the part of a face-amount 
        certificate company, the consideration for which is the 
        payment of a single lump sum (which security shall be 
        known as a ``fully paid'' face-amount certificate).
          (16) ``Government security'' means any security 
        issued or guaranteed as to principal or interest by the 
        United States, or by a person controlled or supervised 
        by and acting as an instrumentality of the Government 
        of the United States pursuant to authority granted by 
        the Congress of the United States; or any certificate 
        of deposit for any of the foregoing.
          (17) ``Insurance company'' means a company which is 
        organized as an insurance company, whose primary and 
        predominant business activity is the writing of 
        insurance or the reinsuring of risks underwritten by 
        insurance companies, and which is subject to 
        supervision by the insurance commissioner or a similar 
        official or agency of a State; or any receiver or 
        similar official or any liquidating agent for such a 
        company, in his capacity as such.
          (18) ``Interstate commerce'' means trade, commerce, 
        transportation, or communication among the several 
        States, or between any foreign country and any State, 
        or between any State and any place or ship outside 
        thereof.
          (19) ``Interested person'' of another person means--
                  (A) when used with respect to an investment 
                company--
                          (i) any affiliated person of such 
                        company,
                          (ii) any member of the immediate 
                        family of any natural person who is an 
                        affiliated person of such company,
                          (iii) any interested person of any 
                        investment adviser of or principal 
                        underwriter for such company,
                          (iv) any person or partner or 
                        employee of any person who at any time 
                        since the beginning of the last two 
                        completed fiscal years of such company 
                        has acted as legal counsel for such 
                        company,
                          (v) any person or any affiliated 
                        person of a person (other than a 
                        registered investment company) that, at 
                        any time during the 6-month period 
                        preceding the date of the determination 
                        of whether that person or affiliated 
                        person is an interested person, has 
                        executed any portfolio transactions 
                        for, engaged in any principal 
                        transactions with, or distributed 
                        shares for--
                                  (I) the investment company;
                                  (II) any other investment 
                                company having the same 
                                investment adviser as such 
                                investment company or holding 
                                itself out to investors as a 
                                related company for purposes of 
                                investment or investor 
                                services; or
                                  (III) any account over which 
                                the investment company's 
                                investment adviser has 
                                brokerage placement discretion,
                          (vi) any person or any affiliated 
                        person of a person (other than a 
                        registered investment company) that, at 
                        any time during the 6-month period 
                        preceding the date of the determination 
                        of whether that person or affiliated 
                        person is an interested person, has 
                        loaned money or other property to--
                                  (I) the investment company;
                                  (II) any other investment 
                                company having the same 
                                investment adviser as such 
                                investment company or holding 
                                itself out to investors as a 
                                related company for purposes of 
                                investment or investor 
                                services; or
                                  (III) any account for which 
                                the investment company's 
                                investment adviser has 
                                borrowing authority, and
                          (vii) any natural person whom the 
                        Commission by order shall have 
                        determined to be an interested person 
                        by reason of having had, at any time 
                        since the beginning of the last two 
                        completed fiscal years of such company, 
                        a material business or professional 
                        relationship with such company or with 
                        the principal executive officer of such 
                        company or with any other investment 
                        company having the same investment 
                        adviser or principal underwriter or 
                        with the principal executive officer of 
                        such other investment company:
                 Provided, That no person shall be deemed to be 
                an interested person of an investment company 
                solely by reason of (aa) his being a member of 
                its board of directors or advisory board or an 
                owner of its securities, or (bb) his membership 
                in the immediate family of any person specified 
                in clause (aa) of this proviso; and
                  (B) when used with respect to an investment 
                adviser of or principal underwriter for any 
                investment company--
                          (i) any affiliated person of such 
                        investment adviser or principal 
                        underwriter,
                          (ii) any member of the immediate 
                        family of any natural person who is an 
                        affiliated person of such investment 
                        advisor or principal underwiter,
                          (iii) any person who knowingly has 
                        any direct or indirect beneficial 
                        interest in, or who is designated as 
                        trustee, executor, or guardian of any 
                        legal interest in, any security issued 
                        either by such investment adviser or 
                        principal underwriter or by a 
                        controlling person of such investment 
                        adviser or principal underwriter,
                          (iv) any person or partner or 
                        employee of any person who at any time 
                        since the beginning of the last two 
                        completed fiscal years of such 
                        investment company has acted as legal 
                        counsel for such investment adviser or 
                        principal underwriter,
                          (v) any person or any affiliated 
                        person of a person (other than a 
                        registered investment company) that, at 
                        any time during the 6-month period 
                        preceding the date of the determination 
                        of whether that person or affiliated 
                        person is an interested person, has 
                        executed any portfolio transactions 
                        for, engaged in any principal 
                        transactions with, or distributed 
                        shares for--
                                  (I) any investment company 
                                for which the investment 
                                adviser or principal 
                                underwriter serves as such;
                                  (II) any investment company 
                                holding itself out to 
                                investors, for purposes of 
                                investment or investor 
                                services, as a company related 
                                to any investment company for 
                                which the investment adviser or 
                                principal underwriter serves as 
                                such; or
                                  (III) any account over which 
                                the investment adviser has 
                                brokerage placement discretion,
                          (vi) any person or any affiliated 
                        person of a person (other than a 
                        registered investment company) that, at 
                        any time during the 6-month period 
                        preceding the date of the determination 
                        of whether that person or affiliated 
                        person is an interested person, has 
                        loaned money or other property to--
                                  (I) any investment company 
                                for which the investment 
                                adviser or principal 
                                underwriter serves as such;
                                  (II) any investment company 
                                holding itself out to 
                                investors, for purposes of 
                                investment or investor 
                                services, as a company related 
                                to any investment company for 
                                which the investment adviser or 
                                principal underwriter serves as 
                                such; or
                                  (III) any account for which 
                                the investment adviser has 
                                borrowing authority, and
                          (vii) any natural person whom the 
                        Commission by order shall have 
                        determined to be an interested person 
                        by reason of having had at any time 
                        since the beginning of the last two 
                        completed fiscal years of such 
                        investment company a material business 
                        or professional relationship with such 
                        investment adviser or principal 
                        underwriter or with the principal 
                        executive officer or any controlling 
                        person of such investment adviser or 
                        principal underwriter.
                For the purposes of this paragraph (19), 
                ``member of the immediate family'' means any 
                parent, spouse of a parent, child, spouse of a 
                child, spouse, brother, or sister, and includes 
                step and adoptive relationships. The Commission 
                may modify or revoke any order issued under 
                clause (vii) of subparagaph (A) or (B) of this 
                paragraph whenever it finds that such order is 
                no longer consistent with the facts. No order 
                issued pursuant to clause (vii) of subparagraph 
                (A) or (B) of this paragraph shall become 
                effective until at least sixty days after the 
                entry thereof, and no such order shall affect 
                the status of any person for the purposes of 
                this title or for any other purpose for any 
                period prior to the effective date of such 
                order.
          (20) ``Investment adviser'' of an investment company 
        means (A) any person (other than a bona fide officer, 
        director, trustee, member of an advisory board, or 
        employee of such company, as such) who pursuant to 
        contract with such company regularly furnishes advice 
        to such company with respect to the desirability of 
        investing in, purchasing or selling securities or other 
        property, or is empowered to determine what securities 
        or other property shall be purchased or sold by such 
        company, and (B) any other person who pursuant to 
        contract with a person described in clause (A) 
        regularly performs substantially all of the duties 
        undertaken by such person described in clause (A); but 
        does not include (i) a person whose advice is furnished 
        solely through uniform publications distributed to 
        subscribers thereto, (ii) a person who furnishes only 
        statistical and other factual information, advice 
        regarding economic factors and trends, or advice as to 
        occasional transactions in specific securities, but 
        without generally furnishing advice or making 
        recommendations regarding the purchase or sale of 
        securities, (iii) a company furnishing such services at 
        cost to one or more investment companies, insurance 
        companies, or other financial institutions, (iv) any 
        person the character and amount of whose compensation 
        for such services must be approved by a court, or (v) 
        such other persons as the Commission may by rules and 
        regulations or order determine not to be within the 
        intent of this definition.
          (21) ``Investment banker'' means any person engaged 
        in the business of underwriting securities issued by 
        other persons, but does not include an investment 
        company, any person who acts as an underwriter in 
        isolated transactions but not as a part of a regular 
        business, or any person solely by reason of the fact 
        that such person is an underwriter for one or more 
        investment companies.
          (22) ``Issuer'' means every person who issues or 
        proposes to issue any security, or has outstanding any 
        security which it has issued.
          (23) ``Lend'' includes a purchase coupled with an 
        agreement by the vendor to repurchase; ``borrow'' 
        includes a sale coupled with a similar agreement.
          (24) ``Majority-owned subsidiary'' of a person means 
        a company 50 per centum or more of the outstanding 
        voting securities of which are owned by such person, or 
        by a company which, within the meaning of this 
        paragraph, is a majority-owned subsidiary of such 
        person.
          (25) ``Means or instrumentality of interstate 
        commerce'' includes any facility of a national 
        securities exchange.
          (26) ``National securities exchange'' means an 
        exchange registered under section 6 of the Securities 
        Exchange Act of 1934.
          (27) ``Periodic payment plan certificate'' means (A) 
        any certificate, investment contract, or other security 
        providing for a series of periodic payments by the 
        holder, and representing an undivided interest in 
        certain specified securities or in a unit or fund of 
        securities purchased wholly or partly with the proceeds 
        of such payments, and (B) any security the issuer of 
        which is also issuing securities of the character 
        described in clause (A) and the holder of which has 
        substantially the same rights and privileges as those 
        which holders of securities of the character described 
        in clause (A) have upon completing the periodic 
        payments for which such securities provide.
          (28) ``Person'' means a natural person or a company.
          (29) ``Principal underwriter'' of or for any 
        investment company other than a closed-end company, or 
        of any security issued by such a company, means any 
        underwriter who as principal purchases from such 
        company, or pursuant to contract has the right (whether 
        absolute or conditional) from time to time to purchase 
        from such company, any such security for distribution, 
        or who as agent for such company sells or has the right 
        to sell any such security to a dealer or to the public 
        or both, but does not include a dealer who purchases 
        from such company through a principal underwriter 
        acting as agent for such company. ``Principal 
        underwriter'' of or for a closed-end company or any 
        issuer which is not an investment company, or of any 
        security issued by such a company or issuer, means any 
        underwriter who, in connection with a primary 
        distribution of securities, (A) is in privity of 
        contract with the issuer or an affiliated person of the 
        issuer; (B) acting alone or in concert with one or more 
        other persons, initiates or directs the formation of an 
        underwriting syndicate; or (C) is allowed a rate of 
        gross commission, spread, or other profit greater than 
        the rate allowed another underwriter participating in 
        the distribution.
          (30) ``Promoter'' of a company or a proposed company 
        means a person who, acting alone or in concert with 
        other persons, is initiating or directing, or has 
        within one year initiated or directed, the organization 
        of such company.
          (31) ``Prospectus'', as used in section 22, means a 
        written prospectus intended to meet the requirements of 
        section 10(a) of the Securities Act of 1933 and 
        currently in use. As used elsewhere, ``prospectus'' 
        means a prospectus as defined in the Securities Act of 
        1933.
          (32) ``Redeemable security'' means any security, 
        other than short-term paper, under the terms of which 
        the holder, upon its presentation to the issuer or to a 
        person designated by the issuer, is entitled (whether 
        absolutely or only out of surplus) to receive 
        approximately his proportionate share of the issuer's 
        current net assets, or the cash equivalent thereof.
          (33) ``Reorganization'' means (A) a reorganization 
        under the supervision of a court of competent 
        jurisdiction; (B) a merger or consolidation; (C) a sale 
        of 75 per centum or more in value of the assets of a 
        company; (D) a restatement of the capital of a company, 
        or an exchange of securities issued by a company for 
        any of its own outstanding securities; (E) a voluntary 
        dissolution or liquidation of a company; (F) a 
        recapitalization or other procedure or transaction 
        which has for its purpose the alteration, modification, 
        or elimination of any of the rights, preferences, or 
        privileges of any class of securities issued by a 
        company, as provided in its charter or other instrument 
        creating or defining such rights, preferences, and 
        privileges; (G) an exchange of securities issued by a 
        company for outstanding securities issued by another 
        company or companies, preliminary to and for the 
        purpose of effecting or consummating any of the 
        foregoing; or (H) any exchange of securities by a 
        company which is not an investment company for 
        securities issued by a registered investment company.
          (34) ``Sale'', ``sell'', ``offer to sell'', or 
        ``offer for sale'' includes every contract of sale or 
        disposition of, attempt or offer to dispose of, or 
        solicitation of an offer to buy, a security or interest 
        in a security, for value. Any security given or 
        delivered with, or as a bonus on account of, any 
        purchase of securities or any other thing, shall be 
        conclusively presumed to constitute a part of the 
        subject of such purchase and to have been sold for 
        value.
          (35) ``Sales load'' means the difference between the 
        price of a security to the public and that portion of 
        the proceeds from its sale which is received and 
        invested or held for investment by the issuer (or in 
        the case of a unit investment trust, by the depositor 
        or trustee), less any portion of such difference 
        deducted for trustee's or custodian's fee, insurance 
        premiums, issue taxes, or administrative expenses or 
        fees which are not properly chargeable to sales or 
        promotional activities. In the case of a periodic 
        payment plan certificate, ``sales load'' includes the 
        sales load on any investment company securities in 
        which the payments made on such certificate are 
        invested, as well as the sales load on the certificate 
        itself.
          (36) ``Security'' means any note, stock, treasury 
        stock, security future, bond, debenture, evidence of 
        indebtedness, certificate of interest or participation 
        in any profit-sharing agreement, collateral-trust 
        certificate, preorganization certificate or 
        subsciption, transferable share, investment contract, 
        voting-trust certificate, certificate of deposit for a 
        security, fractional undivided interest in oil, gas, or 
        other mineral rights, any put, call, straddle, option, 
        or privilege on any security (including a certificate 
        of deposit) or on any group or index of securities 
        (including any interest therein or based on the value 
        thereof), or any put, call, straddle, option, or 
        privilege entered into on a national securities 
        exchange relating to foreign currency, or, in general, 
        any interest or instrument commonly known as a 
        ``security'', or any certificate of interest or 
        participation in, temporary or interim certificate for, 
        receipt for, guarantee of, or warrant or right to 
        subscribe to or purchase, any of the foregoing. The 
        term does not include a digital commodity or permitted 
        payment stablecoin.
          (37) ``Separate account'' means an account 
        established and maintained by an insurance company 
        pursuant to the laws of any State or territory of the 
        United States, or of Canada or any province thereof, 
        under which income, gains and losses, whether or not 
        realized, from assets allocated to such account, are, 
        in accordance with the applicable contract, credited to 
        or charged against such account without regard to other 
        income, gains, or losses of the insurance company.
          (38) ``Short-term paper'' means any note, draft, bill 
        of exchange, or banker's acceptance payable on demand 
        or having a maturity at the time of issuance of not 
        exceeding nine months, exclusive of days of grace, or 
        any renewal thereof payable on demand or having a 
        maturity likewise limited; and such other classes of 
        securities, of a commercial rather than an investment 
        character, as the Commission may designate by rules and 
        regulations.
          (39) ``State'' means any State of the United States, 
        the District of Columbia, Puerto Rico, the Virgin 
        Islands, or any other possession of the United States.
          (40) ``Underwriter'' means any person who has 
        purchased from an issuer with a view to, or sells for 
        an issuer in connection with, the distribution of any 
        security, or participates or has a direct or indirect 
        participation in any such undertaking, or participates 
        or has a participation in the direct or indirect 
        underwriting of any such undertaking; but such term 
        shall not include a person whose interest is limited to 
        a commission from an underwriter or dealer not in 
        excess of the usual and customary distributor's or 
        seller's commission. As used in this paragraph the term 
        ``issuer'' shall include, in addition to an issuer, any 
        person directly or indirectly controlling or controlled 
        by the issuer, or any person under direct or indirect 
        common control with the issuer. When the distribution 
        of the securities in respect of which any person is an 
        underwriter is completed such person shall cease to be 
        an underwriter in respect of such securities or the 
        issuer thereof.
          (41) ``Value'', with respect to assets of registered 
        investment companies, except as provided in subsection 
        (b) of section 28 of this title, means--
                  (A) as used in sections 3, 5, and 12 of this 
                title, (i) with respect to securities owned at 
                the end of the last preceding fiscal quarter 
                for which market quotations are readily 
                available, the market value at the end of such 
                quarter; (ii) with respect to other securities 
                and assets owned at the end of the last 
                preceding fiscal quarter, fair value at the end 
                of such quarter, as determined in good faith by 
                the board of directors; and (iii) with respect 
                to securities and other assets acquired after 
                the end of the last preceding fiscal quarter, 
                the cost thereof; and
                  (B) as used elsewhere in this title, (i) with 
                respect to securities for which market 
                quotations are readily available, the market 
                value of such securities; and (ii) with respect 
                to other securities and assets, fair value as 
                determined in good faith by the board of 
                directors;
        in each case as of such time or times as determined 
        pursuant to this title, and the rules and regulations 
        issued by the Commission hereunder. Notwithstanding the 
        fact that market quotations for securities issued by 
        controlled companies are available, the board of 
        directors may in good faith determine the value of such 
        securities: Provided, That the value so determined is 
        not in excess of the higher of market value or asset 
        value of such securities in the case of majority-owned 
        subsidiaries, and is not in excess of market value in 
        the case of other controlled companies.
                  
  For purposes of the valuation of those assets of a registered 
diversified company which are not subject to the limitations 
provided for in section 5(b)(1), the Commission may, by rules 
and regulations or orders, permit any security to be carried at 
cost, if it shall determine that such procedure is consistent 
with the general intent and purposes of this title. For 
purposes of sections 5 and 12, in lieu of values determined as 
provided in clause (A) above, the Commission shall by rules and 
regulations permit valuation of securities at cost or other 
basis in cases where it may be more convenient for such company 
to make its computations on such basis by reason of the 
necessity or desirability of complying with the provisions of 
any United States revenue laws or rules and regulations issued 
thereunder, or the laws or the rules and regulations issued 
thereunder of any State in which the securities of such company 
may be qualified for sale.
  The foregoing definition shall not derogate from the 
authority of the Commission with respect to the reports, 
information, and documents to be filed with the Commission by 
any registered company, or with respect to the accounting 
policies and principles to be following by any such company, as 
provided in sections 8, 30, and 31.
          (42) ``Voting security'' means any security presently 
        entitling the owner or holder thereof to vote for the 
        election of directors of a company. A specified 
        percentage of the outstanding voting securities of a 
        company means such amount of its outstanding voting 
        securities as entitles the holder or holders thereof to 
        cast said specified percentage of the aggregate votes 
        which the holders of all the outstanding voting 
        securities of such company are entitled to cast. The 
        vote of a majority of the outstanding voting securities 
        of a company means the vote, at the annual or a special 
        meeting of the security holders of such company duly 
        called, (A) of 67 per centum or more of the voting 
        securities present at such meeting, if the holders of 
        more than 50 per centum of the outstanding voting 
        securities of such company are present or represented 
        by proxy; or (B) of more than 50 per centum of the 
        outstanding voting securities of such company, 
        whichever is the less.
          (43) ``Wholly-owned subsidiary'' of a person means a 
        company 95 per centum or more of the outstanding voting 
        securities of which are owned by such person, or by a 
        company which, within the meaning of this paragraph, is 
        a wholly-owned subsidiary of such person.
          (44) ``Securities Act of 1933'', ``Securities 
        Exchange Act of 1934'', and ``Trust Indenture Act of 
        1939'' means those Acts, respectively, as heretofore or 
        hereafter amended.
          (45) ``Savings and loan association'' means a savings 
        and loan association, building and loan association, 
        cooperative bank, homestead association, or similar 
        institution, which is supervised and examined by State 
        or Federal authority having supervision over any such 
        institution, and a receiver, conservator, or other 
        liquidating agent of any such institution.
          (46) ``Eligible portfolio company'' means any issuer 
        which--
                  (A) is organized under the laws of, and has 
                its principal place of business in, any State 
                or States;
                  (B) is neither an investment company as 
                defined in section 3 (other than a small 
                business investment company which is licensed 
                by the Small Business Administration to operate 
                under the Small Business Investment Act of 1958 
                and which is a wholly-owned subsidiary of the 
                business development company) nor a company 
                which would be an investment company except for 
                the exclusion from the definition of investment 
                company in section 3(c); and
                  (C) satisfies one of the following:
                          (i) it does not have any class of 
                        securities with respect to which a 
                        member of a national securities 
                        exchange, broker, or dealer may extend 
                        or maintain credit to or for a customer 
                        pursuant to rules or regulations 
                        adopted by the Board of Governors of 
                        the Federal Reserve System under 
                        section 7 of the Securities Exchange 
                        Act of 1934;
                          (ii) it is controlled by a business 
                        development company, either alone or as 
                        part of a group acting together, and 
                        such business development company in 
                        fact exercises a controlling influence 
                        over the management or policies of such 
                        eligible portfolio company and, as a 
                        result of such control, has an 
                        affiliated person who is a director of 
                        such eligible portfolio company;
                          (iii) it has total assets of not more 
                        than $4,000,000, and capital and 
                        surplus (shareholders' equity less 
                        retained earnings) of not less than 
                        $2,000,000, except that the Commission 
                        may adjust such amounts by rule, 
                        regulation, or order to reflect changes 
                        in 1 or more generally accepted indices 
                        or other indicators for small 
                        businesses; or
                          (iv) it meets such other criteria as 
                        the Commission may, by rule, establish 
                        as consistent with the public interest, 
                        the protection of investors, and the 
                        purposes fairly intended by the policy 
                        and provisions of this title.
          (47) ``Making available significant managerial 
        assistance'' by a business development company means--
                  (A) any arrangement whereby a business 
                development company, through its directors, 
                officers, employees, or general partners, 
                offers to provide, and, if accepted, does so 
                provide, significant guidance and counsel 
                concerning the management, operations, or 
                business objectives and policies of a portfolio 
                company;
                  (B) the exercise by a business development 
                company of a controlling influence over the 
                management or policies of a portfolio company 
                by the business development company acting 
                individually or as part of a group acting 
                together which controls such portfolio company; 
                or
                  (C) with respect to a small business 
                investment company licensed by the Small 
                Business Administration to operate under the 
                Small Business Investment Act of 1958, the 
                making of loans to a portfolio company.
        For purposes of subparagraph (A), the requirement that 
        a business development company make available 
        significant managerial assistance shall be deemed to be 
        satisfied with respect to any particular portfolio 
        company where the business development company 
        purchases securities of such portfolio company in 
        conjunction with one or more other persons acting 
        together, and at least one of the persons in the group 
        makes available significant managerial assistance to 
        such portfolio company, except that such requirement 
        will not be deemed to be satisfied if the business 
        development company, in all cases, makes available 
        significant managerial assistance solely in the manner 
        described in this sentence.
          (48) ``Business development company'' means any 
        closed-end company which--
                  (A) is organized under the laws of, and has 
                its principal place of business in, any State 
                or States;
                  (B) is operated for the purpose of making 
                investments in securities described in 
                paragraphs (1) through (3) of section 55(a), 
                and makes available significant managerial 
                assistance with respect to the issuers of such 
                securities, provided that a business 
                development company must make available 
                significant managerial assistance only with 
                respect to the companies which are treated by 
                such business development company as satisfying 
                the 70 per centum of the value of its total 
                assets condition of section 55; and provided 
                further that a business development company 
                need not make available significant managerial 
                assistance with respect to any company 
                described in paragraph (46)(C)(iii), or with 
                respect to any other company that meets such 
                criteria as the Commission may by rule, 
                regulation, or order permit, as consistent with 
                the public interest, the protection of 
                investors, and the purposes of this title; and
                  (C) has elected pursuant to section 54(a) to 
                be subject to the provisions of sections 55 
                through 65.
          (49) ``Foreign securities authority'' means any 
        foreign government or any governmental body or 
        regulatory organization empowered by a foreign 
        government to administer or enforce its laws as they 
        relate to securities matters.
          (50) ``Foreign financial regulatory authority'' means 
        any (A) foreign securities authority, (B) other 
        governmental body or foreign equivalent of a self-
        regulatory organization empowered by a foreign 
        government to administer or enforce its laws relating 
        to the regulation of fiduciaries, trusts, commercial 
        lending, insurance, trading in contracts of sale of a 
        commodity for future delivery, or other instruments 
        traded on or subject to the rules of a contract market, 
        board of trade or foreign equivalent, or other 
        financial activities, or (C) membership organization a 
        function of which is to regulate the participation of 
        its members in activities listed above.
          (51)(A) ``Qualified purchaser'' means--
                  (i) any natural person (including any person 
                who holds a joint, community property, or other 
                similar shared ownership interest in an issuer 
                that is excepted under section 3(c)(7) with 
                that person's qualified purchaser spouse) who 
                owns not less than $5,000,000 in investments, 
                as defined by the Commission;
                  (ii) any company that owns not less than 
                $5,000,000 in investments and that is owned 
                directly or indirectly by or for 2 or more 
                natural persons who are related as siblings or 
                spouse (including former spouses), or direct 
                lineal descendants by birth or adoption, 
                spouses of such persons, the estates of such 
                persons, or foundations, charitable 
                organizations, or trusts established by or for 
                the benefit of such persons;
                  (iii) any trust that is not covered by clause 
                (ii) and that was not formed for the specific 
                purpose of acquiring the securities offered, as 
                to which the trustee or other person authorized 
                to make decisions with respect to the trust, 
                and each settlor or other person who has 
                contributed assets to the trust, is a person 
                described in clause (i), (ii), or (iv); or
                  (iv) any person, acting for its own account 
                or the accounts of other qualified purchasers, 
                who in the aggregate owns and invests on a 
                discretionary basis, not less than $25,000,000 
                in investments.
          (B) The Commission may adopt such rules and 
        regulations applicable to the persons and trusts 
        specified in clauses (i) through (iv) of subparagraph 
        (A) as it determines are necessary or appropriate in 
        the public interest or for the protection of investors.
          (C) The term ``qualified purchaser'' does not include 
        a company that, but for the exceptions provided for in 
        paragraph (1) or (7) of section 3(c), would be an 
        investment company (hereafter in this paragraph 
        referred to as an ``excepted investment company''), 
        unless all beneficial owners of its outstanding 
        securities (other than short-term paper), determined in 
        accordance with section 3(c)(1)(A), that acquired such 
        securities on or before April 30, 1996 (hereafter in 
        this paragraph referred to as ``pre-amendment 
        beneficial owners''), and all pre-amendment beneficial 
        owners of the outstanding securities (other than short-
        term paper) of any excepted investment company that, 
        directly or indirectly, owns any outstanding securities 
        of such excepted investment company, have consented to 
        its treatment as a qualified purchaser. Unanimous 
        consent of all trustees, directors, or general partners 
        of a company or trust referred to in clause (ii) or 
        (iii) of subparagraph (A) shall constitute consent for 
        purposes of this subparagraph.
          (52) The terms ``security future'' and ``narrow-based 
        security index'' have the same meanings as provided in 
        section 3(a)(55) of the Securities Exchange Act of 
        1934.
          (53) The term ``credit rating agency'' has the same 
        meaning as in section 3 of the Securities Exchange Act 
        of 1934.
          (54) The terms ``commodity pool'', ``commodity pool 
        operator'', ``commodity trading advisor'', ``major swap 
        participant'', ``swap'', ``swap dealer'', and ``swap 
        execution facility'' have the same meanings as in 
        section 1a of the Commodity Exchange Act (7 U.S.C. 
        1a).''.
          (55) Digital asset-related terms.--The terms 
        ``digital commodity'' and ``permitted payment 
        stablecoin'' have the meaning given those terms, 
        respectively, under section 2(a) of the Securities Act 
        of 1933 (15 U.S.C. 77b(a)).
  (b) No provision in this title shall apply to, or be deemed 
to include, the United States, a State, or any political 
subdivision of a State, or any agency, authority, or 
instrumentality of any one or more of the foregoing, or any 
corporation which is wholly owned directly or indirectly by any 
one or more of the foregoing, or any officer, agent, or 
employee of any of the foregoing acting as such in the course 
of his official duty, unless such provision makes specific 
reference thereto.
  (c) Consideration of Promotion of Efficiency, Competition, 
and Capital Formation.--Whenever pursuant to this title the 
Commission is engaged in rulemaking and is required to consider 
or determine whether an action is consistent with the public 
interest, the Commission shall also consider, in addition to 
the protection of investors, whether the action will promote 
efficiency, competition, and capital formation.

           *       *       *       *       *       *       *


                             Minority Views

    Securities and Exchange Commission (SEC) Chair Gary Gensler 
has repeatedly and unambiguously stated that most digital 
assets are in fact securities.\1\ Unfortunately, most digital 
assets firms have chosen not to register with the SEC and in 
response, Chair Gensler has been diligent in utilizing the 
resources at his disposal to crack down on this mass 
noncompliance.\2\ To the extent that Chair Gensler's 
enforcement actions have been challenged in court,\3\ the SEC 
has prevailed again and again with stunning consistency with 
the exception of one outlier case that may yet be reversed on 
appeal.\4\ Despite the lengths that SEC Chair Gensler has gone 
to provide regulatory clarity for digital assets, the crypto 
industry continues to insist that there is a lack of regulatory 
clarity without providing much of any detail on how the current 
securities law framework doesn't work for their industry.
---------------------------------------------------------------------------
    \1\Most Cryptocurrencies Are Securities, Says SEC Chair, 
Investopedia (Sept. 8, 2022).
    \2\Gensler defends SEC's crypto crackdown in marathon House 
hearing, CNBC (Apr. 18, 2023).
    \3\Ripple says it will fight the SEC lawsuit `all the way through', 
CNBC (Sept. 12, 2023); see also Crypto firms facing US SEC charges find 
hope in Ripple ruling, experts say, Reuters (July 17, 2023).
    \4\Judge grants SEC request to file motion for appeal in Ripple 
case, CoinTelegraph (Aug. 17, 2023); see also Judge Rejects Ripple 
Ruling Precedent in Denying Terraform Labs' Motion to Dismiss SEC 
Lawsuit, CoinDesk (Aug. 1, 2023).
---------------------------------------------------------------------------
    In response to ambiguous industry complaints, H.R. 4763 
would create a new, alternative legal framework specifically 
for digital assets. Rather than providing greater regulatory 
clarity, this bill provides more than 200 pages of new 
definitions and legal tests that only create more confusion and 
uncertainty. For example, while the ``Howey'' test, which is 
the current standard for determining whether something is a 
security under current law, has decades of judicial precedent 
to clarify how to apply it in different situations, the new 
definitions and tests in this bill come with zero judicial 
precedent, making it very unclear how these new standards would 
be applied by the courts. The current securities law framework 
has served us well for nearly a century, evolving with various 
technological innovations in the industry. There is simply no 
good reason to throw all of that away in favor of a complicated 
new framework that caters to a single industry that refuses to 
follow the rules.
    We agree with federal regulators and the GAO who have 
stated that there are discrete gaps in the current federal 
regulatory regime regarding digital assets.\5\ This includes 
providing spot market authority for the CFTC, ensuring the SEC 
has extraterritorial reach overseas, and providing regulators 
with oversight of affiliates and subsidiaries of digital asset 
businesses. Such authorities could have helped the SEC act 
against FTX, or its affiliated Alameda Research (which was 
functioning as an unregistered hedge fund) before its collapse 
and would provide similar oversight as authorities banking 
regulators have to examine affiliates and subsidiaries of most 
banks. We believe that we should be focusing on these discrete 
issues and leveraging the current securities law framework 
rather than throwing it out the window.
---------------------------------------------------------------------------
    \5\See FSOC, Report on Digital Asset Financial Stability Risks and 
Regulation (Oct. 3, 2022); U.S. Government Accountability Office, 
Blockchain in Finance: Legislative and Regulatory Actions Are Needed to 
Ensure Comprehensive Oversight of Crypto Assets (Jun. 22, 2023).
---------------------------------------------------------------------------
    While H.R. 4763 creates a great deal of confusion, a few 
things are crystal clear. First, this bill would exempt digital 
assets from several consumer, investor, and market protections 
that otherwise currently apply to them under existing 
securities laws. Specifically, under the bill, it is likely 
that most digital assets would be considered commodities soon 
after they are issued on any of the current blockchains. By 
shifting a substantial portion of the digital assets market to 
the commodities regime, the bill removes several critical 
protections that apply to securities and not commodities. 
Simply put, the CFTC regulatory framework was created for and 
operates for sophisticated and large institutional traders 
while SEC's framework governs the issuance of investment 
products meant for everyday retail investors and retirees. This 
bill also does not require the structural separation that is 
currently in place under securities laws of broker/dealers, 
exchanges, and clearing houses to prevent conflicts of 
interest. Furthermore, the Investment Company Act and the 
Investment Advisers Act--regulations designed to minimize 
conflicts of interest that can arise in complex operations--
would not apply to digital commodities in this bill.\6\
---------------------------------------------------------------------------
    \6\Section 301(c) of the bill provides that the definition of the 
term ``security'' in the Investment Advisers Act ``does not include a 
digital commodity or a permitted payment stablecoin.'' Similarly, 
Section 301(d) provides that the definition of the term ``security'' in 
the Investment Company Act ``does not include a digital commodity or a 
permitted payment stablecoin.'' H.R. 4763.
---------------------------------------------------------------------------
    Second, this bill would allow the commingling of funds, 
which was a major factor in the fall of FTX. Specifically, 
while this bill establishes restrictions on the commingling of 
consumer funds by digital asset broker/dealers, it creates a 
procedure where consumers can waive this protection. It is not 
difficult to imagine crypto exchanges or trading facilities 
encouraging this waiver either as part of the service agreement 
(not unlike the forced arbitration clauses that exist today) or 
making it easy for consumers or investors to check a box 
without realizing that doing so gives the trading firm ability 
to commingle customer assets with that of the firm or its 
affiliated hedge funds. When FTX collapsed in November 2022, 
one of the shocking discoveries in the aftermath was that FTX 
had been commingling customer funds to make undisclosed 
investments and trade against its own customers. When the dust 
had settled, over one million users were owed $8.7 billion in 
bankruptcy proceedings.\7\ The collapse of FTX demonstrated the 
scale of harm possible when commingling occurs, and H.R. 4763 
would legitimize this practice.
---------------------------------------------------------------------------
    \7\FTX Bankruptcy Team Says the Exchange Owed Customers $8.7B, 
CoinDesk (June 26, 2023).
---------------------------------------------------------------------------
    Third, H.R. 4763 would create new opportunities for 
regulatory arbitrage. Specifically, the bill's definition of 
``digital asset'' is overly broad, raising the possibility that 
traditional financial instruments could get swept into the 
lighter touch regulatory regime designed for digital assets 
under this bill. Private industry may be incentivized to 
structure assets and asset pools to avoid the specific 
categories excluded from the definition.
    Fourth, H.R. 4763 not only fails to provide any new funding 
for the SEC, which would be responsible for implementing much 
of this highly complicated new regime, but also rescinds $150 
million from the SEC's Reserve Fund, a fund created by Dodd-
Frank to fund long term IT projects or to respond to unforeseen 
events, like the 2010 Flash Crash and the pandemic. This bill 
takes these funds and proposes $120 million in resources to the 
CFTC over a 5-year period, which is significantly less than the 
amount CFTC Chairman Rostin Behnam said would be needed.\8\ In 
addition, the bill does not provide for ongoing funding for the 
agency, such as fees that could be levied on crypto firms. At 
the same time, Republicans are proposing cuts to these 
agencies' budgets through the appropriations process. Earlier 
this year, President Joe Biden requested that Congress provide 
$411 million for the CFTC in fiscal year (FY) 2024, a 12.6% 
increase from the FY 2023 enacted level\9\ and $2.436 billion 
for the SEC.\10\ However, House Republicans have advanced steep 
budget cuts through the Default on America Act.\11\ Their plan 
revealed that Republicans would impose a 22% cut across the 
board for non-defense spending.\12\ The Financial Services and 
General Government Appropriations bill, released by the House 
Appropriations Committee earlier this year, prohibits the 
implementation of certain SEC rules and cuts the SEC's budget 
by 8% from FY 2023.\13\ Chair Gensler has explained that ``that 
funding level may not be enough to address staffing and 
technological needs.''\14\
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    \8\House Ag Committee looks at digital assets regulatory bill, Dems 
ask how to pay for it, CoinTelegraph (June 6, 2023).
    \9\PL 117-328.
    \10\Gensler Cheers $2.4B Funding Proposal for SEC in Biden Budget, 
Blockworks (Mar. 31, 2023).
    \11\Kevin McCarthy Speaker of the House, House GOP Leadership 
Statement on the House GOP Plan to Address the Debt Ceiling (Apr. 19, 
2023).
    \12\The White House, State Fact Sheets: MAGA House Republicans' 
Default on America Act Would Have Devastating Impacts Across America 
(May 2, 2023).
    \13\Womack Remarks at FY24 Financial Services and General 
Government Markup, House Committee on Appropriations (June 22, 2023).
    \14\SEC's Gensler Calls CFTC `Not As Robust' On Crypto, Law360 
(July 19, 2023).
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    While Republicans accepted a few amendments, they rejected 
critical changes Democrats proposed including:
           Ranking Member Waters' amendment no. 3, 
        which would preserve the current securities law 
        framework and offer targeted and meaningful fixes to 
        address discrete issues in order to better protect 
        investors in the digital assets ecosystem. These narrow 
        fixes respond to recommendations from the FSOC to 
        provide the CFTC with spot market authority over 
        digital assets not deemed securities by the SEC and 
        provide the SEC with extraterritorial jurisdiction and 
        oversight into affiliates. This amendment also directs 
        the SEC to issue a report and provide testimony to 
        Congress on whether broader changes to the SEC's 
        oversight of digital assets are necessary.
           Rep. Lynch's amendment no. 11, which would 
        strike Section 311 of the bill, ``Treatment of custody 
        activities by banking institutions.'' This section 
        conflicts with the SEC's SAB 121 which directs banks 
        and public companies to list digital assets as 
        liabilities on their balance sheets.
           Rep. Lynch's amendment no. 13, which would 
        direct the SEC, CFTC, and CFPB to issue rules to ensure 
        investor and consumer protections for digital assets 
        that exist for securities and commodities.
           Rep. Foster's amendment no. 1, which would 
        direct FinCEN to establish a method for the application 
        and issuance of a crypto license for individuals with 
        operational control over a digital wallet.
           Rep. Sherman's amendment, which would strike 
        the bill and designates all digital assets and related 
        derivatives to be considered securities and subject to 
        the jurisdiction of the SEC, including all digital 
        asset exchanges as securities exchanges and subject to 
        the full jurisdiction of the SEC.
           Rep. Lynch's amendment, which would 
        authorize such funding as may be necessary for the CFTC 
        and the SEC to execute this bill.
           Rep. Pressley's amendment, which was 
        withdrawn, but would prevent Members of Congress, their 
        employees, and other federal employees from using non-
        public information obtained through their official 
        positions for personal benefit, such as in stock market 
        trading.\15\ The STOCK Act provides for greater 
        transparency by requiring Congress and federal 
        employees to report certain investment activities, 
        while preventing insider trading, strengthening ethics, 
        and strengthening public trust. Rep. Pressley's 
        proposal would treat digital assets as the same for the 
        purposes of the STOCK Act. Republicans indicated an 
        interest in working with Democrats on this proposal.
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    \15\Public Law No. 112-105, 112th Congress (2011-2012); see also 
STOCK Act: Meaning, Overview, Criticisms, Investopedia (Aug. 31, 2022).
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           Rep. Lynch's amendment, which would strike 
        part of Section 306 ``Requirements of Digital Asset 
        Brokers and Digital Asset Dealers,'' to protect 
        consumers from being directed to waive guardrails 
        around commingling their funds with the funds of the 
        entity.
           Rep. Green amendment, no. 14,\16\ which was 
        withdrawn with the commitment that Rep. Hill would work 
        with him on whistleblower protections in the 
        legislation. His amendment would confirm that nothing 
        in the bill would prevent the SEC or CFTC from going 
        after bad actors in the digital asset ecosystem, even 
        in relation to entities filing a notice of intent to 
        register. This amendment also ensures that the SEC can 
        pursue enforcement in illegal market activities, such 
        as price manipulation, insider trading, Ponzi schemes, 
        fraud, wash trading, common ownership of tokens trading 
        on an exchange against consumers, and prop trading/
        affiliated trading.
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    \16\HFSC, Rep. Green Amendment No. 14 to H.R. 4763 (July 26, 2023).
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    Finally, the following groups are opposed to the 
legislation: American Association for Justice, American 
Economic Liberties Project, Americans for Financial Reform, 
Center for American Progress, Center for Responsible Lending, 
Consumer Action, Consumer Federation of America, Consumer 
Reports, Demand Progress, Institute for Agriculture and Trade 
Policy, National Consumer Law Center (on behalf of its low-
income clients), National Community Reinvestment Coalition, 
North American Securities Administrators Association, Open 
Markets Institute, Public Citizen, Revolving Door Project, Rise 
Economy (formerly California Reinvestment Coalition), Strong 
Economy for All Coalition, Texas Appleseed, 20/20 Vision, 
Woodstock Institute.
    For these reasons, we strongly oppose H.R. 4763.
            Sincerely,
                                   Maxine Waters,
                                           Ranking Member.
                                   Nydia M. Velazquez,
                                   David Scott,
                                   Al Green,
                                   Bill Foster,
                                   Juan Vargas,
                                   Brad Sherman,
                                   Stephen F. Lynch,
                                   Emanuel Cleaver, II,
                                   Joyce Beatty,
                                   Vicente Gonzalez,
                                   Sean Casten,
                                   Rashida Tlaib,
                                   Nikema Williams,
                                   Ayanna Pressley,
                                   Sylvia R. Garcia,
                                           Members of Congess.