{"check":null,"uid":"f6d2d36be9da1fff","title":"Providing for consideration of the bill (H.R. 4922) to limit youth offender status in the District of Columbia to individuals 18 years of age or younger, to direct the Attorney General of the District of Columbia to establish and operate a publicly accessible website containing updated statistics on juvenile crime in the District of Columbia, to amend the District of Columbia Home Rule Act to proh","title_generated":false,"country":"США","organ":"Конгресс США","kind":"law","kind_name":"Законодательство","lang":"en","date":"2026-05-15","summary":"Создаёт режим регулирования цифровых товаров (digital commodities) — активов, ценность которых опирается на блокчейн. Сделки, биржи, брокеров и дилеров надзирает Комиссия по торговле товарными фьючерсами; к торгам допускается актив на зрелом блокчейне с децентрализованным управлением либо тот, чей эмитент подаёт установленную отчётность. Вводятся требования к мониторингу торгов, хранению записей и раздельному учёту клиентских активов. От регистрации в Комиссии по ценным бумагам зрелые блокчейны освобождаются при продажах ниже порога; за комиссией остаются альтернативные торговые системы и национальные биржи. На участников рынка распространяется Закон о банковской тайне с антиотмывочными обязанностями.","snippet":"","topics":["Криптоактивы и блокчейн"],"status":"ok","error":"","text_len":634117,"versions":2,"url":"https://www.congress.gov/bill/119-congress/hr/3633","first_seen":"2026-08-19","last_checked":"2026-09-17 02:01","relevance":"hit","score":281,"query":"","source_key":"congress_us","verdict":{"relevance":"hit","score":281,"topics":["Криптоактивы и блокчейн"],"need_body":8,"authorities":[],"evidence":[{"topic":"Криптоактивы и блокчейн","term":"блокчейн","weak":false,"pos":509,"ctx":"лирования цифровых товаров (digital commodities) — активов, ценность которых опирается на блокчейн. сделки, биржи, брокеров и дилеров надзирает комиссия по торговле товарными фьючерсами; к","zone":"название","weight":3},{"topic":"Криптоактивы и блокчейн","term":"блокчейн","weak":false,"pos":643,"ctx":"надзирает комиссия по торговле товарными фьючерсами; к торгам допускается актив на зрелом блокчейне с децентрализованным управлением либо тот, чей эмитент подаёт установленную отчётность. в","zone":"название","weight":3},{"topic":"Криптоактивы и блокчейн","term":"блокчейн","weak":false,"pos":891,"ctx":"раздельному учёту клиентских активов. от регистрации в комиссии по ценным бумагам зрелые блокчейны освобождаются при продажах ниже порога; за комиссией остаются альтернативные торговые сис","zone":"название","weight":3},{"topic":"Криптоактивы и блокчейн","term":"blockchain","weak":false,"pos":201,"ctx":"framework for digital commodities, defined by the bill as digital assets that rely upon a blockchain for their value. the commodity futures trading commission must generally regulate digital","zone":"текст","weight":1},{"topic":"Криптоактивы и блокчейн","term":"blockchain","weak":false,"pos":451,"ctx":"nges, brokers, and dealers. to qualify for trade on an exchange (1) a digital commodity’s blockchain must be mature, or on a blockchain system that has achieved decentralized control as defi","zone":"текст","weight":1},{"topic":"Криптоактивы и блокчейн","term":"blockchain","weak":false,"pos":486,"ctx":"ify for trade on an exchange (1) a digital commodity’s blockchain must be mature, or on a blockchain system that has achieved decentralized control as defined by the bill; or (2) the issuer","zone":"текст","weight":1},{"topic":"Криптоактивы и блокчейн","term":"blockchain","weak":false,"pos":796,"ctx":"g, and the commingling of customer assets. the bill exempts digital commodities on mature blockchains (and digital commodities on blockchains expected to mature within certain timeframes) fro","zone":"текст","weight":1},{"topic":"Криптоактивы и блокчейн","term":"blockchain","weak":false,"pos":836,"ctx":"s. the bill exempts digital commodities on mature blockchains (and digital commodities on blockchains expected to mature within certain timeframes) from securities and exchange commission (se","zone":"текст","weight":1},{"topic":"Криптоактивы и блокчейн","term":"crypto","weak":false,"pos":1612,"ctx":"ntil the bill is implemented. for more information on this bill, see crs insight in12583, crypto legislation: an overview of h.r. 3633, the clarity act . full text [congressional bills","zone":"текст","weight":1}],"dropped":[{"topic":"Авторское право и цифровой контент","term":"intellectual property","weak":true,"pos":13481,"ctx":"issuance of a digital commodity, including via any arrangement involving the transfer of intellectual property associated with the blockchain system to which the digital commodity relates. <","why":"одиночное упоминание (нужно 8)"},{"topic":"Авторское право и цифровой контент","term":"intellectual property","weak":true,"pos":34156,"ctx":"deleted> ``(aa) a work of art, a musical composition, a literary work, or other intellectual property; ``(bb) collectibles, merchandise, virtual land, and video game asset","why":"одиночное упоминание (нужно 8)"},{"topic":"Авторское право и цифровой контент","term":"intellectual property","weak":true,"pos":61895,"ctx":"ment of this act. (c) effect on other laws.-- (1) intellectual property law.--nothing in this section shall be construed to limit or expand any law pertaining to","why":"одиночное упоминание (нужно 8)"},{"topic":"Авторское право и цифровой контент","term":"intellectual property","weak":true,"pos":62007,"ctx":"law.--nothing in this section shall be construed to limit or expand any law pertaining to intellectual property. (2) state law.--nothing in this section shall be construed to preven","why":"одиночное упоминание (нужно 8)"},{"topic":"Кибербезопасность","term":"cybersecurity","weak":false,"pos":116733,"ctx":"ess such alteration-- ``(i) addresses errors, regular maintenance, or cybersecurity risks of the blockchain system that affect the programmatic functioning of the blockchain","why":"одиночное упоминание (нужно 8)"}]},"last_changed":"2026-09-11","meta":{"congress":"119","billType":"HR","number":"3633","policyArea":"Finance and Financial Sector","subjects":["Advanced technology and technological innovations","Bank accounts, deposits, capital","Banking and financial institutions regulation","Business records","Computer security and identity theft","Computers and information technology","Currency","Data collection, sharing, protection","Digital media","Financial services and investments","Fraud offenses and financial crimes","Licensing and registrations","Securities"],"latestAction":"2026-03-25 Pursuant to the provisions of H.Res. 1131, H.Res. 707 is amended.","textVersion":"rs"},"source_url":"https://www.congress.gov/bill/119-congress/hr/3633","text":"SUMMARY\nDigital Asset Market Clarity Act of 2025 or the CLARITY Act of 2025\nThis bill establishes a regulatory framework for digital commodities, defined by the bill as digital assets that rely upon a blockchain for their value.\nThe Commodity Futures Trading Commission must generally regulate digital commodities transactions, including digital commodity exchanges, brokers, and dealers. To qualify for trade on an exchange (1) a digital commodity’s blockchain must be mature, or on a blockchain system that has achieved decentralized control as defined by the bill; or (2) the issuer of the digital commodity must file certain reports. The bill establishes requirements for trade monitoring, recordkeeping, and the commingling of customer assets.\nThe bill exempts digital commodities on mature blockchains (and digital commodities on blockchains expected to mature within certain timeframes) from Securities and Exchange Commission (SEC) registration requirements if annual sales fall under a certain amount and other requirements are met. The bill provides the SEC with jurisdiction over digital commodity activities and transactions engaged in by certain brokers and dealers on alternative trading systems and by national securities exchanges.\nDigital commodity exchanges, brokers, and dealers are subject to the Bank Secrecy Act for anti-money laundering and related purposes.\nThe bill also sets forth requirements for alternative trading systems, previously issued digital commodities, and provisional registration until the bill is implemented.\nFor more information on this bill, see CRS Insight IN12583, Crypto Legislation: An Overview of H.R. 3633, the CLARITY Act .\n\nFULL TEXT\n[Congressional Bills 119th Congress]\n[From the U.S. Government Publishing Office]\n[H.R. 3633 Reported in Senate (RS)]\n\n\n\nCalendar No. 423\n119th CONGRESS\n2d Session\nH. R. 3633\n\n_______________________________________________________________________\n\nIN THE SENATE OF THE UNITED STATES\n\nSeptember 18 (legislative day, September 16), 2025\n\nReceived; read twice and referred to the Committee on Banking,\nHousing, and Urban Affairs\n\nJune 1, 2026\n\nReported by Mr. Scott of South Carolina, with an amendment\n[Strike out all after the enacting clause and insert the part printed\nin italic]\n\n_______________________________________________________________________\n\nAN ACT\n\nTo provide for a system of regulation of the offer and sale of digital\ncommodities by the Securities and Exchange Commission and the Commodity\nFutures Trading Commission, to amend the Federal Reserve Act to\nprohibit the Federal reserve banks from offering certain products or\nservices directly to an individual, to prohibit the use of central bank\ndigital currency for monetary policy, and for other purposes.\n\nBe it enacted by the Senate and House of Representatives of the\nUnited States of America in Congress assembled,\n\nSECTION 1. SHORT TITLES; TABLE OF CONTENTS.\n\n (a) Short Titles.--This Act may be cited as the ``Digital\nAsset Market Clarity Act of 2025'' or the ``CLARITY Act of 2025'' and\nthe ``Anti-CBDC Surveillance State Act''.\n (b) Table of Contents.--The table of contents for this Act\nis as follows:\n\nSec. 1. Short titles; table of contents.\nTITLE I--DEFINITIONS; RULEMAKING; EXPEDITED REGISTRATION\n\nSec. 101. Definitions under the Securities Act of 1933.\nSec. 102. Definitions under the Securities Exchange Act of\n1934.\nSec. 103. Definitions under the Commodity Exchange Act.\nSec. 104. Definitions under this Act.\nSec. 105. Rulemakings.\nSec. 106. Expedited registration for digital commodity\nexchanges, brokers, and dealers;\nprovisional status.\nSec. 107. Commodity Exchange Act and securities laws savings\nprovisions.\nSec. 108. Administrative requirements.\nSec. 109. Treatment of certain non-controlling blockchain\ndevelopers.\nSec. 110. Application of the Bank Secrecy Act.\nSec. 111. Rule of construction.\nSec. 112. Implementation.\nTITLE II--OFFERS AND SALES OF DIGITAL COMMODITIES\n\nSec. 201. Treatment of investment contract assets.\nSec. 202. Exempted primary transactions in digital\ncommodities.\nSec. 203. Treatment of secondary transactions in digital\ncommodities that originally involved\ninvestment contracts.\nSec. 204. Requirements for offers and sales of digital\ncommodities by digital commodity related\npersons and digital commodity affiliated\npersons.\nSec. 205. Mature blockchain system requirements.\nSec. 206. Effective date.\nTITLE III--REGISTRATION FOR INTERMEDIARIES AT THE SECURITIES\nAND EXCHANGE COMMISSION\n\nSec. 301. Treatment of digital commodities and permitted\npayment stablecoins.\nSec. 302. Anti-fraud authority over permitted payment\nstablecoins and certain digital commodity\ntransactions.\nSec. 303. Eligibility of alternative trading systems.\nSec. 304. Rulemaking for dual-registered entities.\nSec. 305. Modernization of recordkeeping requirements.\nSec. 306. Exemptive authority.\nSec. 307. Additional registrations with the Commodity Futures\nTrading Commission.\nSec. 308. Exempting digital commodities from State securities\nlaws.\nSec. 309. Exclusion for decentralized finance activities.\nSec. 310. Treatment of custody activities by banking\ninstitutions.\nSec. 311. Broker and dealer disclosures regarding the\ntreatment of assets.\nSec. 312. Digital commodity activities that are financial in\nnature.\nSec. 313. Effective date; administration.\nSec. 314. Educational material requirements.\nSec. 315. Discretionary Surplus Fund.\nTITLE IV--REGISTRATION FOR DIGITAL COMMODITY INTERMEDIARIES AT\nTHE COMMODITY FUTURES TRADING COMMISSION\n\nSec. 401. Commission jurisdiction over digital commodity\ntransactions.\nSec. 402. Requiring futures commission merchants to use\nqualified digital asset custodians.\nSec. 403. Trading certification and approval for digital\ncommodities.\nSec. 404. Registration of digital commodity exchanges.\nSec. 405. Qualified digital asset custodians.\nSec. 406. Registration and regulation of digital commodity\nbrokers and dealers.\nSec. 407. Registration of associated persons.\nSec. 408. Registration of commodity pool operators and\ncommodity trading advisors.\nSec. 409. Exclusion for decentralized finance activities.\nSec. 410. Resources for implementation and enforcement.\nSec. 411. Requirements related to control persons.\nSec. 412. Other tradable assets.\nSec. 413. Conflict of interest rulemaking.\nSec. 414. Effective date.\nSec. 415. Sense of Congress.\nTITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS\n\nSec. 501. Findings; sense of Congress.\nSec. 502. Strategic Hub for Innovation and Financial\nTechnology.\nSec. 503. Codification of LabCFTC.\nSec. 504. Study on decentralized finance.\nSec. 505. Study on non-fungible tokens.\nSec. 506. Study on expanding financial literacy amongst\ndigital commodity holders.\nSec. 507. Study on financial market infrastructure\nimprovements.\nSec. 508. Study on blockchain in payments.\nSec. 509. Study on illicit use of digital assets.\nSec. 510. GAO study on certain centralized intermediaries that\nare primarily located in foreign\njurisdictions.\nSec. 511. Studies on foreign adversary participation.\nSec. 512. Conforming amendments.\nTITLE VI--ANTI-CBDC SURVEILLANCE STATE ACT\n\nSec. 601. Short title.\nSec. 602. Prohibition on Federal reserve banks relating to\ncertain products or services for\nindividuals and prohibition on directly\nissuing a central bank digital currency.\nSec. 603. Prohibition on Federal reserve banks indirectly\nissuing a central bank digital currency.\nSec. 604. Prohibition with respect to central bank digital\ncurrency.\nSec. 605. Sense of Congress.\n\nTITLE I--DEFINITIONS; RULEMAKING; EXPEDITED\nREGISTRATION\n\nSEC. 101. DEFINITIONS UNDER THE SECURITIES ACT OF\n1933.\n\n Section 2(a) of the Securities Act of 1933 (15 U.S.C.\n77b(a)) is amended by adding at the end the following:\n ``(20) Blockchain.--The term `blockchain' means--\n\n ``(A) any technology--\n ``(i) where data is--\n ``(I) shared across a\nnetwork to create a distributed ledger\nof independently verifiable\ntransactions or information among\nnetwork participants;\n ``(II) linked using\ncryptography to maintain the integrity\nof the distributed ledger and to\nexecute other functions; and\n ``(III) propagated among\nnetwork participants to reach consensus\non the state of the distributed ledger\nand any other functions; and\n ``(ii) composed of source code\nthat is publicly available; and\n ``(B) any similar technology to the\ntechnology described in subparagraph (A).\n ``(21) Blockchain application.--The term\n`blockchain application' means any executable software that is\ndeployed to a blockchain and composed of source code that is\npublicly available, including a smart contract or any network\nof smart contracts, or other similar technology.\n ``(22) Blockchain protocol.--The term `blockchain\nprotocol' means publicly available source code of a blockchain\nthat is executed by the network participants of a blockchain to\nfacilitate its functioning, or other similar\ntechnology.\n ``(23) Blockchain system.--The term `blockchain\nsystem' means any blockchain, together with its blockchain\nprotocol or any blockchain application or network of blockchain\napplications.\n ``(24) Decentralized governance system.--\n\n ``(A) In general.--The term `decentralized\ngovernance system' means, with respect to a blockchain\nsystem, any transparent, rules-based system permitting\npersons to form consensus or reach agreement in the\ndevelopment, provision, publication, maintenance, or\nadministration of such blockchain system, where\nparticipation is not limited to, or under the effective\ncontrol of, any person or group of persons under common\ncontrol.\n ``(B) Relationship of persons to\ndecentralized governance systems.--With respect to a\ndecentralized governance system, the decentralized\ngovernance system and any persons participating in the\ndecentralized governance system shall be treated as\nseparate persons unless such persons are under common\ncontrol or acting pursuant to an agreement to act in\nconcert.\n ``(C) Legal entities for decentralized\ngovernance systems.--The term `decentralized governance\nsystem' shall include a legal entity used to implement\nthe rules-based system described in subparagraph (A),\nprovided that the legal entity does not operate\npursuant to centralized management. For the purposes of\nthis subparagraph, the delegation of ministerial or\nadministrative authority at the direction of the\nparticipants in a decentralized governance system shall\nnot be construed to be centralized\nmanagement.\n ``(25) Digital asset.--The term `digital asset'\nmeans any digital representation of value which is recorded on\na cryptographically-secured distributed ledger or other similar\ntechnology.\n ``(26) Digital commodity.--The term `digital\ncommodity' has the meaning given that term under section 1a of\nthe Commodity Exchange Act (7 U.S.C. 1a).\n ``(27) Digital commodity affiliated person.--The\nterm `digital commodity affiliated person'--\n ``(A) means a person (including a digital\ncommodity related person) that, with respect to any\ndigital commodity--\n ``(i) acquires or has any right to\nacquire 5 percent or more of the total\noutstanding units of such digital commodity\nfrom a digital commodity issuer or an agent or\nunderwriter thereof;\n ``(ii) is a founder of the digital\ncommodity issuer; or\n ``(iii) is an executive officer,\ndirector, trustee, general partner, or person\nserving in a similar capacity of the digital\ncommodity issuer or held such role at any point\nin the previous 12-month period; and\n ``(B) does not include a decentralized\ngovernance system.\n ``(28) Digital commodity issuer.--\n ``(A) In general.--With respect to a\ndigital commodity, the term `digital commodity issuer'\nmeans any person that--\n ``(i) issues or causes to be\nissued, or proposes to issue or cause to be\nissued, a unit of such digital commodity to a\nperson; or\n ``(ii) offers or sells a right to\na future issuance of a unit of such digital\ncommodity to a person.\n ``(B) Prohibition on evasion.--It shall be\nunlawful for any person to knowingly evade\nclassification as a `digital commodity issuer' and\nfacilitate an arrangement for the primary purpose of\neffecting an offer, sale, distribution, or other\nissuance of a digital commodity, including via any\narrangement involving the transfer of intellectual\nproperty associated with the blockchain system to which\nthe digital commodity relates.\n ``(29) Digital commodity related person.--\n\n ``(A) In general.--With respect to a\ndigital commodity issuer, the term `digital commodity\nrelated person'--\n ``(i) means a person--\n ``(I) that is or was in\nthe previous 6-month period a promoter,\nsenior employee, advisory board member,\nconsultant, advisor, or person serving\nin a similar capacity; or\n ``(II) that acquires or\nhas any right to acquire 1 percent or\nmore of the total outstanding units of\nsuch digital commodity from a digital\ncommodity issuer or an agent or\nunderwriter thereof; and\n ``(ii) does not include a\ndecentralized governance system.\n ``(B) Senior employee defined.--In this\nparagraph and with respect to a digital commodity\nissuer, the term `senior employee' means any employee\nmaterially involved in the management of the digital\ncommodity issuer, including management of the\ndevelopment of the blockchain system to which the\ndigital commodity relates.\n ``(30) End user distribution.--\n ``(A) In general.--The term `end user\ndistribution' means a distribution of a unit of a\ndigital commodity that--\n ``(i) does not involve an exchange\nof more than a nominal value of cash, property,\nor other assets; and\n ``(ii) is distributed in a broad\nand equitable manner based on conditions\ncapable of being satisfied by any participant\nin the blockchain system, including, as\nincentive-based rewards--\n ``(I) to users of the\ndigital commodity or any blockchain\nsystem to which the digital commodity\nrelates;\n ``(II) for activities\ndirectly related to the operation of\nthe blockchain system, such as mining,\nvalidating, staking, or other activity\ndirectly tied to the operation of the\nblockchain system; or\n ``(III) to the existing\nholders of another digital commodity,\nin proportion to the total units of\nsuch other digital commodity as are\nheld by each person.\n ``(B) Protocol consensus participation.--\nThe term `end user distribution' includes the\nfollowing:\n ``(i) Self staking.--The\ndistribution of a unit of a digital commodity\nas a programmatic result of validating or\nstaking activity for a blockchain system's\nconsensus mechanism, including the staking of a\ndigital commodity and the operation of a node\nor validator for such activity where the owner\nof the staked digital commodity and operator of\nthe node or validator are the same person or\nentity.\n ``(ii) Self-custodial staking with\na third party.--The distribution of a unit of a\ndigital commodity as a programmatic result of\nvalidating or staking activity for a blockchain\nsystem's consensus mechanism, including the\nstaking of a digital commodity and the\noperation of a node or validator for such\nactivity where--\n ``(I) the owner of the\nstaked digital commodity and operator\nof the node or validator for such\nactivity are different persons or\nentities; and\n ``(II) the operator of the\nnode or validator does not maintain\ncustody or control of the staked\ndigital commodity.\n ``(iii) Custodial and ancillary\nstaking services.--Subject to the rules issued\npursuant to subparagraph (C), the provision of\ncustodial or ancillary staking services\nenabling the owner of a digital commodity to\nparticipate in validating or staking activity\nfor a blockchain system's consensus mechanism\nthat results in the programmatic distribution\nof a unit of a digital commodity, provided that\nsuch custodial or ancillary services are\nexclusively administrative or ministerial in\nnature.\n ``(C) Rulemaking to define the custodial\nand ancillary staking services.--Not later than 270\ndays after the date of the enactment of this paragraph,\nthe Commission shall issue rules defining the custodial\nand ancillary staking services described in\nsubparagraph (B)(iii) that are exclusively\nadministrative or ministerial in nature, consistent\nwith what is necessary or appropriate for the public\ninterest or for the protection of investors.\n ``(31) Mature blockchain system.--The term `mature\nblockchain system' means a blockchain system, together with its\nrelated digital commodity, that is not controlled by any person\nor group of persons under common control.\n ``(32) Permitted payment stablecoin.--The term\n`permitted payment stablecoin' means a payment stablecoin (as\ndefined in section 2 of the GENIUS Act) issued by a permitted\npayment stablecoin issuer.\n ``(33) Permitted payment stablecoin issuer.--The\nterm `permitted payment stablecoin issuer' has the meaning\ngiven that term in section 2 of the GENIUS Act.''.\n\nSEC. 102. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF\n1934.\n\n Section 3(a) of the Securities Exchange Act of 1934 (15\nU.S.C. 78c(a)) is amended--\n (1) by redesignating the second paragraph (80)\n(relating to funding portals) as paragraph (81); and\n (2) by adding at the end the following:\n ``(82) Bank secrecy act.--The term `Bank Secrecy\nAct' means--\n ``(A) section 21 of the Federal Deposit\nInsurance Act (12 U.S.C. 1829b);\n ``(B) chapter 2 of title I of Public Law\n91-508 (12 U.S.C. 1951 et seq.); and\n ``(C) subchapter II of chapter 53 of title\n31, United States Code.\n ``(83) Additional digital commodity-related\nterms.--\n ``(A) Securities act of 1933.--The terms\n`blockchain system', `decentralized governance system',\n`digital asset', `digital commodity affiliated person',\n`digital commodity issuer', `digital commodity related\nperson', `end user distribution', `mature blockchain\nsystem', `permitted payment stablecoin', and `permitted\npayment stablecoin issuer' have the meaning given those\nterms, respectively, under section 2(a) of the\nSecurities Act of 1933 (15 U.S.C. 77b(a)).\n ``(B) Commodity exchange act.--The terms\n`digital commodity', `digital commodity broker',\n`digital commodity dealer', `digital commodity\nexchange', `decentralized finance messaging system',\nand `decentralized finance trading protocol' have the\nmeaning given those terms, respectively, under section\n1a of the Commodity Exchange Act (7 U.S.C.\n1a).''.\n\nSEC. 103. DEFINITIONS UNDER THE COMMODITY EXCHANGE ACT.\n\n (a) In General.--Section 1a of the Commodity Exchange Act\n(7 U.S.C. 1a) is amended--\n (1) in paragraph (10)--\n (A) in subparagraph (A)--\n (i) by redesignating clauses (iii)\nand (iv) as clauses (iv) and (v), respectively;\nand\n (ii) by inserting after clause\n(ii) the following:\n ``(iii) digital commodity;'';\nand\n (B) by redesignating subparagraph (B) as\nsubparagraph (C) and inserting after subparagraph (A)\nthe following:\n ``(B) Exclusion.--For purposes of this\nparagraph, the term `trading in commodity interests'\nshall not include transacting in digital commodities\nfor the purpose of--\n ``(i) acting as a digital\ncommodity custodian;\n ``(ii) establishing, maintaining,\nor managing inventory or payment instruments\nfor commercial purposes; or\n ``(iii) maintaining or supporting\nthe operation of, or validating transactions\non, a blockchain system.'';\n (2) in paragraph (11)--\n (A) in subparagraph (A)(i)--\n (i) by redesignating subclauses\n(III) and (IV) as subclauses (IV) and (V),\nrespectively; and\n (ii) by inserting after subclause\n(II) the following:\n ``(III) digital\ncommodity;''; and\n (B) by redesignating subparagraph (B) as\nsubparagraph (C) and inserting after subparagraph (A)\nthe following:\n ``(B) Exclusion.--For purposes of this\nparagraph, the term `trading in commodity interests'\nshall not include transacting in digital commodities\nfor the purpose of--\n ``(i) acting as a digital\ncommodity custodian;\n ``(ii) establishing, maintaining,\nor managing inventory or payment instruments\nfor commercial purposes; or\n ``(iii) maintaining or supporting\nthe operation of, or validating transactions\non, a blockchain system.'';\n (3) in paragraph (12)(A)(i)--\n (A) in subclause (II), by adding at the\nend a semicolon;\n (B) by redesignating subclauses (III) and\n(IV) as subclauses (IV) and (V), respectively;\nand\n (C) by inserting after subclause (II) the\nfollowing:\n ``(III) a digital\ncommodity;'';\n (4) by redesignating paragraphs (16) through (51)\nas paragraphs (17) through (52), respectively, and inserting\nafter paragraph (15) the following:\n ``(16) Terms related to digital commodities.--\n\n ``(A) Associated person of a digital\ncommodity broker.--\n ``(i) In general.--Except as\nprovided in clause (ii), the term `associated\nperson of a digital commodity broker' means a\nperson who is associated with a digital\ncommodity broker as a partner, officer,\nemployee, or agent (or any person occupying a\nsimilar status or performing similar functions)\nin any capacity that involves--\n ``(I) the solicitation or\nacceptance of an order for the purchase\nor sale of a digital commodity;\nor\n ``(II) the supervision of\nany person engaged in the solicitation\nor acceptance of an order for the\npurchase or sale of a digital\ncommodity.\n ``(ii) Exclusion.--The term\n`associated person of a digital commodity\nbroker' does not include any person associated\nwith a digital commodity broker the functions\nof which are solely clerical or\nministerial.\n ``(B) Associated person of a digital\ncommodity dealer.--\n ``(i) In general.--Except as\nprovided in clause (ii), the term `associated\nperson of a digital commodity dealer' means a\nperson who is associated with a digital\ncommodity dealer as a partner, officer,\nemployee, or agent (or any person occupying a\nsimilar status or performing similar functions)\nin any capacity that involves--\n ``(I) the solicitation or\nacceptance of a contract for the\npurchase or sale of a digital\ncommodity; or\n ``(II) the supervision of\nany person engaged in the solicitation\nor acceptance of a contract for the\npurchase or sale of a digital\ncommodity.\n ``(ii) Exclusion.--The term\n`associated person of a digital commodity\ndealer' does not include any person associated\nwith a digital commodity dealer the functions\nof which are solely clerical or\nministerial.\n ``(C) Bank secrecy act.--The term `Bank\nSecrecy Act' means--\n ``(i) section 21 of the Federal\nDeposit Insurance Act (12 U.S.C.\n1829b);\n ``(ii) chapter 2 of title I of\nPublic Law 91-508 (12 U.S.C. 1951 et seq.);\nand\n ``(iii) subchapter II of chapter\n53 of title 31, United States Code.\n ``(D) Decentralized finance messaging\nsystem.--\n ``(i) In general.--The term\n`decentralized finance messaging system' means\na software application that provides a user\nwith the ability to create or submit an\ninstruction, communication, or message to a\ndecentralized finance trading protocol for the\npurpose of executing a transaction by the\nuser.\n ``(ii) Additional requirements.--\nThe term `decentralized finance messaging\nsystem' does not include any system that\nprovides any person other than the user with\ncontrol over--\n ``(I) the funds of the\nuser; or\n ``(II) the execution of\nthe transaction of the user.\n ``(E) Decentralized finance trading\nprotocol.--\n ``(i) In general.--The term\n`decentralized finance trading protocol' means\na blockchain system through which multiple\nparticipants can execute a financial\ntransaction--\n ``(I) in accordance with\nan automated rule or algorithm that is\npredetermined and non-discretionary;\nand\n ``(II) without reliance on\nany other person to maintain control of\nthe digital assets of the user during\nany part of the financial\ntransaction.\n ``(ii) Exclusions.--\n ``(I) In general.--The\nterm `decentralized finance trading\nprotocol' does not include a blockchain\nsystem if--\n ``(aa) a person or\ngroup of persons under common\ncontrol or acting pursuant to\nan agreement to act in concert\nhas the authority, directly or\nindirectly, through any\ncontract, arrangement,\nunderstanding, relationship, or\notherwise, to control or\nmaterially alter the\nfunctionality, operation, or\nrules of consensus or agreement\nof the blockchain system;\nor\n ``(bb) the\nblockchain system does not\noperate, execute, and enforce\nits operations and transactions\nbased solely on pre-\nestablished, transparent rules\nencoded directly within the\nsource code of the blockchain\nsystem.\n ``(II) Special rule.--For\npurposes of subclause (I), a\ndecentralized governance system shall\nnot be considered to be a person or a\ngroup of persons under common control\nor acting pursuant to an agreement to\nact in concert.\n ``(F) Digital commodity.--\n ``(i) In general.--The term\n`digital commodity' means a digital asset that\nis intrinsically linked to a blockchain system,\nand the value of which is derived from or is\nreasonably expected to be derived from the use\nof the blockchain system.\n ``(ii) Relationship to a\nblockchain system.--For purposes of this\nsubparagraph, a digital asset is intrinsically\nlinked to a blockchain system if the digital\nasset is directly related to the functionality\nor operation of the blockchain system or to the\nactivities or services for which the blockchain\nsystem is created or utilized, including where\nthe digital asset is--\n ``(I) issued or generated\nby the programmatic functioning of the\nblockchain system;\n ``(II) used to transfer\nvalue between participants in the\nblockchain system;\n ``(III) used to access the\nactivities or services of the\nblockchain system;\n ``(IV) used to participate\nin the decentralized governance system\nof the blockchain system;\n ``(V) used or removed from\ncirculation in whole or in part to pay\nfees or otherwise verify or validate\ntransactions on the blockchain\nsystem;\n ``(VI) used as payment or\nincentive to participants in the\nblockchain system to engage in the\nactivities of the blockchain system,\nprovide services to other participants\nin the blockchain system, or otherwise\nparticipate in the functionality of the\nblockchain system; or\n ``(VII) used as payment or\nincentive to participants in the\nblockchain system to validate\ntransactions, secure the blockchain\nsystem, provide computational services,\nmaintain or distribute information, or\notherwise participate in the operations\nof the blockchain system.\n ``(iii) Exclusion.--The term\n`digital commodity' does not include any of the\nfollowing:\n ``(I) Security.--\n\n ``(aa) Any\nsecurity, other than a note, an\ninvestment contract, or a\ncertificate of interest or\nparticipation in any profit-\nsharing agreement.\n ``(bb) A note, an\ninvestment contract, or a\ncertificate of interest or\nparticipation in any profit-\nsharing agreement that--\n\n\n ``(AA)\nrepresents or gives the\nholder an ownership\ninterest or other\ninterest in the\nrevenues, profits,\nobligations, debts,\nassets, or assets or\ndebts to be acquired of\nthe issuer of the\ndigital asset or\nanother person (other\nthan a decentralized\ngovernance\nsystem);\n\n ``(BB)\nmakes the holder a\ncreditor of the issuer\nof the digital asset or\nanother person;\nor\n\n ``(CC)\nrepresents or gives the\nholder the right to\nreceive interest or the\nreturn of principal\nfrom the issuer of the\ndigital asset or\nanother\nperson.\n\n ``(II) Security\nderivative.--A digital asset that,\nbased on its terms and other\ncharacteristics, is, represents, or is\nfunctionally equivalent to an\nagreement, contract, or transaction\nthat is--\n ``(aa) a security\nfuture, as defined in section\n2a of the Securities Act of\n1933;\n ``(bb) a security-\nbased swap, as defined in\nsection 2a of the Securities\nAct of 1933;\n ``(cc) a put,\ncall, straddle, option, or\nprivilege on any security,\ncertificate of deposit, or\ngroup or index of securities\n(including any interest therein\nor based on the value thereof),\nas defined in section 2a of the\nSecurities Act of 1933;\nor\n ``(dd) a put,\ncall, straddle, option, or\nprivilege on any security, as\ndefined in section 2a of the\nSecurities Act of\n1933.\n ``(III) Permitted payment\nstablecoin.--A digital asset that is a\npermitted payment stablecoin.\n ``(IV) Banking deposit.--\n\n ``(aa) A deposit\n(as defined under section 3 of\nthe Federal Deposit Insurance\nAct (12 U.S.C. 1813)),\nregardless of the technology\nused to record the\ndeposit.\n ``(bb) An account\n(as defined in section 101 of\nthe Federal Credit Union Act\n(12 U.S.C. 1752)), regardless\nof the technology used to\nrecord the account.\n ``(V) Commodity.--A\ndigital asset that references,\nrepresents an interest in, or is\nfunctionally equivalent to--\n ``(aa) an\nagricultural\ncommodity;\n ``(bb) an excluded\ncommodity, other than a\nsecurity; or\n ``(cc) an exempt\ncommodity, other than the\ndigital commodity itself, as\nshall be further defined by the\nCommission.\n ``(VI) Commodity\nderivative.--A digital asset that,\nbased on its terms and other\ncharacteristics, is, represents, or is\nfunctionally equivalent to an\nagreement, contract, or transaction\nthat is--\n ``(aa) a contract\nof sale of a commodity for\nfuture delivery or an option\nthereon;\n ``(bb) a security\nfutures product;\n ``(cc) a\nswap;\n ``(dd) an\nagreement, contract, or\ntransaction described in\nsection 2(c)(2)(C)(i) or\nsection\n2(c)(2)(D)(i);\n ``(ee) a commodity\noption authorized under section\n4c; or\n ``(ff) a leverage\ntransaction authorized under\nsection 19.\n ``(VII) Pooled investment\nvehicle.--\n ``(aa) In\ngeneral.--A digital asset not\ndescribed by subclause (I)\nthat, based on its terms and\nother characteristics, is,\nrepresents, or is functionally\nequivalent to an interest in--\n\n\n ``(AA) a\ncommodity pool, as\ndefined in this Act;\nor\n\n ``(BB) a\npooled investment\nvehicle.\n\n ``(bb) Pooled\ninvestment vehicle defined.--In\nthis subclause, the term\n`pooled investment vehicle'\nmeans--\n\n ``(AA) any\ninvestment company as\ndefined in section 3(a)\nof the Investment\nCompany Act of 1940 (15\nU.S.C. 80a-\n3(a));\n\n ``(BB) any\ncompany (as defined in\nsection 2 of such Act\n(15 U.S.C. 80a-2)) that\nwould be an investment\ncompany under section\n3(a) of such Act but\nfor the exclusions\nprovided from that\ndefinition by section\n3(c) of such Act, if\nfor purposes of this\nsubclause the company\nwere assumed to be an\nissuer (as defined in\nsection 2 of such Act);\nor\n\n ``(CC) any\nentity or person that\nis not an investment\ncompany but holds or\nwill hold assets other\nthan\nsecurities.\n\n ``(VIII) Good,\ncollectible, and other non-commodity\nasset.--A digital asset that has value,\nutility, or significance beyond its\nmere existence as a digital asset,\nincluding the digital equivalent of a\ntangible or intangible good, such as--\n\n ``(aa) a work of\nart, a musical composition, a\nliterary work, or other\nintellectual\nproperty;\n ``(bb)\ncollectibles, merchandise,\nvirtual land, and video game\nassets;\n ``(cc) affinity,\nrewards, or loyalty points,\nincluding airline miles or\ncredit card points, that are\nnot primarily speculative in\nnature; or\n ``(dd) rights,\nlicenses, and\ntickets.\n ``(iv) Rule of construction.--No\npresumption shall exist that a digital asset is\na security, nor shall a digital asset be\nexcluded from being a digital commodity\npursuant to clause (iii)(I), solely due to--\n\n ``(I) the digital asset\nproviding voting or economic rights\nwith respect to the blockchain system\nto which the digital asset relates or\nthe decentralized governance system of\nthe blockchain system to which the\ndigital asset relates;\n ``(II) the value of the\ndigital asset having the potential to\nappreciate or depreciate in response to\nthe efforts, operations, or financial\nperformance of the blockchain system to\nwhich the digital asset relates or the\ndecentralized governance system of the\nblockchain system to which the digital\nasset relates; or\n ``(III) the value of the\ndigital asset appreciating or\ndepreciating due to the use of the\nblockchain system to which the digital\nasset relates or the decentralized\ngovernance system of the blockchain\nsystem to which the digital asset\nrelates.\n ``(G) Digital commodity broker.--\n\n ``(i) In general.--The term\n`digital commodity broker' means any person\nwho, as a regular business--\n ``(I) is engaged in--\n\n ``(aa) soliciting\nor accepting an order from a\ncustomer for--\n\n ``(AA) the\npurchase or sale of a\ndigital commodity;\nor\n\n ``(BB) an\nagreement, contract, or\ntransaction described\nin section\n2(c)(2)(D)(iv);\nand\n\n ``(bb) in\nconjunction with the activities\nin item (aa), accepts or\nmaintains control over--\n\n\n ``(AA) the\nfunds of any customer;\nor\n\n ``(BB) the\nexecution of any\ntransaction of a\ncustomer;\n\n ``(II) is engaged in\nsoliciting or accepting orders from a\ncustomer for the purchase or sale of a\nunit of a digital commodity on or\nsubject to the rules of a registered\nentity; or\n ``(III) is registered with\nthe Commission as a digital commodity\nbroker.\n ``(ii) Exceptions.--The term\n`digital commodity broker' does not include a\nperson solely because the person--\n ``(I) solicits or accepts\nan order described in clause\n(i)(I)(aa)(AA) from a customer who is\nan eligible contract\nparticipant;\n ``(II) enters into 1 or\nmore digital commodity transactions\nthat are attributable or solely\nincidental to making, sending,\nreceiving, or facilitating payments,\nwhether involving a payment service\nprovider or on a peer-to-peer basis;\nor\n ``(III) is a bank (as\ndefined under section 3(a) of the\nSecurities Exchange Act of 1934)\nengaging in certain banking activities\nwith respect to a digital commodity in\nthe same or a similar manner as a bank\nis excluded from the definition of a\nbroker under such section, as\ndetermined by the Commission.\n ``(iii) Further definition.--The\nCommission, by rule or regulation, may exclude\nfrom the term `digital commodity broker' any\nperson or class of persons if the Commission\ndetermines that the rule or regulation will\neffectuate the purposes of this Act.\n ``(H) Digital commodity dealer.--\n\n ``(i) In general.--The term\n`digital commodity dealer' means any person\nwho, as a regular business--\n ``(I) is, or offers to be\na counterparty to a person for the\npurchase or sale of a digital commodity\nas a regular business, and in\nconjunction with the activities,\naccepts or maintains control over the\nfunds of any counterparty; or\n ``(II) is registered with\nthe Commission as a digital commodity\ndealer.\n ``(ii) Exception.--The term\n`digital commodity dealer' does not include a\nperson solely because the person--\n ``(I) is or offers to be a\ncounterparty to a person who is an\neligible contract\nparticipant;\n ``(II) enters into a\ndigital commodity transaction with an\neligible contract\nparticipant;\n ``(III) enters into a\ndigital commodity transaction on or\nthrough a registered digital commodity\nexchange, with a registered digital\ncommodity broker, or through a\ndecentralized finance trading\nprotocol;\n ``(IV) enters into a\ndigital commodity transaction for the\nperson's own account, either\nindividually or in a fiduciary\ncapacity, but not as a part of a\nregular business;\n ``(V) enters into 1 or\nmore digital commodity transactions\nthat are attributable or solely\nincidental to making, sending,\nreceiving, or facilitating payments,\nwhether involving a payment service\nprovider or on a peer-to-peer basis;\nor\n ``(VI) is a bank (as\ndefined under section 3(a) of the\nSecurities Exchange Act of 1934)\nengaging in certain banking activities\nwith respect to a digital commodity in\nthe same or a similar manner as a bank\nis excluded from the definition of a\ndealer under section 3(a)(5) of such\nAct, as determined by the\nCommission.\n ``(iii) Further definition.--The\nCommission, by rule or regulation, may exclude\nfrom the term `digital commodity dealer' any\nperson or class of persons if the Commission\ndetermines that the rule or regulation will\neffectuate the purposes of this Act.\n ``(I) Digital commodity exchange.--The\nterm `digital commodity exchange' means a trading\nfacility that offers or seeks to offer a cash or spot\nmarket in at least 1 digital commodity.\n ``(J) Mixed digital asset transaction.--\nThe term `mixed digital asset transaction' means a\ntransaction in which a digital commodity is traded for\na security.\n ``(K) Terms defined under the securities\nact of 1933.--The terms `blockchain system',\n`decentralized governance system', `digital asset',\n`digital commodity issuer', `digital commodity\naffiliated person', `digital commodity related person',\n`end user distribution', `mature blockchain system',\n`permitted payment stablecoin', and `permitted payment\nstablecoin issuer' have the meaning given those terms,\nrespectively, under section 2(a) of the Securities Act\nof 1933 (15 U.S.C. 77b(a)).''; and\n (5) in paragraph (41) (as so redesignated by\nparagraph (4) of this subsection)--\n (A) by striking ``and'' at the end of\nsubparagraph (E);\n (B) by striking the period at the end of\nsubparagraph (F) and inserting ``; and''; and\n (C) by adding at the end the\nfollowing:\n ``(G) a digital commodity exchange\nregistered under section 5i.''.\n (b) Conforming Amendments.--\n (1) Each of the following provisions of law is\namended by striking ``1a(18)'' and inserting\n``1a(19)'':\n (A) Section 4s(h)(5)(A)(i) of the\nCommodity Exchange Act (7 U.S.C.\n6s(h)(5)(A)(i)).\n (B) Section 5(e) of the Securities Act of\n1933 (15 U.S.C. 77e(e)).\n (C) Section 6(g)(5)(B) of the Securities\nExchange Act of 1934 (15 U.S.C.\n78f(g)(5)(B)).\n (D) Section 15F(h)(5)(A)(i) of the\nSecurities Exchange Act of 1934 (15 U.S.C. 78o-\n10(h)(5)(A)(i)).\n (2) Section 752 of the Wall Street Transparency\nand Accountability Act of 2010 (15 U.S.C. 8325) is amended by\nstriking ``1a(39)'' and inserting ``1a(40)''.\n (3) Section 4s(f)(1)(D) of the Commodity Exchange\nAct (7 U.S.C. 6s(f)(1)(D)) is amended by striking ``1a(47)(A)''\nand inserting ``1a(48)(A)''.\n (4) Each of the following provisions of the\nCommodity Exchange Act is amended by striking ``1a(47)(A)(v)''\nand inserting ``1a(48)(A)(v)'':\n (A) Section 4t(b)(1)(C) (7 U.S.C.\n6t(b)(1)(C)).\n (B) Section 5(d)(23) (7 U.S.C.\n7(d)(23)).\n (C) Section 5b(k)(3) (7 U.S.C. 7a-\n1(k)(3)).\n (D) Section 5h(f)(10)(A)(iii) (7 U.S.C.\n7b-3(f)(10)(A)(iii)).\n (5) Section 21(f)(4)(C) of the Commodity Exchange\nAct (7 U.S.C. 24a(f)(4)(C)) is amended by striking ``1a(48)''\nand inserting ``1a(49)''.\n (6) Section 403 of the Legal Certainty for Bank\nProducts Act of 2000 (7 U.S.C. 27a) is amended--\n (A) in subsection (a)(2), by striking\n``1a(47)(A)(v)'' and inserting ``1a(48)(A)(v)'';\nand\n (B) in each of subsections (b)(1) and\n(c)(2), by striking ``1a(47)'' and inserting\n``1a(48)''.\n (7) Section 712 of the Wall Street Transparency\nand Accountability Act of 2010 (15 U.S.C. 8302) is amended--\n\n (A) in subsection (a)(8), by striking\n``1a(47)(D)'' each place it appears and inserting\n``1a(48)(D)''; and\n (B) in subsection (d)(1), by striking\n``1a(47)(A)(v)'' each place it appears and inserting\n``1a(48)(A)(v)''.\n\nSEC. 104. DEFINITIONS UNDER THIS ACT.\n\n In this Act:\n (1) Definitions under the commodity exchange\nact.--The terms ``decentralized finance messaging system'',\n``decentralized finance trading protocol'', ``digital\ncommodity'', ``digital commodity broker'', ``digital commodity\ndealer'', ``digital commodity exchange'', and ``mixed digital\nasset transaction'' have the meaning given those terms,\nrespectively, under section 1a of the Commodity Exchange Act (7\nU.S.C. 1a).\n (2) Definitions under the securities act of\n1933.--The terms ``blockchain'', ``blockchain system'',\n``blockchain protocol'', ``decentralized governance system'',\n``digital asset'', ``digital commodity issuer'', ``end user\ndistribution'', ``mature blockchain system'', ``permitted\npayment stablecoin'', and ``permitted payment stablecoin\nissuer'' have the meaning given those terms, respectively,\nunder section 2(a) of the Securities Act of 1933 (15 U.S.C.\n77b(a)).\n (3) Definitions under the securities exchange act\nof 1934.--The terms ``Bank Secrecy Act'', ``securities laws'',\nand ``self-regulatory organization'' have the meaning given\nthose terms, respectively, under section 3(a) of the Securities\nExchange Act of 1934 (15 U.S.C. 78c(a)).\n\nSEC. 105. RULEMAKINGS.\n\n (a) Definitions.--The Commodity Futures Trading Commission\nand the Securities and Exchange Commission shall jointly issue rules to\nfurther define the following terms:\n (1) The terms--\n (A) ``blockchain'', ``blockchain\napplication'', ``blockchain system'', ``blockchain\nprotocol'', ``decentralized governance system'',\n``digital commodity affiliated person'', ``digital\ncommodity issuer'', ``digital commodity related\nperson'', ``end user distribution'', and ``mature\nblockchain system'', as defined under section 2(a) of\nthe Securities Act of 1933;\n (B) ``unilateral authority'', as such term\nis used in section 42 of the Securities Exchange Act of\n1934 and section 1a of the Commodity Exchange Act;\nand\n (C) ``programmatic functioning'', as such\nterm is used in sections 4C of the Securities Act of\n1933, section 42 of the Securities Exchange Act of\n1934, and section 1a of the Commodity Exchange\nAct.\n (2) The terms ``digital commodity'',\n``decentralized finance messaging system'', and ``decentralized\nfinance trading protocol'', as defined under section 1a of the\nCommodity Exchange Act.\n (b) Joint Rulemaking for Mixed Digital Asset\nTransactions.--The Securities and Exchange Commission and the Commodity\nFutures Trading Commission shall jointly issue rules applicable to\nmixed digital asset transactions under this Act and the amendments made\nby this Act, including by further defining such term.\n (c) Protection of Self-Custody.--\n (1) In general.--A United States individual shall\nretain the right to--\n (A) maintain a hardware wallet or software\nwallet for the purpose of facilitating the individual's\nown lawful custody of digital assets; and\n (B) engage in direct, peer-to-peer\ntransactions in digital assets with another individual\nor entity for the individual's own lawful purposes\nusing a hardware wallet or software wallet, if--\n\n (i) such other individual or\nentity is not a financial institution (as\ndefined in section 5312 of title 31, United\nStates Code); and\n (ii) the transactions do not\ninvolve any property or interests in property\nthat are blocked pursuant to, or are otherwise\nprohibited by, United States\nsanctions.\n (2) Application.--This subsection--\n (A) applies solely to personal use by\nindividuals; and\n (B) does not apply to individuals acting\nin a custodial or fiduciary capacity for\nothers.\n (3) Rule of construction.--Nothing in this\nsubsection shall be construed to limit the authority of the\nSecretary of the Treasury, the Securities and Exchange\nCommission, the Commodity Futures Trading Commission, the Board\nof Governors of the Federal Reserve System, the Comptroller of\nthe Currency, the Federal Deposit Insurance Corporation, or the\nNational Credit Union Administration to carry out any\nenforcement action or special measure authorized under\napplicable law, including--\n (A) the Bank Secrecy Act, section 9714 of\nthe Combating Russian Money Laundering Act (31 U.S.C.\n5318A note), and section 7213A of the Fentanyl\nSanctions Act (21 U.S.C. 2313a); or\n (B) any other law relating to illicit\nfinance, money laundering, terrorism financing, or\nUnited States sanctions.\n (d) Joint Rulemaking, Procedures, or Guidance for\nDelisting.--Not later than 180 days after the date of the enactment of\nthis Act, the Commodity Futures Trading Commission and the Securities\nand Exchange Commission shall jointly issue rules, procedures, or\nguidance (as determined appropriate by the Commissions) regarding the\nprocess to delist an asset for trading under section 106 if the\nCommissions determine that the listing is inconsistent with the\nCommodity Exchange Act, the securities laws (including regulations\nunder those laws), or this Act.\n (e) Joint Rules for Portfolio Margining Determinations.--\n\n (1) In general.--Not later than 360 days after the\ndate of the enactment of this Act, the Commodity Futures\nTrading Commission and the Securities and Exchange Commission\nshall jointly issue rules describing the process for persons\nregistered with either such Commission to seek a joint order or\ndetermination with respect to margin, customer protection,\nsegregation, or other requirements as necessary to facilitate\nportfolio margining of securities (including related extensions\nof credit), security-based swaps, contracts for future\ndelivery, options on a contract for future delivery, swaps, and\ndigital commodities, or any subset thereof, in--\n (A) a securities account carried by a\nregistered broker or dealer or a security-based swap\naccount carried by a registered security-based swap\ndealer;\n (B) a futures or cleared swap account\ncarried by a registered futures commission\nmerchant;\n (C) a swap account carried by a swap\ndealer; or\n (D) a digital commodity account carried by\na registered digital commodity broker or digital\ncommodity dealer that is also registered in such other\ncapacity as is necessary to also carry the other\ncustomer or counterparty positions being held in the\naccount.\n (2) Process.--With respect to a joint order or\ndetermination described in paragraph (1), the rules required to\nbe issued pursuant to paragraph (1) shall require--\n (A) the joint order or determination to be\nissued only if the order or determination is in the\npublic interest and provides for the appropriate\nprotection of customers;\n (B) applicants to file a standard\napplication, in a form and manner determined by the\nSecurities and Exchange Commission and the Commodity\nFutures Trading Commission, which shall include the\ninformation necessary to make the joint order or\ndetermination;\n (C) the Securities and Exchange Commission\nand the Commodity Futures Trading Commission to make a\nfinal determination not later than 270 days after the\nfiling of a completed application;\n (D) the Securities and Exchange Commission\nand the Commodity Futures Trading Commission to\nconsider the public interest of the joint order or\ndetermination through the solicitation of public\ncomments; and\n (E) the Securities and Exchange Commission\nand the Commodity Futures Trading Commission to consult\nwith other relevant foreign or domestic regulators,\nincluding the Board of Governors of the Federal Reserve\nSystem, the Federal Deposit Insurance Corporation, and\nthe Office of the Comptroller of the Currency, as\nappropriate.\n (f) Capital Requirements to Address Netting Agreements.--\nNo later than 360 days following the date of enactment of this Act, the\nBoard of Governors of the Federal Reserve System, the Comptroller of\nthe Currency, and the Federal Deposit Insurance Corporation shall\ndevelop risk-based and leverage capital requirements for insured\ndepository institutions, depository institution holding companies, and\nnonbank financial companies supervised by the Board of Governors that\naddress netting agreements that provide for termination and close-out\nnetting across multiple types of financial transactions, consistent\nwith subsection (e), in the event of a counterparty's\ndefault.\n\nSEC. 106. EXPEDITED REGISTRATION FOR DIGITAL COMMODITY\nEXCHANGES, BROKERS, AND DEALERS; PROVISIONAL\nSTATUS.\n\n (a) Registration.--\n (1) In general.--Unless exempted from\nregistration, a person shall not act as a digital commodity\nbroker, digital commodity dealer, or digital commodity exchange\nafter the end of the 90-day period beginning on the date the\nprocess described in paragraph (2) is adopted by the Commodity\nFutures Trading Commission, unless, as the case may be, the\nperson is registered as a--\n (A) digital commodity broker pursuant to\nsection 4u of the Commodity Exchange Act;\n (B) digital commodity dealer pursuant to\nsection 4u of the Commodity Exchange Act; or\n (C) digital commodity exchange pursuant to\nsection 5i of the Commodity Exchange Act.\n (2) Expedited process.--Within 180 days after the\ndate of the enactment of this Act, the Commodity Futures\nTrading Commission shall adopt, by rule, regulation, or order,\na process for expedited registration of persons required to be\nregistered pursuant to paragraph (1).\n (b) Provisional Status.--\n (1) In general.--A person who is registered in\naccordance with subsection (a) of this section shall be in\nprovisional status until--\n (A) in the case of a digital commodity\nbroker or dealer, 270 days after the final effective\ndate of the rulemakings required under section 4u of\nthe Commodity Exchange Act; or\n (B) in the case of a digital commodity\nexchange, 270 days after the final effective date of\nthe rulemakings required under section 5i of such\nAct.\n (2) Payment of fees.--A person in provisional\nstatus shall pay all fees and penalties required under section\n410.\n (c) Operations Prior to Regulations.--\n (1) Requirements.--A person in provisional status\nshall be subject to the requirements of this section and the\nCommodity Exchange Act and any rules or regulations promulgated\nunder this section or the Commodity Exchange Act, as\napplicable.\n (2) Listings.--\n (A) In general.--Except as provided in\nsubparagraph (B), a person in provisional status may\ncontinue to offer, solicit, trade, facilitate, execute,\nclear, report, or otherwise deal in any digital asset\noffered on or through the facilities of the person\nbefore the date of registration under this section,\nuntil such time as the joint rulemaking on definitions\nrequired under section 105(a) is effective.\n (B) Delisting.--Before the effective date\nof the joint rulemaking on definitions under section\n105(a), a person in provisional status shall cease\noffering, soliciting, trading, facilitating, executing,\nclearing, reporting, or otherwise dealing in any\ndigital asset required to be delisted pursuant to a\njoint delisting process established under section\n105(d).\n (3) Exemptive authority.--In order to promote\nresponsible innovation and fair competition, or protect\ncustomers, the Commodity Futures Trading Commission may exempt\nany persons or class of persons registered pursuant to\nsubsection (a) and in provisional status pursuant to subsection\n(b) from any requirements of this section or the Commodity\nExchange Act or any rules or regulations promulgated under this\nsection or the Commodity Exchange Act, as applicable.\n (d) Customer Disclosure Before Registration.--\n (1) In general.--Beginning 30 days after the date\nof the enactment of this Act, any person acting as a digital\ncommodity exchange, digital commodity broker, or digital\ncommodity dealer shall disclose to the customers of the person\nso acting, in the disclosure documents, offering documents, and\npromotional material of the person so acting, in a prominent\nmanner, that the person is not registered with or regulated by\nthe Commodity Futures Trading Commission.\n (2) Expiration.--Paragraph (1) of this subsection\nshall not apply to any person who registers pursuant to\nsubsection (a).\n\nSEC. 107. COMMODITY EXCHANGE ACT AND SECURITIES LAWS SAVINGS\nPROVISIONS.\n\n (a) In General.--Nothing in this Act shall affect or apply\nto, or be interpreted to affect or apply to--\n (1) any agreement, contract, or transaction that\nis subject to the Commodity Exchange Act as--\n (A) a contract of sale of a commodity for\nfuture delivery or an option on such a\ncontract;\n (B) a swap;\n (C) a security futures product;\n (D) an option authorized under section 4c\nof such Act;\n (E) an agreement, contract, or transaction\ndescribed in section 2(c)(2)(C)(i) of such Act;\nor\n (F) a leverage transaction authorized\nunder section 19 of such Act;\n (2) any agreement, contract, or transaction that\nis subject to the securities laws as--\n (A) a security-based swap;\n (B) a security futures product;\nor\n (C) an option on or based on the value of\na security; or\n (3) the activities of any person with respect to\nany such agreement, contract, or transaction.\n (b) Prohibitions on Spot Digital Commodity Entities.--\nNothing in this Act authorizes, or shall be interpreted to authorize, a\ndigital commodity exchange, digital commodity broker, or digital\ncommodity dealer to engage in any activities involving any transaction,\ncontract, or agreement described in subsection (a)(1), solely by virtue\nof being registered as a digital commodity exchange, digital commodity\nbroker, or digital commodity dealer.\n (c) Definitions.--In this section, each term shall have\nthe meaning provided in the Commodity Exchange Act or the regulations\nprescribed under such Act.\n\nSEC. 108. ADMINISTRATIVE REQUIREMENTS.\n\n Section 4c(a) of the Commodity Exchange Act (7 U.S.C.\n6c(a)) is amended--\n (1) in paragraph (3)--\n (A) in subparagraph (B), by striking\n``or'' at the end;\n (B) in subparagraph (C), by striking the\nperiod and inserting ``; or''; and\n (C) by adding at the end the\nfollowing:\n ``(D) a contract of sale of a digital\ncommodity.'';\n (2) in paragraph (4)--\n (A) in subparagraph (A)--\n (i) in clause (ii), by striking\n``or'' at the end;\n (ii) in clause (iii), by striking\nthe period and inserting ``; or'';\nand\n (iii) by adding at the end the\nfollowing:\n ``(iv) a contract of sale of a\ndigital commodity.'';\n (B) in subparagraph (B)--\n (i) in clause (ii), by striking\n``or'' at the end;\n (ii) in clause (iii), by striking\nthe period and inserting ``; or'';\nand\n (iii) by adding at the end the\nfollowing:\n ``(iv) a contract of sale of a\ndigital commodity.''; and\n (C) in subparagraph (C)--\n (i) in clause (ii), by striking\n``or'' at the end;\n (ii) by striking ``(iii) a swap,\nprovided however,'' and inserting the\nfollowing:\n ``(iii) a swap; or\n ``(iv) a contract of sale of a\ndigital commodity,\nprovided, however,''; and\n (iii) by striking ``clauses (i),\n(ii), or (iii)'' and insert ``any of clauses\n(i) through (iv)''.\n\nSEC. 109. TREATMENT OF CERTAIN NON-CONTROLLING BLOCKCHAIN\nDEVELOPERS.\n\n (a) In General.--Notwithstanding applicable law, a non-\ncontrolling blockchain developer or provider of a blockchain service\nshall not be treated as a money transmitter or as engaged in ``money\ntransmitting'' or, following the date of enactment of this Act, be\notherwise subject to any new registration requirement that is\nsubstantially similar to the requirement that currently applies to\nmoney transmitters, solely on the basis of--\n (1) creating or publishing software to facilitate\nthe creation of, or provision of maintenance services to, a\nblockchain or blockchain service;\n (2) providing hardware or software to facilitate a\ncustomer's own custody or safekeeping of the customer's digital\nassets; or\n (3) providing infrastructure support to maintain a\nblockchain service.\n (b) Rule of Construction.--Nothing in this section shall\nbe construed to affect whether a blockchain developer or provider of a\nblockchain service is otherwise subject to classification or treatment\nas a money transmitter, or as engaged in ``money transmitting'', under\napplicable State or Federal law, including laws relating to anti-money\nlaundering or countering the financing of terrorism, based on conduct\noutside the scope of subsection (a). Nothing in this section shall be\nconstrued to affect whether a blockchain developer or provider of a\nblockchain service is otherwise subject to classification or treatment\nas a financial institution under the Bank Secrecy Act, this Act, or any\nAct enacted after the date of enactment of this Act.\n (c) Effect on Other Laws.--\n (1) Intellectual property law.--Nothing in this\nsection shall be construed to limit or expand any law\npertaining to intellectual property.\n (2) State law.--Nothing in this section shall be\nconstrued to prevent any State from enforcing any State law\nthat is consistent with this section. No cause of action may be\nbrought and no liability may be imposed under any State or\nlocal law that is inconsistent with this section.\n (d) Definitions.--In this section:\n (1) Blockchain developer.--The term ``blockchain\ndeveloper'' means any person or business that creates or\npublishes software to facilitate the creation of, or provide\nmaintenance to, a blockchain or a blockchain service.\n (2) Blockchain service.--The term ``blockchain\nservice'' means any information, transaction, or computing\nservice or system that provides or enables access to a\nblockchain network by multiple users, including specifically a\nservice or system that enables users to send, receive,\nexchange, or store digital assets described by blockchain\nnetworks.\n (3) Non-controlling blockchain developer or\nprovider of a blockchain service.--The term ``non-controlling\nblockchain developer or provider of a blockchain service''\nmeans a blockchain developer or provider of a blockchain\nservice that in the regular course of operations, does not have\nthe legal right or the unilateral and independent ability to\ncontrol, initiate upon demand, or effectuate transactions\ninvolving digital assets that users are entitled to, without\nthe approval, consent, or direction of any other third\nparty.\n\nSEC. 110. APPLICATION OF THE BANK SECRECY ACT.\n\n (a) In General.--Section 5312(c)(1)(A) of title 31, United\nStates Code, is amended--\n (1) by inserting ``digital commodity broker,\ndigital commodity dealer,'' after ``futures commission\nmerchant,''; and\n (2) by inserting before the period the following:\n``and any digital commodity exchange registered, or required to\nregister, under the Commodity Exchange Act which permits direct\ncustomer access''.\n (b) Bank Secrecy Act Requirements.--\n (1) Regulations.--The Secretary of the Treasury,\nacting through the Director of the Financial Crimes Enforcement\nNetwork, and in consultation with Commodity Futures Trading\nCommission, shall issue requirements consistent with the\nrequirements of futures commission merchants to apply the Bank\nSecrecy Act to digital commodity brokers, digital commodity\ndealers, and digital commodity exchanges that are tailored to\nthe size and complexity of such entities, including by\nrequiring each such entity to--\n (A) establish and maintain an anti-money\nlaundering and countering the financing of terrorism\nprogram, which shall include--\n (i) an appropriate risk\nassessment;\n (ii) the development of internal\npolicies, procedures, and controls;\n (iii) the designation of a\ncompliance officer;\n (iv) an ongoing employee training\nprogram; and\n (v) an independent audit function\nto test such program;\n (B) retain appropriate records of\ntransactions;\n (C) monitor and report suspicious\nactivity, which may include use of appropriate\ndistributed ledger analytics; and\n (D) maintain an effective customer\nidentification program to identify and verify account\nholders and carry out appropriate customer due\ndiligence.\n (2) Compliance with sanctions.--A digital\ncommodity broker, digital commodity dealer, or digital\ncommodity exchange shall comply with all laws and regulations\nrelated to United States sanctions administered by the Office\nof Foreign Assets Control.\n\nSEC. 111. RULE OF CONSTRUCTION.\n\n Nothing in this Act, or the amendments made by this Act,\nshall be construed to limit or prevent the continued application of\napplicable ethics statutes and regulations administered by the Office\nof Government Ethics, or the ethics rules of the Senate and the House\nof Representatives, including section 208 of title 18, United States\nCode, and sections 2635.702 and 2635.802 of title 5, Code of Federal\nRegulations. For the avoidance of doubt, existing Office of Government\nEthics laws and the ethics rules of the Senate and the House of\nRepresentatives prohibit any member of Congress or senior executive\nbranch official from issuing a digital commodity during their time in\npublic service. For the purposes of this section, an employee described\nin section 202 of title 18, United States Code, shall be deemed an\nexecutive branch employee for purposes of complying with section 208 of\nthat title.\n\nSEC. 112. IMPLEMENTATION.\n\n (a) Global Rulemaking Timeframe.--Unless otherwise\nprovided in this Act or an amendment made by this Act, the Commodity\nFutures Trading Commission and the Securities and Exchange Commission,\nor both, shall individually, and jointly where required, promulgate\nrules and regulations required of each Commission under this Act or an\namendment made by this Act not later than 360 days after the date of\nenactment of this Act.\n (b) Rules and Registration Before Final Effective Dates.--\n\n (1) In general.--In order to prepare for the\nimplementation of this Act, the Commodity Futures Trading\nCommission and the Securities and Exchange Commission may,\nbefore any effective date provided in this Act--\n (A) promulgate rules, regulations, or\norders permitted or required by this Act;\n (B) conduct studies and prepare reports\nand recommendations required by this Act;\n (C) register persons under this Act;\nand\n (D) exempt persons, agreements, contracts,\nor transactions from provisions of this Act, under the\nterms contained in this Act.\n (2) Limitation on effectiveness.--An action by the\nCommodity Futures Trading Commission or the Securities and\nExchange Commission under paragraph (1) shall not become\neffective before the effective date otherwise applicable to the\naction under this Act.\n\nTITLE II--OFFERS AND SALES OF DIGITAL COMMODITIES\n\nSEC. 201. TREATMENT OF INVESTMENT CONTRACT ASSETS.\n\n (a) Securities Act of 1933.--Section 2(a) of the\nSecurities Act of 1933 (15 U.S.C. 77b(a)), as amended by section 101,\nis further amended--\n (1) in paragraph (1), by adding at the end the\nfollowing: ``The term `investment contract' does not include an\ninvestment contract asset.''; and\n (2) by adding at the end the following:\n ``(36) The term `investment contract asset' means\na digital commodity--\n ``(A) that can be exclusively possessed\nand transferred, person to person, without necessary\nreliance on an intermediary, and is recorded on a\nblockchain; and\n ``(B) sold or otherwise transferred, or\nintended to be sold or otherwise transferred, pursuant\nto an investment contract.''.\n (b) Investment Advisers Act of 1940.--Section 202(a)(18)\nof the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(18)) is\namended by adding at the end the following: ``The term `investment\ncontract' does not include an investment contract asset (as such term\nis defined under section 2(a) of the Securities Act of\n1933).''.\n (c) Investment Company Act of 1940.--Section 2(a)(36) of\nthe Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(36)) is amended\nby adding at the end the following: ``The term `investment contract'\ndoes not include an investment contract asset (as such term is defined\nunder section 2(a) of the Securities Act of 1933).''.\n (d) Securities Exchange Act of 1934.--Section 3(a)(10) of\nthe Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)) is amended\nby adding at the end the following: ``The term `investment contract'\ndoes not include an investment contract asset (as such term is defined\nunder section 2(a) of the Securities Act of 1933).''.\n (e) Securities Investor Protection Act of 1970.--Section\n16(14) of the Securities Investor Protection Act of 1970 (15 U.S.C.\n78lll(14)) is amended by adding at the end the following: ``The term\n`investment contract' does not include an investment contract asset (as\nsuch term is defined under section 2(a) of the Securities Act of\n1933).''.\n\nSEC. 202. EXEMPTED PRIMARY TRANSACTIONS IN DIGITAL\nCOMMODITIES.\n\n (a) In General.--The Securities Act of 1933 (15 U.S.C. 77a\net seq.) is amended--\n (1) in section 4(a), by adding at the end the\nfollowing:\n ``(8) the offer or sale of an investment contract\ninvolving units of a digital commodity by its digital commodity\nissuer (including all entities controlled by or under common\ncontrol with the issuer), if--\n ``(A) the blockchain system to which the\ndigital commodity relates, together with the digital\ncommodity, is certified as a mature blockchain system\nunder section 42 of the Securities Exchange Act of 1934\nor the issuer intends for the blockchain system to\nwhich the digital commodity relates to be a mature\nblockchain system by the later of--\n ``(i) the date that is four years\nafter the first sale of the investment contract\ninvolving a unit of such digital commodity in\nreliance on the exemption provided under this\nparagraph, subject to any extensions as may be\ngranted by the Commission; or\n ``(ii) the date that is four years\nafter the effective date of this\nparagraph;\n ``(B) the sum of all cash and other\nconsideration to be received by the digital commodity\nissuer in reliance on the exemption provided under this\nparagraph, during the 12-month period preceding the\ndate of such offering, including the amount received in\nsuch offering, is not more than $50,000,000 (as such\namount is annually adjusted by the Commission to\nreflect the change in the Consumer Price Index for All\nUrban Consumers published by the Bureau of Labor\nStatistics of the Department of Labor);\n ``(C) after the completion of the\ntransaction, a purchaser does not own more than 10\npercent of the total amount of the outstanding units of\nthe digital commodity;\n ``(D) the transaction does not involve the\noffer or sale of an investment contract involving units\nof a digital commodity by its digital commodity issuer\nthat--\n ``(i) is not organized under the\nlaws of a State, a territory of the United\nStates, or the District of Columbia;\n ``(ii) is a development stage\ncompany that either--\n ``(I) has no specific\nbusiness plan or purpose; or\n ``(II) has indicated that\nthe business plan of the company is to\nmerge with or acquire an unidentified\ncompany;\n ``(iii) is an investment company,\nas defined in section 3 of the Investment\nCompany Act of 1940 (15 U.S.C. 80a-3), or is\nexcluded from the definition of investment\ncompany by section 3(c) of that Act (15 U.S.C.\n80a-3(b) or 80a-3(c));\n ``(iv) is issuing fractional\nundivided interests in oil or gas rights, or a\nsimilar interest in other mineral\nrights;\n ``(v) is, or has been, subject to\nany order of the Commission entered pursuant to\nsection 12(j) of the Securities Exchange Act of\n1934 during the 5-year period before the filing\nof the offering statement; or\n ``(vi) is disqualified pursuant to\nsection 230.262 of title 17, Code of Federal\nRegulations; and\n ``(E) the issuer meets the requirements of\nsection 4B(b).''; and\n (2) by inserting after section 4A the\nfollowing:\n\n``SEC. 4B. REQUIREMENTS WITH RESPECT TO CERTAIN DIGITAL\nCOMMODITY TRANSACTIONS.\n\n ``(a) Commission Jurisdiction.--For the purposes of this\nsection:\n ``(1) The Commission shall have jurisdiction and\nenforcement authority with respect to disclosures described in\nthis section.\n ``(2) Section 17 shall apply to a statement made\nin an offering statement, disclosure, or report filed under\nthis section to the same extent as such section 17 applies to a\nstatement made in any other offering statement, disclosure, or\nreport filed under this Act.\n ``(b) Requirements for Digital Commodity Issuers.--\n\n ``(1) Terms and conditions.--A digital commodity\nissuer offering or selling an investment contract involving\nunits of a digital commodity in reliance on section 4(a)(8)\nshall file with the Commission an offering statement and any\nrelated documents, in such form and with such content as\nprescribed by the Commission, including financial information,\na description of the issuer and the operations of the issuer,\nthe financial condition of the issuer, a description of the\nplan of distribution of any unit of a digital commodity that is\nto be offered as well as the intended use of the offering\nproceeds, and a description of the development plan for the\nblockchain system, and the related digital commodity, to become\na mature blockchain system, if such blockchain system is not\nalready certified as a mature blockchain system pursuant to\nsection 42 of the Securities Exchange Act of 1934 (15 U.S.C.\n78a et seq.).\n ``(2) Information required for purchasers.--A\ndigital commodity issuer that has filed a statement under\nparagraph (1) to offer and sell an investment contract\ninvolving a unit of a digital commodity in reliance on section\n4(a)(8) shall include in such statement the following\ninformation:\n ``(A) Maturity status.--Whether the\nblockchain system to which the digital commodity\nrelates has been certified as a mature blockchain\nsystem pursuant to section 42 of the Securities\nExchange Act of 1934 (15 U.S.C. 78a et seq.) and, where\nsuch blockchain system is not so certified, a statement\nof the digital commodity issuer's intent for the\nblockchain system to which the digital commodity\nrelates to be a mature blockchain system within the\ntime period described in section 4(a)(8)(A).\n ``(B) Source code.--The source code, or a\npublicly accessible webpage displaying such source\ncode, for any blockchain system to which the digital\ncommodity relates, and whether the source code was\nsourced from an external third party, whether there are\nany existing external dependencies, and whether the\ncode underwent a third-party security audit, along with\nmaterial results of any such audit.\n ``(C) Transaction history.--A description\nof the steps necessary to independently access, search,\nand verify the transaction history of any blockchain\nsystem to which the digital commodity relates, to the\nextent any such independent access, search, and\nverification activities are technically feasible with\nrespect to such blockchain system.\n ``(D) Digital commodity economics.--A\ndescription of the purpose of any blockchain system to\nwhich the digital commodity relates and the operation\nof any such blockchain system, including--\n ``(i) information explaining the\nlaunch and supply process, including the number\nof units of the digital commodity to be issued\nin an initial allocation, the total number of\nunits of the digital commodity to be created,\nthe release schedule for the units of the\ndigital commodity, and the total number of\nunits of the digital commodity\noutstanding;\n ``(ii) information explaining the\ntechnical requirements for holding, accessing,\nand transferring the digital\ncommodity;\n ``(iii) information on any\napplicable consensus mechanism or process for\nvalidating transactions, method of generating\nor mining digital commodities, and any process\nfor burning or destroying units of the digital\ncommodity on the blockchain system;\n ``(iv) an explanation of any\nmechanism for driving value to the digital\ncommodity of such blockchain system;\nand\n ``(v) an explanation of governance\nmechanisms for implementing changes to the\nblockchain system or forming consensus among\nholders of units of such digital\ncommodity.\n ``(E) Plan of development.--The current\nstate and timeline for the development of any\nblockchain system to which the digital commodity\nrelates, detailing how and when the blockchain system\nis intended to be a mature blockchain system, if the\nblockchain system is not yet certified as a mature\nblockchain system, and the various roles that exist or\nare intended to exist in connection with the blockchain\nsystem, such as users, service providers, developers,\ntransaction validators, and governance participants,\nincluding a discussion of any mechanisms by which\ncontrol or authority are exerted with respect to the\nblockchain system or its related digital commodity, and\nany critical operational dependencies of the blockchain\nsystem or its related digital commodity.\n ``(F) Ownership disclosures.--\n ``(i) In general.--A list of all\npersons who are digital commodity related\npersons or digital commodity affiliated persons\nwho have been issued a unit of the digital\ncommodity by the digital commodity issuer or\nhave a right to a unit of the digital commodity\nfrom the digital commodity issuer.\n ``(ii) Confidentiality.--The\nCommission shall keep each list described under\nclause (i) confidential, consistent with what\nis necessary or appropriate in the public\ninterest or for the protection of\ninvestors.\n ``(G) Risk factor disclosures.--A\ndescription of the material risks surrounding ownership\nof a unit of a digital commodity.\n ``(3) Ongoing disclosure requirements for maturing\nblockchain systems.--Subject to paragraph (5), the issuer of a\ndigital commodity related to a blockchain system that is not\nyet certified as a mature blockchain system under section 42 of\nthe Securities Exchange Act of 1934 that has filed a statement\nunder paragraph (1) to offer and sell an investment contract\ninvolving a unit of a digital commodity in reliance on section\n4(a)(8) shall file the following with the Commission:\n ``(A) Semiannual reports.--Every 6 months,\na report containing--\n ``(i) an updated description of\nthe current state and timeline for the\ndevelopment of the blockchain system to which\nthe digital commodity relates, showing how and\nwhen the blockchain is intended to be a mature\nblockchain system;\n ``(ii) a description of the\nefforts of the issuer and digital commodity\nrelated persons in developing the blockchain\nsystem to which the digital commodity\nrelates;\n ``(iii) the amount of money raised\nby the digital commodity issuer in reliance on\nsection 4(a)(8), how much of that money has\nbeen spent, and the general categories of\nactivities for which that money has been spent\nand amounts spent per category; and\n ``(iv) financial statements, where\napplicable.\n ``(B) Current reports.--A current report\nreflecting any material changes relevant to the\ninformation previously reported to the Commission by\nthe digital commodity issuer, which shall be filed as\nsoon as practicable after the material change occurred,\nin accordance with such rules as the Commission may\nprescribe as necessary or appropriate in the public\ninterest or for the protection of investors.\n ``(4) Rulemaking.--Not later than 360 days after\nthe date of the enactment of this section, the Commission shall\nprescribe rules on requirements applicable to issuers of\ndigital commodities in reliance on section 4(a)(8).\n ``(5) Termination of certain reporting\nrequirements; post-maturity reporting requirements.--\n ``(A) In general.--The ongoing reporting\nrequirements under paragraph (3) shall not apply to a\ndigital commodity issuer 180 days after the end of the\ncovered fiscal year, if the information with respect to\nthe digital commodity and the blockchain system to\nwhich it relates described in subparagraphs (A) through\n(C) of paragraph (2) is made publicly available and the\ndisclosure requirements under subparagraph (C) of this\nparagraph are satisfied.\n ``(B) Covered fiscal year defined.--In\nthis paragraph, the term `covered fiscal year' means,\nwith respect to a digital commodity, the first fiscal\nyear of a digital commodity issuer in which the\nblockchain system to which such digital commodity\nrelates is certified as a mature blockchain system\nunder section 42 of the Securities Exchange Act of\n1934.\n ``(C) Post-maturity reporting\nrequirements.--After the blockchain system to which a\ndigital commodity relates is certified as a mature\nblockchain system under section 42 of the Securities\nExchange Act of 1934, any digital commodity issuer that\nhas filed a statement under paragraph (1) to offer and\nsell an investment contract involving a unit of a\ndigital commodity in reliance on section 4(a)(8) and is\nengaged in material ongoing efforts related to the\nmature blockchain system shall disclose, in a manner\nreasonably calculated to inform the public, and at such\nfrequency as the Commission may prescribe, by rule, a\ndescription of such efforts, including--\n ``(i) any participation in a\ndecentralized governance system of such\nblockchain system;\n ``(ii) any participation in\nalterations or proposed alterations to the\nfunctionality or operation of such blockchain\nsystem;\n ``(iii) the use or planned use of\nany funds raised in reliance on section 4(a)(8)\nor any rulemaking pursuant to section 202(c) of\nthe CLARITY Act of 2025 in such\nefforts;\n ``(iv) the amount of units of the\ndigital commodity, or rights thereto, owned and\ncontrolled by such issuer and any use, sale,\ntrading, or other disposition thereof;\nand\n ``(v) any affiliations of such\nissuer material to the efforts of such\nissuer.\n ``(D) Termination of and exemption from\npost-maturity reporting requirements.--Not later than\n270 days after the date of the enactment of this\nsection, the Commission shall issue rules--\n ``(i) for terminating the\ndisclosure requirements described in\nsubparagraph (C) during the first fiscal year\nin which the digital commodity issuer does not\nengage in material ongoing efforts related to\nthe mature blockchain system; and\n ``(ii) to, as is necessary or\nappropriate in the public interest or for the\nprotection of investors, exempt a digital\ncommodity issuer from the requirements\ndescribed in subparagraph (C) where only a de\nminimis amount of market activity involving the\ndigital commodity of such digital commodity\nissuer is taking place.\n ``(E) Rule of construction.--Nothing in\nsubparagraph (C) may be construed to make any digital\ncommodity described in such subparagraph a\nsecurity.\n ``(c) Requirements for Intermediaries.--A person acting as\nan intermediary in connection with the offer or sale of an investment\ncontract involving units of a digital commodity in reliance on section\n4(a)(8) shall--\n ``(1) register with the Commission as a broker or\ndealer; and\n ``(2) be a member of a national securities\nassociation registered under section 15A of the Securities\nExchange Act of 1934 (15 U.S.C. 78o-3).\n ``(d) Disqualification Provisions.--The Commission shall\nissue rules to apply the disqualification provisions under section\n230.262 of title 17, Code of Federal Regulations, to the exemption\nprovided under section 4(a)(8).\n ``(e) Failure To Mature.--\n ``(1) In general.--Not later than 270 days after\nthe date of the enactment of this section, the Commission shall\nissue rules applying such additional obligations and\ndisclosures for the digital commodity issuers, digital\ncommodity related persons, and digital commodity affiliated\npersons of a blockchain system described under subsection\n(b)(1) that does not become a mature blockchain system within\nthe time period described in section 4(a)(8)(A) as are\nnecessary or appropriate in the public interest or for the\nprotection of investors. Such obligations and disclosures shall\ninclude the following:\n ``(A) Disclosures.--Disclosures regarding\nthe following:\n ``(i) Failure to mature.--A\ndetailed explanation of the reason that the\nblockchain system has not become a mature\nblockchain system within the time period\ndescribed in section 4(a)(8)(A).\n ``(ii) Development plans.--The\nfuture plans of development of the blockchain\nsystem, including information required under\nsubsection (b)(3).\n ``(iii) Risk factor disclosures.--\nThe material risks surrounding ownership of a\nunit of a digital commodity that relates to a\nblockchain system described under subsection\n(b)(1) that has not become a mature blockchain\nsystem within the time period described in\nsection 4(a)(8)(A).\n ``(B) Obligations.--Transaction reporting\nand beneficial ownership disclosure obligations\napplicable to digital commodity related persons and\ndigital commodity affiliated persons of such blockchain\nsystem.\n ``(2) Qualification required.--The Commission may\nnot permit any additional reliance on an exempt offering for\nthe offer or sale of an investment contract involving a unit of\na digital commodity by the issuer of the digital commodity\nrelated to a blockchain system described under subsection\n(a)(1) that has not become a mature blockchain system within\nthe time period described in section 4(a)(8)(A) unless the\nCommission has qualified any offering statement related to such\nexempt offering.''.\n (b) Additional Exemptions.--\n (1) Certain registration requirements.--Section\n12(g)(6) of the Securities Exchange Act of 1934 (15 U.S.C.\n78l(g)(6)) is amended by striking ``under section 4(6)'' and\ninserting ``under section 4(a)(6) or 4(a)(8)''.\n (2) Exemption from state regulation.--Section\n18(b)(4) of the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is\namended--\n (A) in subparagraph (B), by striking\n``section 4(4)'' and inserting ``section\n4(a)(4)'';\n (B) in subparagraph (C), by striking\n``section 4(6)'' and inserting ``section\n4(a)(6)'';\n (C) in subparagraph (F)--\n (i) by striking ``section 4(2)''\neach place such term appears and inserting\n``section 4(a)(2)''; and\n (ii) by striking ``or'' at the\nend;\n (D) in subparagraph (G), by striking the\nperiod and inserting ``; or''; and\n (E) by adding at the end the\nfollowing:\n ``(H) section 4(a)(8).''.\n (c) Use of Other Exemptions.--\n (1) Rule of construction.--Except as provided in\nthis subsection, nothing in this section or the amendments made\nby this section may be construed as prohibiting the offer or\nsale of an investment contract involving units of a digital\ncommodity in reliance on an exemption from registration under\nthe Securities Act of 1933, including as provided under section\n3, 4(a), or 19 of the Securities Act of 1933, other than that\nprovided under section 4(a)(8) of the Securities Act of\n1933.\n (2) Rulemakings.--\n (A) The Securities and Exchange Commission\nmay issue rules--\n (i) to permit the issuer of a\ndigital commodity related to a blockchain\nsystem described under section 4B(b)(1) of the\nSecurities Act of 1933 that has not become a\nmature blockchain system within the time period\ndescribed in section 4(a)(8)(A) of such Act, or\nthe issuer of a digital commodity described in\nsubparagraph (B)(iii), to utilize an exempt\noffering to offer or sell an investment\ncontract involving the digital commodity, if\nthe Commission qualifies any offering statement\nrelated to such exempt offering; and\n (ii) for the offer and sale of\ninvestment contracts involving units of a\ndigital commodity by issuers that are not\norganized under the laws of a State, a\nterritory of the United States, or the District\nof Columbia.\n (B) Not later than 270 days after the date\nof the enactment of this section, the Securities and\nExchange Commission shall issue the following\nrules:\n (i) A rule requiring a digital\ncommodity issuer that last offered or sold an\ninvestment contract involving units of a\ndigital commodity in reliance on an exemption\nfrom registration under the Securities Act of\n1933, including as provided under section 3,\n4(a), or 19 of the Securities Act of 1933,\nprior to the date of enactment of this Act, to\nfile a comparable set of disclosures to those\ndescribed under section 4B of the Securities\nAct of 1933 as the Commission determines\nappropriate based on the exemption, the\nmaturity of the blockchain system to which such\ndigital commodity relates, and any material\nongoing efforts of such digital commodity\nissuer (provided that for blockchains certified\nas a mature blockchain system under section 42\nof the Securities Exchange Act of 1934, such\ndisclosures shall be comparable to those under\nsection 4B(b)(5)(C)), not later than the later\nof--\n (I) one year after the\neffective date of this section;\nor\n (II) the date of any\nsecondary market sale of such digital\ncommodity made in reliance on section\n203.\n (ii) A rule requiring a digital\ncommodity issuer that offers or sells an\ninvestment contract involving units of a\ndigital commodity in reliance on an exemption\nfrom registration under the Securities Act of\n1933, including as provided under section 3,\n4(a), or 19 of the Securities Act of 1933,\nother than that provided under section 4(a)(8)\nof the Securities Act of 1933, on or after the\ndate of enactment of this Act, to file a\ncomparable set of disclosures to those\ndescribed under section 4B of the Securities\nAct of 1933 as the Commission determines\nappropriate based on the exemption, the\nmaturity of the blockchain system to which such\ndigital commodity relates, and any material\nongoing efforts of such digital commodity\nissuer, prior to the date of any secondary\nmarket sale of such digital commodity made in\nreliance on section 203.\n (iii) With respect to a digital\ncommodity where the digital commodity issuer is\nrequired to file disclosures under clause (i)\nor (ii) and where the blockchain system to\nwhich the digital commodity relates is not\ncertified as a mature blockchain system\npursuant to section 42 of the Securities\nExchange Act of 1934 after the 4-year period\nbeginning on the date that the first such\ndisclosure is filed--\n (I) a rule prohibiting the\noffer or sale of an investment contract\ninvolving units of the digital\ncommodity unless the Commission has\nqualified any offering statement\nrelated to such offer or sale, where\nsuch offer or sale is permitted\npursuant to subparagraph (A)(i);\nand\n (II) a rule requiring the\ndigital commodity issuer to make\ndisclosures comparable to those\ndescribed in 4B(e)(1)(A) of the\nSecurities Act of 1933.\n (iv) A rule permitting a successor\nto a digital commodity issuer, or such other\nappropriate person as designated by the\nCommission, to make the disclosures required\nunder clause (i), where such issuer does not\nmake the required disclosures.\n\nSEC. 203. TREATMENT OF SECONDARY TRANSACTIONS IN DIGITAL\nCOMMODITIES THAT ORIGINALLY INVOLVED INVESTMENT\nCONTRACTS.\n\n (a) Secondary Market Treatment.--Notwithstanding any other\nprovision of law, the offer or sale of a digital commodity that\noriginally involved an investment contract by a person other than the\nissuer of such digital commodity, or an agent or underwriter thereof,\nshall be deemed not to be an offer or sale of such investment contract\nbetween the issuer of the investment contract involving the digital\ncommodity, or an agent or underwriter thereof, and the purchaser of\nsuch digital commodity under--\n (1) the Securities Act of 1933 (15 U.S.C. 77a et\nseq.);\n (2) the Investment Advisers Act of 1940 (15 U.S.C.\n80b-1 et seq.);\n (3) the Investment Company Act of 1940 (15 U.S.C.\n80a-1 et seq.);\n (4) the Securities Exchange Act of 1934 (15 U.S.C.\n78a et seq.);\n (5) the Securities Investor Protection Act of 1970\n(15 U.S.C. 78aaa et seq.); and\n (6) any applicable provisions of State\nlaw.\n (b) End User Distributions Not an Offer or Sale of a\nSecurity.--An end user distribution does not involve the offer or sale\nof a security.\n (c) Agent Defined.--In this section and with respect to a\ndigital commodity issuer, the term ``agent'' means any person directly\nor indirectly controlled by the issuer or under direct or indirect\ncommon control with the issuer.\n\nSEC. 204. REQUIREMENTS FOR OFFERS AND SALES OF DIGITAL\nCOMMODITIES BY DIGITAL COMMODITY RELATED PERSONS AND\nDIGITAL COMMODITY AFFILIATED PERSONS.\n\n The Securities Act of 1933 (15 U.S.C. 77a et seq.), as\namended by section 202, is further amended by inserting after section\n4B the following:\n\n``SEC. 4C. REQUIREMENTS FOR OFFERS AND SALES OF DIGITAL\nCOMMODITIES BY DIGITAL COMMODITY RELATED PERSONS AND\nDIGITAL COMMODITY AFFILIATED PERSONS.\n\n ``(a) In General.--It shall be a violation of this Act for\na digital commodity affiliated person or a digital commodity related\nperson to offer or sell a digital commodity acquired directly from its\nissuer, or an agent or underwriter thereof, pursuant to an investment\ncontract in reliance on section 4(a)(8) or another exemption under this\nAct, other than as provided in this section.\n ``(b) Commission Jurisdiction.--\n ``(1) Where a digital commodity affiliated person\nor a digital commodity related person offers or sells a digital\ncommodity acquired directly from its issuer, or an agent or\nunderwriter thereof, pursuant to an investment contract in\nreliance on section 4(a)(8), or another exemption under this\nAct, other than as provided in this section, such digital\ncommodity affiliated person or digital commodity related person\nshall be considered an issuer of such investment\ncontract.\n ``(2) For the purposes of this section, the\nCommission shall have jurisdiction and enforcement authority\nwith respect to an offer or sale of a digital commodity\ndescribed in subsection (a).\n ``(c) Restrictions on Digital Commodity Related Persons\nand Digital Commodity Affiliated Persons.--\n ``(1) Prior to being a mature blockchain system.--\nPrior to the blockchain system to which a digital commodity\nrelates being certified as a mature blockchain system under\nsection 42 of the Securities Exchange Act of 1934, units of the\ndigital commodity acquired by a digital commodity related\nperson or digital commodity affiliated person directly from its\nissuer (or an agent or underwriter thereof) pursuant to an\ninvestment contract in reliance on section 4(a)(8), or another\nexemption under this Act, may be offered or sold by such\ndigital commodity related person or digital commodity\naffiliated person if--\n ``(A) reports with respect to such digital\ncommodity, where required under section 4B(b)(3) (or,\nwith respect to a digital commodity not issued in\nreliance on section 4(a)(8), a comparable set of\nreports where required by the Commission) have been\nfiled with the Commission;\n ``(B) the digital commodity related person\nor digital commodity affiliated person has held the\nunits for not less than 12 months; and\n ``(C) the aggregate amount of the units of\nthe digital commodity offered or sold by the digital\ncommodity related person or digital commodity\naffiliated person is--\n ``(i) in any 12-month period, or\nshorter period as the Commission may prescribe,\nnot less than 5 percent or greater than 20\npercent of the total units of the digital\ncommodity acquired directly from its issuer (or\nan agent or underwriter thereof) by the digital\ncommodity related person or digital commodity\naffiliated person, as determined by the\nCommission pursuant to paragraph (3);\nand\n ``(ii) an amount, as determined by\nthe Commission pursuant to paragraph (3), not\nless than 30 percent or greater than 50 percent\nof the total units of the digital commodity\nacquired directly from its issuer (or an agent\nor underwriter thereof) by the digital\ncommodity related person or digital commodity\naffiliated person.\n ``(2) After becoming a mature blockchain system.--\nAfter the blockchain system to which a digital commodity\nrelates is certified as a mature blockchain system under\nsection 42 of the Securities Exchange Act of 1934, units of the\ndigital commodity acquired by a digital commodity related\nperson or digital commodity affiliated person directly from its\nissuer (or an agent or underwriter thereof) pursuant to an\ninvestment contract in reliance on section 4(a)(8) or another\nexemption under this Act, may be--\n ``(A) offered or sold by a digital\ncommodity related person; or\n ``(B) offered or sold by a digital\ncommodity affiliated person if--\n ``(i) information described in\nsection 4B(b)(5)(C), where required (or, with\nrespect to a digital commodity not issued in\nreliance on section 4(a)(8), a comparable set\nof information, where required) is publicly\navailable;\n ``(ii) the digital commodity\naffiliated person has held the units for not\nless than the earlier of--\n ``(I) 12 months;\nor\n ``(II) 3 months following\nthe date on which the blockchain system\nis certified as a mature blockchain\nsystem under section 42 of the\nSecurities Exchange Act of 1934;\nand\n ``(iii) the aggregate amount of\nthe units of the digital commodity offered or\nsold by the digital commodity affiliated person\nin any 12-month period is an amount, as\ndetermined by the Commission pursuant to\nparagraph (3), not less than 5 percent or\ngreater than 10 percent of the total\noutstanding amount of the digital\ncommodity.\n ``(3) Rulemakings required.--Not later than 270\ndays after the date of the enactment of this section,\nconsistent with protecting investors, maintaining fair,\norderly, and efficient markets, and facilitating capital\nformation, and to foster the development of mature blockchain\nsystems, the Commission, by rule, after notice and comment--\n\n ``(A) shall set the percentage amounts\ndescribed in paragraphs (1)(C)(i), (1)(C)(ii), and\n(2)(B)(iii); and\n ``(B) may provide an exemption from the\nlimitation described in paragraph (1)(C)(ii), if the\nCommission requires any offer or sale pursuant to such\nexemption of a digital commodity related to a\nblockchain system that has failed to become a mature\nblockchain system under this Act or any rule\npromulgated hereunder to be accompanied by the\ndisclosures required under, as applicable, section\n4B(e)(1)(A) or section 202(c)(2)(B)(iii)(II) of the\nCLARITY Act of 2025.\n ``(d) Rules of Construction.--For purposes of this\nsection, the use of a digital commodity in the programmatic functioning\nof the blockchain system to which it relates is not an offer or sale of\na digital commodity.\n ``(e) Manipulative and Deceptive Devices; Reporting.--\n\n ``(1) In general.--It shall be unlawful for any\ndigital commodity issuer, digital commodity related person, or\ndigital commodity affiliated person, directly or indirectly, by\nthe use of any means or instrumentality of interstate commerce\nor of the mails, to use or employ, in connection with the\npurchase or sale of any digital commodity, any manipulative or\ndeceptive device or contrivance in contravention of such rules\nand regulations as the Commission may prescribe as necessary or\nappropriate in the public interest or for the protection of\ninvestors.\n ``(2) Affirmative defense.--Not later than 270\ndays after the date of the enactment of this section, the\nCommission shall issue rules to implement paragraph (1),\nincluding by providing any affirmative defenses to an\nenforcement action thereunder as the Commission may prescribe\nas necessary or appropriate in the public interest or for the\nprotection of investors.\n ``(3) Reporting.--Not later than 270 days after\nthe date of the enactment of this section, the Commission shall\nissue rules to prescribe such transaction reporting and\nbeneficial ownership disclosure obligations applicable to\ndigital commodity related persons and digital commodity\naffiliated persons, as necessary or appropriate in the public\ninterest or for the protection of investors.\n ``(4) Differentiation between persons.--In issuing\nrules required under paragraphs (2) and (3), the Commission\nshall differentiate between digital commodity related persons\nand digital commodity affiliated persons, as necessary or\nappropriate in the public interest or for the protection of\ninvestors.\n ``(f) Certain Units Received Prior to Enactment.--A unit\nof a digital commodity received from the digital commodity issuer prior\nto the date of the enactment of this section through an offer or sale\nof an investment contract involving units of a digital commodity in\nreliance on an exemption from registration under this Act, including as\nprovided under section 3, 4(a), or 19, may be offered or sold by a\ndigital commodity related person or digital commodity affiliated\nperson, if--\n ``(1) the digital commodity issuer is no longer\nengaged in material ongoing efforts related to the blockchain\nsystem to which the digital commodity relates and the\nblockchain system to which the digital commodity relates is\ncertified as a mature blockchain system under section 42 of the\nSecurities Exchange Act of 1934; or\n ``(2) the appropriate disclosures required under\nsection 202(c)(2)(B) of the CLARITY Act of 2025 have been made\nwith the Commission.\n ``(g) Rulemaking on Further Usage of Digital\nCommodities.-- The Commission, consistent with protecting investors,\nmaintaining fair, orderly, and efficient markets, and facilitating\ncapital formation, as well as fostering the development of mature\nblockchain systems, may, by rule, exempt unconditionally or on stated\nterms or conditions, a digital commodity related person or a digital\ncommodity affiliated person, or any class thereof, from the\nrequirements of this section for the offer or sale of a digital\ncommodity, including for the purposes of promoting market\nliquidity.''.\n\nSEC. 205. MATURE BLOCKCHAIN SYSTEM REQUIREMENTS.\n\n Title I of the Securities Exchange Act of 1934 (15 U.S.C.\n78a et seq.) is amended by adding at the end the following:\n\n``SEC. 42. MATURE BLOCKCHAIN SYSTEMS.\n\n ``(a) Certification of Blockchain Systems.--\n ``(1) Certification.--A digital commodity issuer,\ndigital commodity related person, digital commodity affiliated\nperson, decentralized governance system of the blockchain\nsystem, or a registered digital commodity exchange, or any\nother appropriate person as designated by the Commission, may\ncertify to the Commission that the blockchain system to which a\ndigital commodity relates is a mature blockchain\nsystem.\n ``(2) Filing requirements.--A certification\ndescribed under paragraph (1) shall be filed with the\nCommission, and include such information that is reasonably\nnecessary to establish that the blockchain system is not\ncontrolled by any person or group of persons under common\ncontrol, which may include information regarding--\n ``(A) the operation of the blockchain\nsystem;\n ``(B) the functionality of the related\ndigital commodity;\n ``(C) how the market value of the digital\ncommodity is substantially derived from the\nprogrammatic functioning of such blockchain\nsystem;\n ``(D) any decentralized governance system\nwhich relates to the blockchain system; and\n ``(E) the current roles, if any, of the\ndigital commodity issuer, digital commodity affiliated\npersons, and digital commodity related persons where\nsuch roles are material to the development or operation\nof such blockchain system or the decentralized\ngovernance system of such blockchain system.\n ``(3) Rebuttable presumption.--The Commission may\nrebut a certification described under paragraph (1) with\nrespect to a blockchain system if the Commission, within 60\ndays of receiving such certification, determines that the\nblockchain system is not a mature blockchain system.\n ``(4) Certification review.--\n ``(A) In general.--Any blockchain system\nthat relates to a digital commodity for which a\ncertification has been made under paragraph (1) shall\nbe considered a mature blockchain system 60 days after\nthe date on which the Commission receives a\ncertification under paragraph (1), unless the\nCommission notifies the person who made the\ncertification within such time that the Commission is\nstaying the certification due to--\n ``(i) an inadequate explanation by\nthe person making the certification;\nor\n ``(ii) any novel or complex issues\nwhich require additional time to\nconsider.\n ``(B) Public notice.--The Commission shall\nmake the following available to the public and provide\na copy to the Commodity Futures Trading\nCommission:\n ``(i) Each certification received\nunder paragraph (1).\n ``(ii) Each stay of the Commission\nunder this subsection, and the reasons\ntherefor.\n ``(iii) Any response from a person\nmaking a certification under paragraph (1) to a\nstay of the certification by the\nCommission.\n ``(C) Consolidation.--The Commission may\nconsolidate and treat as one submission multiple\ncertifications made under paragraph (1) for the same\nblockchain system which relates to a digital commodity\nwhich are received during the review period provided\nunder this paragraph.\n ``(5) Stay of certification.--\n ``(A) In general.--A notification by the\nCommission pursuant to paragraph (4)(A) shall stay the\ncertification once for up to an additional 120 days\nfrom the date of the notification.\n ``(B) Public comment period.--Before the\nend of the 60-day period described under paragraph\n(4)(A), the Commission may begin a public comment\nperiod of at least 30 days in conjunction with a stay\nunder this subsection.\n ``(6) Disposition of certification.--A\ncertification made under paragraph (1) shall--\n ``(A) become effective--\n ``(i) upon the publication of a\nnotification from the Commission to the person\nwho made the certification that the Commission\ndoes not object to the certification;\nor\n ``(ii) at the expiration of the\ncertification review period; and\n ``(B) not become effective upon the\npublication of a notification from the Commission to\nthe person who made the certification that the\nCommission has rebutted the certification.\n ``(7) Recertification.--With respect to a\nblockchain system for which a certification has been rebutted\nunder this subsection, no person may make a certification under\nparagraph (1) with respect to such blockchain system during the\n90-day period beginning on the date of such rebuttal.\n ``(8) Appeal of rebuttal.--\n ``(A) In general.--If a certification is\nrebutted under this section, the person making such\ncertification may appeal the decision to the United\nStates Court of Appeals for the District of Columbia,\nnot later than 60 days after the notice of rebuttal is\nmade.\n ``(B) Review.--In an appeal under\nsubparagraph (A), the court shall have de novo review\nof the determination to rebut the\ncertification.\n ``(b) Maturity Criteria.--\n ``(1) Sense of congress.--It is the sense of the\nCongress that protecting investors, maintaining fair, orderly,\nand efficient markets, and facilitating capital formation\nnecessitates establishing clear criteria for blockchain systems\nto be deemed mature, as well as enabling the Commission to\ndevelop, without prejudice to any such criteria codified in\nstatute, alternative criteria by which blockchain systems may\nbe considered not to be controlled by any person or group of\npersons under common control in order to accommodate changes in\nmarkets and technology.\n ``(2) In general.--The Commission may issue rules\nidentifying conditions by which a blockchain system, together\nwith its related digital commodity, shall be considered a\nmature blockchain system, consistent with the protection of\ninvestors, maintenance of fair, orderly, and efficient markets,\nand the facilitation of capital formation.\n ``(3) Rules of construction.--\n ``(A) Nothing in this subsection may be\nconstrued to permit the Commission to impose additional\ncriteria to the criteria in subsection (c) for\ncertifying that a blockchain system is a mature\nblockchain system pursuant to subsection (c).\n ``(B) Nothing in this subsection or\nsubsection (c) may be construed to limit the\nCommission's ability to identify alternative conditions\nand criteria by which a blockchain system may be\nconsidered a mature blockchain system.\n ``(c) Deemed Mature.--\n ``(1) In general.--Notwithstanding subsection (b),\nfor the purposes of subsection (a), a digital commodity issuer,\ndigital commodity related person, digital commodity affiliated\nperson, or decentralized governance system of the blockchain\nsystem may establish that a blockchain system, together with\nits related digital commodity, is not controlled by any person\nor group of persons under common control, if the blockchain\nsystem, together with its related digital asset, meets the\nrequirements described in paragraph (2) or (3).\n ``(2) Criteria for any blockchain system.--The\nrequirements described in this paragraph are the\nfollowing:\n ``(A) System value.--\n ``(i) Market value.--The digital\ncommodity has a value that is substantially\nderived from the use and functioning of the\nblockchain system.\n ``(ii) Development of value\nmechanism substantially completed.--Where the\ndigital commodity issuer has made public a\ndevelopment plan describing how the digital\ncommodity's value is reasonably expected to be\nderived from the programmatic functioning of\nthe blockchain system, the development of such\nmechanisms has been substantially\ncompleted.\n ``(B) Functional system.--The blockchain\nsystem allows network participants to engage in the\nactivities the blockchain system is intended to\nprovide, including--\n ``(i) using, transmitting, or\nstoring value, or otherwise executing\ntransactions, on the blockchain\nsystem;\n ``(ii) deploying, executing, or\naccessing software or services, or otherwise\noffering or participating in services, deployed\non or integrated with the blockchain\nsystem;\n ``(iii) participating in the\nconsensus mechanism, transaction validation\nprocess, or decentralized governance system of\nthe blockchain system; or\n ``(iv) operating any client, node,\nvalidator, or other form of computational\ninfrastructure with respect to the blockchain\nsystem.\n ``(C) Open and interoperable system.--The\nblockchain system--\n ``(i) is composed of source code\nthat is open source; and\n ``(ii) does not restrict or\nprohibit based on the exercise of unilateral\nauthority any person, other than a digital\ncommodity issuer, digital commodity related\nperson, or digital commodity affiliated person\nfrom engaging in the activities the blockchain\nsystem is intended to provide, including the\nactivities described in subparagraph\n(B).\n ``(D) Programmatic system.--The blockchain\nsystem operates, executes, and enforces its operations\nand transactions based solely on pre-established,\ntransparent rules encoded directly within the source\ncode of the blockchain system.\n ``(E) System governance.--No person or\ngroup of persons under common control--\n ``(i) has the unilateral\nauthority, directly or indirectly, through any\ncontract, arrangement, understanding,\nrelationship, or otherwise, to control or\nmaterially alter the functionality, operation,\nor rules of consensus or agreement of the\nblockchain system or its related digital\ncommodity; or\n ``(ii) has the unilateral\nauthority to direct the voting, in the\naggregate, of 20 percent or more of the\noutstanding voting power of such blockchain\nsystem by means of a related digital commodity,\nnodes or validators, a decentralized governance\nsystem, or otherwise, in a blockchain system\nwhich can be altered by a voting\nsystem.\n ``(F) Impartial system.--No person or\ngroup of persons under common control possesses a\nunique permission or privilege with respect to\nfunctionality, operation, or rules of consensus or\nagreement of the blockchain system or its related\ndigital commodity, unless such alteration--\n ``(i) addresses errors, regular\nmaintenance, or cybersecurity risks of the\nblockchain system that affect the programmatic\nfunctioning of the blockchain system;\nand\n ``(ii) is adopted through the\nconsensus or agreement of a decentralized\ngovernance system.\n ``(G) Distributed ownership.--No digital\ncommodity issuer, digital commodity related person, or\ndigital commodity affiliated person beneficially owns,\nin the aggregate, 20 percent or more of the total\namount of units of the digital commodity.\n ``(3) Optional criteria for preexisting blockchain\nsystems.--The requirements described in this paragraph are that\nthe blockchain system--\n ``(A) was created prior to the date of\nenactment of this section;\n ``(B) met the requirements of\nsubparagraphs (A) through (F) of paragraph (2) prior to\nthe date of enactment of this section; and\n ``(C) at least 50 percent of the units of\nthe digital commodity related to the blockchain system\nare held by persons other than the digital commodity\nissuer, a digital commodity related person, or a\ndigital commodity affiliated person.\n ``(d) Decentralized Governance System.--\n ``(1) For the purposes of this section, a\ndecentralized governance system is not a `person' or a `group\nof persons under common control'.\n ``(2) A blockchain system, together with its\ndigital commodity, shall not be precluded from being considered\na mature blockchain system solely based on a functional,\nadministrative, clerical, or ministerial action of a\ndecentralized governance system, including any such action\ntaken by a person acting on behalf of and at the direction of\nthe decentralized governance system, as determined by the\nCommission and consistent with the protection of investors,\nmaintenance of fair, orderly, and efficient markets, and the\nfacilitation of capital formation.\n ``(e) Rulemaking.--Not more than 270 days after the date\nof enactment of this section, the Commission shall issue rules to carry\nout this section.''.\n\nSEC. 206. EFFECTIVE DATE.\n\n Unless otherwise provided in this title, this title and\nthe amendments made by this title shall take effect 360 days after the\ndate of enactment of this Act, except that, to the extent a provision\nof this title requires a rulemaking, the provision shall take effect on\nthe later of--\n (1) 360 days after the date of enactment of this\nAct; or\n (2) 60 days after the publication in the Federal\nRegister of the final rule implementing the\nprovision.\n\nTITLE III--REGISTRATION FOR INTERMEDIARIES AT THE SECURITIES\nAND EXCHANGE COMMISSION\n\nSEC. 301. TREATMENT OF DIGITAL COMMODITIES AND PERMITTED\nPAYMENT STABLECOINS.\n\n (a) Securities Act of 1933.--Section 2(a)(1) of the\nSecurities Act of 1933 (15 U.S.C. 77b(a)(1)), as amended by the GENIUS\nAct, is amended by striking the final sentence and inserting the\nfollowing: ``The term does not include a digital commodity or permitted\npayment stablecoin.''.\n (b) Securities Exchange Act of 1934.--Section 3(a)(10) of\nthe Securities Exchange Act of 1934 (15 U.S.C. 78c(a)), as amended by\nthe GENIUS Act, is amended by striking the final sentence and inserting\nthe following: ``The term does not include a digital commodity or\npermitted payment stablecoin.''.\n (c) Investment Advisers Act of 1940.--Section 202(a) of\nthe Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is amended--\n\n (1) in paragraph (18), as amended by the GENIUS\nAct, by striking the final sentence and inserting the\nfollowing: ``The term does not include a digital commodity or\npermitted payment stablecoin.'';\n (2) by redesignating the second paragraph (29)\n(relating to commodity pools) as paragraph (31); and\n (3) by adding at the end, the following:\n ``(32) Digital commodity-related terms.--The terms\n`digital commodity' and `permitted payment stablecoin' have the\nmeaning given those terms, respectively, under section 2(a) of\nthe Securities Act of 1933 (15 U.S.C. 77b(a)).''.\n (d) Investment Company Act of 1940.--Section 2(a) of the\nInvestment Company Act of 1940 (15 U.S.C. 80a-2) is amended--\n (1) in paragraph (36), as amended by the GENIUS\nAct, by striking the final sentence and inserting the\nfollowing: ``The term does not include a digital commodity or\npermitted payment stablecoin.''; and\n (2) by adding at the end, the following:\n ``(55) Digital commodity-related terms.--The terms\n`digital commodity' and `permitted payment stablecoin' have the\nmeaning given those terms, respectively, under section 2(a) of\nthe Securities Act of 1933 (15 U.S.C. 77b(a)).''.\n (e) Securities Investor Protection Act of 1970.--Section\n16 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll)\nis amended--\n (1) in paragraph (14), as amended by the GENIUS\nAct, by striking the final sentence and inserting the\nfollowing: ``The term does not include a digital commodity or\npermitted payment stablecoin, as such terms are defined,\nrespectively, under section 2(a) of the Securities Act of 1933\n(15 U.S.C. 77b(a))''; and\n (2) by adding at the end the following:\n ``(15) Treatment of permitted payment\nstablecoins.--A permitted payment stablecoin, as defined in\nsection 2(a) of the Securities Act of 1933, shall not qualify\nas `cash' and a claim for a permitted payment stablecoin shall\nnot qualify as a `claim for cash'.''.\n\nSEC. 302. ANTI-FRAUD AUTHORITY OVER PERMITTED PAYMENT\nSTABLECOINS AND CERTAIN DIGITAL COMMODITY\nTRANSACTIONS.\n\n (a) In General.--Section 10 of the Securities Exchange Act\nof 1934 (15 U.S.C. 78j) is amended--\n (1) by moving subsection (c) so as to appear after\nsubsection (b);\n (2) by inserting after subsection (c) the\nfollowing:\n ``(d) To use or employ, in connection with the purchase or\nsale of any permitted payment stablecoin or digital commodity, by or\nthrough, as applicable, a broker, dealer, national securities exchange,\nor an alternative trading system, any manipulative or deceptive device\nor contrivance in contravention of such rules and regulations as the\nCommission may prescribe as necessary or appropriate in the public\ninterest or for the protection of investors.''; and\n (3) by adding at the end the following: ``Rules\npromulgated under subsection (b) that prohibit fraud,\nmanipulation, or insider trading (but not rules imposing or\nspecifying reporting or recordkeeping requirements, procedures,\nor standards as prophylactic measures against fraud,\nmanipulation, or insider trading), and judicial precedents\ndecided under subsection (b) and rules promulgated thereunder\nthat prohibit fraud, manipulation, or insider trading, shall\napply with respect to permitted payment stablecoin and digital\ncommodity transactions engaged in by or through a broker or\ndealer or through an alternative trading system or, as\napplicable, a national securities exchange to the same extent\nas they apply to securities transactions. Judicial precedents\ndecided under section 17(a) of the Securities Act of 1933 and\nsections 9, 15, 16, 20, and 21A of this title, and judicial\nprecedents decided under applicable rules promulgated under\nsuch sections, shall apply to permitted payment stablecoins and\ndigital commodities with respect to those circumstances in\nwhich the permitted payment stablecoins and digital commodities\nare, as applicable, brokered, traded, or custodied by or\nthrough a broker or dealer or through an alternative trading\nsystem or a national securities exchange to the same extent as\nthey apply to securities.''.\n (b) Treatment of Permitted Payment Stablecoins.--Title I\nof the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is\namended by inserting after section 6 the following:\n\n``SEC. 6A. TREATMENT OF TRANSACTIONS IN PERMITTED PAYMENT\nSTABLECOINS.\n\n ``(a) Authority To Broker, Trade, and Custody Permitted\nPayment Stablecoins.--Permitted payment stablecoins may be brokered,\ntraded, or custodied by a broker or dealer or through an alternative\ntrading system or national securities exchange.\n ``(b) Commission Jurisdiction.--The Commission shall only\nhave jurisdiction over a transaction in a permitted payment stablecoin\nwith respect to those circumstances in which a permitted payment\nstablecoin is brokered, traded, or custodied--\n ``(1) by a broker or dealer;\n ``(2) through a national securities exchange;\nor\n ``(3) through an alternative trading\nsystem.\n ``(c) Limitation.--Subsection (b) shall only apply to a\ntransaction described in subsection (b) for the purposes of regulating\nthe offer, execution, solicitation, or acceptance of a permitted\npayment stablecoin in those circumstances in which the permitted\npayment stablecoin is brokered, traded, or custodied--\n ``(1) by a broker or dealer;\n ``(2) through a national securities exchange;\nor\n ``(3) through an alternative trading\nsystem.''.\n\nSEC. 303. ELIGIBILITY OF ALTERNATIVE TRADING\nSYSTEMS.\n\n (a) In General.--Section 5 of the Securities Exchange Act\nof 1934 (15 U.S.C. 78e) is amended--\n (1) by striking ``It'' and inserting the\nfollowing:\n ``(a) In General.--It''; and\n (2) by adding at the end the following:\n ``(b) Digital Commodity Protections.--\n ``(1) In general.--The Commission may not preclude\na trading platform from operating pursuant to a covered\nexemption to exchange registration under section 6 of this\ntitle on the basis that the assets traded or to be traded on\nsuch platform include--\n ``(A) digital commodities or permitted\npayment stablecoins; and\n ``(B) securities.\n ``(2) Covered exemption.--In this subsection, the\nterm `covered exemption' means an exemption--\n ``(A) described in subsection (a)(2);\nor\n ``(B) with respect to any other rule of\nthe Commission relating to the definition of\n`exchange'.''.\n (b) Securities Exchange Act of 1934.--Section 3(a)(2) of\nthe Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(2)) is amended by\nadding at the end the following: ``Neither an alternative trading\nsystem predominantly facilitating the trading of digital commodities,\npermitted payment stablecoins, or both, relative to its securities\ntraded, nor a digital commodity exchange, is a `facility' of an\nexchange.''.\n (c) Rule of Construction.--Nothing in this section, the\namendments made by this section, or section 304 may be construed to--\n\n (1) prohibit a national securities exchange from\nowning or operating any other type of alternative trading\nsystem; or\n (2) create a presumption that any other type of\nalternative trading system owned or operated by a national\nsecurities exchange is a facility of that exchange.\n\nSEC. 304. RULEMAKING FOR DUAL-REGISTERED ENTITIES.\n\n (a) Conflict of Interest Policies and Procedures.--Each\nperson or entity dual-registered with the Commodity Futures Trading\nCommission as permitted under section 15(p) of the Securities Exchange\nAct of 1934 shall establish, maintain, and, as applicable, enforce and\ncomply with written policies and procedures reasonably designed to\nmitigate any conflicts of interest, including with respect to\ntransactions or arrangements with affiliates registered with the\nSecurities and Exchange Commission, taking into consideration the\nnature of the business of such person or entity.\n (b) Exemption From Duplicative, Conflicting, or Unduly\nBurdensome Provisions.--The Securities and Exchange Commission shall\nprescribe rules for a person or entity with multiple registrations,\nwhere at least one such registration includes any dual registration\npermitted under section 15(p) of the Securities Exchange Act of 1934,\nto exempt the person or entity from duplicative, conflicting, or unduly\nburdensome provisions of the Securities Exchange Act of 1934 and rules\nthereunder, to the extent such an exemption would protect investors,\nmaintain fair, orderly, and efficient markets, and facilitate capital\nformation.\n (c) Implementing Organizations.--The Securities and\nExchange Commission shall require any registered national securities\nassociation that has as a member a registered broker or registered\ndealer that is registered with the Commodity Futures Trading Commission\nas a digital commodity broker or digital commodity dealer as permitted\nunder section 15(p)(1) of the Securities Exchange Act of 1934 or\notherwise transacts in permitted payment stablecoins to revise such\nrules as may be necessary to further the purposes of and compliance\nwith this section.\n (d) Memorandum of Understanding.--The Securities and\nExchange Commission shall enter into a memorandum of understanding with\nthe Commodity Futures Trading Commission to ensure--\n (1) non-duplicative supervision and enforcement\nwith respect to registrants of the Securities and Exchange\nCommission dual-registered with the Commodity Futures Trading\nCommission as permitted under section 15(p) of the Securities\nExchange Act of 1934; and\n (2) appropriate information sharing between the\nCommissions to further the purposes of and compliance with this\nsection, the Securities Exchange Act of 1934, and the Commodity\nExchange Act.\n (e) Rule of Construction.--Nothing in this section shall\nbe construed to limit the anti-fraud, anti-manipulation, or false\nreporting enforcement authorities of the Commodity Futures Trading\nCommission with respect to a contract of sale of a commodity and\npersons effecting such contracts.\n\nSEC. 305. MODERNIZATION OF RECORDKEEPING\nREQUIREMENTS.\n\n (a) In General.--For purposes of books and records\nrequirements for brokers, dealers, transfer agents, national securities\nexchanges under the Securities and Exchange Act of 1934 (15 U.S.C. 78a\net seq.), investment advisers under the Investment Advisers Act of 1940\n(15 U.S.C. 80b-1 et seq.), and investment companies under the\nInvestment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), a person may,\nconsistent with any rules promulgated under subsection (b), utilize\nrecords from a blockchain system.\n (b) Revision of Rules.--Not later than 180 days after the\ndate of enactment of this Act, the Securities and Exchange Commission\nshall issue and revise such rules as may be necessary to implement this\nsection.\n\nSEC. 306. EXEMPTIVE AUTHORITY.\n\n Section 28 of the Securities Act of 1933 (15 U.S.C. 77z-3)\nis amended by striking ``by rule or regulation'' and inserting ``by\nrule, regulation, or order''.\n\nSEC. 307. ADDITIONAL REGISTRATIONS WITH THE COMMODITY FUTURES\nTRADING COMMISSION.\n\n Section 15 of the Securities Exchange Act of 1934 (15\nU.S.C. 78o) is amended by adding at the end the following:\n ``(p) Additional Registrations With the Commodity Futures\nTrading Commission.--\n ``(1) Registered brokers and dealers.--A\nregistered broker or registered dealer shall be permitted to\nmaintain a registration with the Commodity Futures Trading\nCommission as a digital commodity broker or digital commodity\ndealer.\n ``(2) National securities exchanges.--A national\nsecurities exchange or affiliate thereof shall be permitted to\nmaintain a registration with the Commodity Futures Trading\nCommission as a digital commodity exchange.\n ``(3) Alternative trading systems.--An alternative\ntrading system, and the operator thereof, shall be permitted to\nmaintain a registration with the Commodity Futures Trading\nCommission as a digital commodity exchange.\n ``(4) Notice of application.--Any person or entity\ndescribed in paragraph (1) through (3) shall provide to the\nSecurities and Exchange Commission, at such time and in such\nform and manner as the Securities and Exchange Commission shall\nprescribe, notice of any application to register with the\nCommodity Futures Trading Commission as a digital commodity\nbroker, digital commodity dealer, or digital commodity\nexchange.''.\n\nSEC. 308. EXEMPTING DIGITAL COMMODITIES FROM STATE SECURITIES\nLAWS.\n\n (a) Covered Security.--Section 18(b) of the Securities Act\nof 1933 (15 U.S.C. 77r(b)) is amended by adding at the end the\nfollowing:\n ``(5) Exemption in connection with digital\ncommodities.--A digital commodity shall be treated as a covered\nsecurity.''.\n (b) Rule of Construction.--Nothing in this section,\nsection 202, or the amendments made by such sections may be construed\nto limit the existing authority described in section 18(c)(1) of the\nSecurities Act of 1933 (15 U.S.C. 77r(c)(1)) of a securities commission\n(or any agency or office performing like functions) of any State with\nrespect to a covered security or any security.\n\nSEC. 309. EXCLUSION FOR DECENTRALIZED FINANCE\nACTIVITIES.\n\n The Securities Exchange Act of 1934 (15 U.S.C. 78a et\nseq.) is amended by inserting after section 15G the\nfollowing:\n\n``SEC. 15H. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO\nTHIS ACT.\n\n ``(a) In General.--Notwithstanding any other provision of\nthis Act, a person shall not be subject to this Act and the regulations\npromulgated under this Act based on the person directly or indirectly\nengaging in any of the following activities, whether singly or in\ncombination, in relation to the operation of a blockchain system or in\nrelation to a decentralized finance trading protocol:\n ``(1) Compiling network transactions or relaying,\nsearching, sequencing, validating, or acting in a similar\ncapacity.\n ``(2) Providing computational work, operating a\nnode or oracle service, or procuring, offering, or utilizing\nnetwork bandwidth, or providing other similar incidental\nservices.\n ``(3) Providing a user-interface that enables a\nuser to read and access data about a blockchain\nsystem.\n ``(4) Developing, publishing, constituting,\nadministering, maintaining, or otherwise distributing a\nblockchain system or a decentralized finance trading\nprotocol.\n ``(5) Developing, publishing, constituting,\nadministering, maintaining, or otherwise distributing a\ndecentralized finance messaging system, or operating or\nparticipating in a liquidity pool, for the purpose of executing\na spot contract for the purchase or sale of a digital commodity\nin relation to a decentralized finance trading\nprotocol.\n ``(6) Developing, publishing, constituting,\nadministering, maintaining, or otherwise distributing software\nor systems that create or deploy hardware or software,\nincluding wallets or other systems, facilitating an individual\nuser's own personal ability to keep, safeguard, or custody the\nuser's digital assets or related private keys.\n ``(b) Exceptions.--Subsection (a) shall not apply to the\nanti-fraud and anti-manipulation authorities of the\nCommission.''.\n\nSEC. 310. TREATMENT OF CUSTODY ACTIVITIES BY BANKING\nINSTITUTIONS.\n\n (a) Treatment of Custody Activities.--The appropriate\nFederal banking agency, the National Credit Union Administration (in\nthe case of a credit union), and the Securities and Exchange Commission\nmay not require a depository institution, national bank, Federal credit\nunion, State credit union, trust company, broker, or dealer, or any\naffiliate thereof (the ``entity'')--\n (1) to include assets held in custody that are not\naccounted for as assets of the entity as a liability on the\nfinancial statement or balance sheet of the entity, including\ndigital commodity or permitted payment stablecoin custody or\nsafekeeping services; and\n (2) to hold regulatory capital against assets,\nincluding reserves backing such assets, in custody or\nsafekeeping, except as necessary to mitigate against\noperational risks inherent with the custody or safekeeping\nservices, as determined by--\n (A) the appropriate Federal banking\nagency;\n (B) the National Credit Union\nAdministration (in the case of a credit\nunion);\n (C) a State bank supervisor;\n (D) a State credit union supervisor (as\ndefined in section 6003 of the Anti-Money Laundering\nAct of 2020 (31 U.S.C. 5311 note)); or\n (E) the Securities and Exchange Commission\n(in the case of a broker or dealer).\n (b) Definitions.--In this section:\n (1) Banking terms.--The terms ``appropriate\nFederal banking agency'', ``depository institution'',\n``national bank'', and ``State bank supervisor'' have the\nmeaning given those terms, respectively, under section 3 of the\nFederal Deposit Insurance Act (12 U.S.C. 1813).\n (2) Credit union terms.--The terms ``Federal\ncredit union'' and ``State credit union'' have the meaning\ngiven those terms, respectively, under section 101 of the\nFederal Credit Union Act (12 U.S.C. 1752).\n\nSEC. 311. BROKER AND DEALER DISCLOSURES REGARDING THE\nTREATMENT OF ASSETS.\n\n (a) In General.--Not later than 270 days after the date of\nthe enactment of this Act, the Securities and Exchange Commission shall\nissue rules requiring written disclosures regarding the treatment of\ncustomer assets in the event of an insolvency, resolution, or\nliquidation proceeding to be provided by a registered broker or dealer\nto an investor before a digital commodity, a permitted payment\nstablecoin, or an investment contract involving a unit of a digital\ncommodity is received, acquired, or held by the broker or dealer for\nthe account of the investor, which shall include, as necessary or\nappropriate for the protection of investors--\n (1) a description of the manner in which any\ndigital commodity, permitted payment stablecoin, or investment\ncontact involving a unit of a digital commodity received,\nacquired, or held by the broker or dealer for the account of\nsuch investor would be treated in an insolvency, resolution, or\nliquidation proceeding with respect to the broker or dealer\nunder--\n (A) title II of the Dodd-Frank Wall Street\nReform and Consumer Protection Act (12 U.S.C. 5381 et\nseq.);\n (B) the Securities Investor Protection Act\nof 1970 (15 U.S.C. 78aaa et seq.); or\n (C) as applicable, chapter 7 or chapter 11\nof title 11, United States Code; and\n (2) how the treatment described in paragraph (1)\ndiffers from the treatment of securities and cash received,\nacquired, or held by the broker or dealer for the account of\nsuch investor in the event of an insolvency, resolution, or\nliquidation proceeding with respect to the broker or dealer\nunder each law described under subparagraph (A) through (C) of\nparagraph (1).\n\nSEC. 312. DIGITAL COMMODITY ACTIVITIES THAT ARE FINANCIAL IN\nNATURE.\n\n (a) Digital Commodity Activities That Are Financial in\nNature.--Section 4(k)(4) of the Bank Holding Company Act of 1956 (12\nU.S.C. 1843(k)(4)) is amended--\n (1) in subparagraph (A), by striking ``or\nsecurities'' and inserting ``, securities, or digital\ncommodities''; and\n (2) in subparagraph (E), by inserting ``or digital\ncommodities'' before the period at the end.\n (b) National Bank Activity.--\n (1) In general.--A national bank may use a digital\nasset or blockchain system to perform, provide, or deliver any\nactivity, function, product, or service that the national bank\nis otherwise authorized by law to perform, provide, or\ndeliver.\n (2) Rule of construction.--Nothing in this\nsubsection may be construed to exempt a national bank's\nperformance, provision, or delivery of an activity, function,\nproduct, or service from a requirement that would apply if the\nactivity were not performed, provided, or delivered using a\ndigital asset or blockchain system.\n (c) Insured State Banks and Subsidiaries of Insured State\nBanks.--For purposes of sections 24(a) and 24(d) of the Federal Deposit\nInsurance Act (12 U.S.C. 1831a(a) and (d)), all of the activities\nauthorized for a national bank under subsection (b) that are principal\nactivities shall be permissible for an insured State bank and\nsubsidiary of an insured State bank.\n\nSEC. 313. EFFECTIVE DATE; ADMINISTRATION.\n\n Except as otherwise provided under this title, this title\nand the amendments made by this title shall take effect 360 days after\nthe date of enactment of this Act, except that, to the extent a\nprovision of this title requires a rulemaking, the provision shall take\neffect on the later of--\n (1) 360 days after the date of enactment of this\nAct; or\n (2) 60 days after the publication in the Federal\nRegister of the final rule implementing the\nprovision.\n\nSEC. 314. EDUCATIONAL MATERIAL REQUIREMENTS.\n\n The Securities and Exchange Commission, in consultation\nwith the Commodity Futures Trading Commission, shall require any\nregistered entity that facilitates the trading of digital commodities\nor investment contracts involving units of a digital commodity to\nprovide clear and accessible educational materials to the public,\nincluding--\n (1) an overview of how blockchain technology\nfunctions;\n (2) a description of common risks associated with\ndigital commodities;\n (3) a description of the differences between\ndigital commodity markets and traditional financial\nmarkets;\n (4) information on reporting requirements related\nto digital commodity transactions or investment contracts\ninvolving units of a digital commodity; and\n (5) guidance on recognizing fraudulent schemes and\ninstructions for reporting suspected fraud.\n\nSEC. 315. DISCRETIONARY SURPLUS FUND.\n\n (a) In General.--The dollar amount specified under section\n7(a)(3)(A) of the Federal Reserve Act (12 U.S.C. 289(a)(3)(A)) is\nreduced by $15,000,000.\n (b) Effective Date.--The amendment made by subsection (a)\nshall take effect on September 30, 2035.\n\nTITLE IV--REGISTRATION FOR DIGITAL COMMODITY INTERMEDIARIES AT\nTHE COMMODITY FUTURES TRADING COMMISSION\n\nSEC. 401. COMMISSION JURISDICTION OVER DIGITAL COMMODITY\nTRANSACTIONS.\n\n (a) Savings Clause.--Section 2(a)(1) of the Commodity\nExchange Act (7 U.S.C. 2(a)(1)) is amended by adding at the end the\nfollowing:\n ``(J) Except as expressly provided in this\nAct, nothing in the CLARITY Act of 2025 shall affect or\napply to, or be interpreted to affect or apply to--\n\n ``(i) any agreement, contract, or\ntransaction that is subject to this Act as--\n\n ``(I) a contract of sale\nof a commodity for future delivery or\nan option on such a contract;\n ``(II) a swap;\n ``(III) a security futures\nproduct;\n ``(IV) an option\nauthorized under section 4c of this\nAct;\n ``(V) an agreement,\ncontract, or transaction described in\nsubparagraph (C)(i) or (D)(i) of\nsubsection (c)(2) of this section;\nor\n ``(VI) a leverage\ntransaction authorized under section\n19; or\n ``(ii) the activities of any\nperson with respect to any such an agreement,\ncontract, or transaction.''.\n (b) Limitation on Authority Over Permitted Payment\nStablecoins.--Section 2(c)(1) of the Commodity Exchange Act (7 U.S.C.\n2(c)(1)) is amended--\n (1) in subparagraph (F), by striking ``or'' at the\nend;\n (2) in subparagraph (G), by striking the period\nand inserting ``; or''; and\n (3) by adding at the end the following:\n ``(H) permitted payment\nstablecoins.''.\n (c) Commission Jurisdiction Over Financing Agreements.--\nSection 2(c)(2)(D) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(D))\nis amended--\n (1) in clause (ii)(I), by inserting after\n``paragraph (1)'' the following: ``(other than an agreement,\ncontract, or transaction in a permitted payment stablecoin)'';\nand\n (2) by redesignating clause (iv) as clause (v) and\ninserting after clause (iii) the following:\n ``(iv) Agreements for margin\nfinancing.--Notwithstanding clause (iii), a\ndigital commodity broker may, subject to the\nrequirements of section 4u(c)(2), offer to or\nenter into an agreement for margin financing\nwith a customer for the purchase or sale of a\ndigital commodity, provided any purchase or\nsale made pursuant to the agreement shall\nresult in the delivery of the digital commodity\ninto or from an account carried for the\ncustomer by the digital commodity broker, as\ndetermined by the Commission by rule or\nregulation, based on commercial spot market\npractices.''.\n (d) Commission Authority Over Certain Digital Commodity\nand Stablecoin Spot Transactions.--Section 2(c)(2) of the Commodity\nExchange Act (7 U.S.C. 2(c)(2)) is amended by adding at the end the\nfollowing:\n ``(F) Commission jurisdiction with respect\nto digital commodity transactions.--\n ``(i) In general.--Subject to\nsections 6d and 12(e), the Commission shall\nhave exclusive jurisdiction with respect to any\naccount, agreement, contract, or transaction\ninvolving a contract of sale of a digital\ncommodity or tradable asset (as defined in\nsection 4x) in interstate commerce, including\nin a digital commodity or tradable asset (as so\ndefined) cash or spot market, that is offered,\nsolicited, traded, facilitated, executed,\ncleared, reported, or otherwise dealt in--\n\n ``(I) on or subject to the\nrules of a registered entity or an\nentity that is required to be\nregistered as a registered entity;\nor\n ``(II) by any other entity\nregistered, or required to be\nregistered, with the\nCommission.\n ``(ii) Limitations.--Clause (i)\nshall not apply with respect to--\n ``(I) custodial or\ndepository activities for a digital\ncommodity of an entity regulated by an\nappropriate Federal banking agency or a\nState bank supervisor (within the\nmeaning of section 3 of the Federal\nDeposit Insurance Act); or\n ``(II) an offer or sale of\nan investment contract involving a\ndigital commodity or of a securities\noffer or sale involving a digital\ncommodity.\n ``(iii) Mixed digital asset\ntransactions.--\n ``(I) In general.--Clause\n(i) shall not apply to a mixed digital\nasset transaction.\n ``(II) Reports on mixed\ndigital asset transactions.--A digital\ncommodity issuer, digital commodity\nrelated person, digital commodity\naffiliated person, or other person\nregistered with the Securities and\nExchange Commission that engages in a\nmixed digital asset transaction, shall,\non request of the Commission, open to\ninspection and examination by the\nCommission all books and records\nrelating to the mixed digital asset\ntransaction, subject to the\nconfidentiality and disclosure\nrequirements of section 8.\n ``(G) Agreements, contracts, and\ntransactions in stablecoins.--\n ``(i) Treatment of permitted\npayment stablecoins on commission-registered\nentities.--Subject to clauses (ii) and (iii),\nthe Commission shall have jurisdiction over a\ncash or spot agreement, contract, or\ntransaction in a permitted payment stablecoin\nthat is offered, offered to enter into, entered\ninto, executed, solicited, or accepted, or for\nwhich the execution of is confirmed--\n ``(I) on or subject to the\nrules of a registered entity;\nor\n ``(II) by any other entity\nregistered with the\nCommission.\n ``(ii) Permitted payment\nstablecoin transaction rules.--This Act shall\napply to a transaction described in clause (i)\nonly for the purpose of regulating the offer,\nexecution, solicitation, or acceptance of a\ncash or spot permitted payment stablecoin\ntransaction on a registered entity or by any\nother entity registered with the Commission, as\nif the permitted payment stablecoin were a\ndigital commodity.\n ``(iii) No authority over\npermitted payment stablecoins.--Notwithstanding\nclauses (i) and (ii), the Commission shall not\nmake a rule or regulation, impose a requirement\nor obligation on a registered entity or other\nentity registered with the Commission, or\nimpose a requirement or obligation on a\npermitted payment stablecoin issuer, regarding\nthe operation of a permitted payment stablecoin\nissuer or a permitted payment\nstablecoin.''.\n (e) Conforming Amendments.--The Commodity Exchange Act is\namended--\n (1) in section 1a(9) (7 U.S.C. 1a(9)), as amended\nby the GENIUS Act, by striking the second sentence;\nand\n (2) in section 2(a)(1)(A) (7 U.S.C. 2(a)(1)(A)),\nin the 1st sentence, by inserting ``subparagraphs (F) and (G)\nof subsection (c)(2) of this section or'' before ``section\n19''.\n\nSEC. 402. REQUIRING FUTURES COMMISSION MERCHANTS TO USE\nQUALIFIED DIGITAL ASSET CUSTODIANS.\n\n Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is\namended--\n (1) in subsection (a)(2)--\n (A) in the 1st proviso, by striking ``any\nbank or trust company'' and inserting ``any bank, trust\ncompany, or qualified digital asset custodian, as\napplicable,''; and\n (B) by inserting ``: Provided further,\nThat any such property that is a digital asset shall be\nheld in a qualified digital asset custodian'' before\nthe period at the end; and\n (2) in subsection (f)(3)(A)(i), by striking ``any\nbank or trust company'' and inserting ``any bank, trust\ncompany, or qualified digital asset custodian''.\n\nSEC. 403. TRADING CERTIFICATION AND APPROVAL FOR DIGITAL\nCOMMODITIES.\n\n Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-2)\nis amended--\n (1) in subsection (a), by striking ``5(d) and\n5b(c)(2)'' and inserting ``5(d), 5b(c)(2), and\n5i(c)'';\n (2) in subsection (b)--\n (A) in each of paragraphs (1) and (2), by\ninserting ``digital commodity exchange,'' before\n``derivatives''; and\n (B) in paragraph (3), by inserting\n``digital commodity exchange,'' before ``derivatives''\neach place it appears;\n (3) in subsection (c)--\n (A) in paragraph (2), by inserting ``or\nparticipants'' before ``(in a'';\n (B) in paragraph (4)(B), by striking\n``1a(10)'' and inserting ``1a(9)''; and\n (C) in paragraph (5), by adding at the end\nthe following:\n ``(D) Special rules for digital commodity\ncontracts.--In certifying any new rule or rule\namendment, or listing any new contract or instrument,\nin connection with a contract of sale of a commodity\nfor future delivery, option, swap, or other agreement,\ncontract, or transaction, that is based on or\nreferences a digital commodity, a registered entity\nshall make or rely on a certification under subsection\n(d) for the digital commodity.''; and\n (4) by inserting after subsection (c) the\nfollowing:\n ``(d) Certifications for Digital Commodity Trading.--\n\n ``(1) In general.--Notwithstanding subsection (c),\nfor the purposes of listing or offering a digital commodity for\ntrading in a digital commodity cash or spot market, an eligible\nentity shall submit a written certification to the Commission\nthat the digital commodity meets the requirements of this Act\n(including the regulations prescribed under this\nAct).\n ``(2) Contents of the certification.--\n ``(A) In general.--In making a written\ncertification under this paragraph, the eligible entity\nshall furnish to the Commission an analysis of how the\ndigital commodity meets the requirements of section\n5i(c)(3).\n ``(B) Reliance on prior disclosures.--In\nmaking a certification under this subsection, an\neligible entity may rely on the records and disclosures\nof any relevant person registered with the Securities\nand Exchange Commission or other State or Federal\nagency.\n ``(3) Modifications.--\n ``(A) In general.--An eligible entity\nshall modify a certification made under paragraph (1)\nto--\n ``(i) account for significant\nchanges in any information provided to the\nCommission under paragraph (2)(A)(ii);\nor\n ``(ii) permit or restrict trading\nin units of a digital commodity held by a\ndigital commodity related person or a digital\ncommodity affiliated person.\n ``(B) Recertification.--Modifications\nrequired by this subsection shall be subject to the\nsame disapproval and review process as a new\ncertification under paragraphs (4) and (5).\n ``(4) Disapproval.--\n ``(A) In general.--The written\ncertification described in paragraph (1) shall become\neffective unless the Commission finds that the listing\nof the digital commodity is inconsistent with the\nrequirements of this Act or the rules and regulations\nprescribed under this Act.\n ``(B) Analysis required.--The Commission\nshall include, with any findings referred to in\nsubparagraph (A), a detailed analysis of the factors on\nwhich the decision was based.\n ``(C) Public findings.--The Commission\nshall make public any disapproval decision, and any\nrelated findings and analysis, made under this\nparagraph.\n ``(5) Review.--\n ``(A) In general.--Unless the Commission\nmakes a disapproval decision under paragraph (4), the\nwritten certification described in paragraph (1) shall\nbecome effective, pursuant to the certification by the\neligible entity and notice of the certification to the\npublic (in a manner determined by the Commission) on\nthe date that is--\n ``(i) 20 business days after the\ndate the Commission receives the certification\n(or such shorter period as determined by the\nCommission by rule or regulation), in the case\nof a digital commodity that has not been\ncertified under this section or for which a\ncertification is being modified under paragraph\n(3); or\n ``(ii) 1 business day after the\ndate the Commission receives the certification\n(or such shorter period as determined by the\nCommission by rule or regulation) for any\ndigital commodity that has been certified under\nthis section.\n ``(B) Extensions.--The time for\nconsideration under subparagraph (A) may be extended\nthrough notice to the eligible entity that there are\nnovel or complex issues that require additional time to\nanalyze, that the explanation by the submitting\neligible entity is inadequate, or of a potential\ninconsistency with this Act--\n ``(i) once, for 30 business days,\nthrough written notice to the eligible entity\nby the Commission; and\n ``(ii) once, for an additional 30\nbusiness days, through written notice to the\neligible entity from the Commission that\nincludes a description of any deficiencies with\nthe certification, including any--\n ``(I) novel or complex\nissues which require additional time to\nanalyze;\n ``(II) missing information\nor inadequate explanations;\nor\n ``(III) potential\ninconsistencies with this\nAct.\n ``(6) Prior approval before registration.--\n\n ``(A) In general.--A person applying for\nregistration with the Commission for the purposes of\nlisting or offering a digital commodity for trading in\na digital commodity cash or spot market may request\nthat the Commission grant prior approval for the person\nto list or offer the digital commodity on being\nregistered with the Commission.\n ``(B) Request for prior approval.--A\nperson seeking prior approval under subparagraph (A)\nshall furnish the Commission with a written\ncertification that the digital commodity meets the\nrequirements of this Act (including the regulations\nprescribed under this Act) and the information\ndescribed in paragraph (2).\n ``(C) Deadline.--The Commission shall take\nfinal action on a request for prior approval not later\nthan 90 business days after submission of the request,\nunless the person submitting the request agrees to an\nextension of the time limitation established under this\nsubparagraph.\n ``(D) Disapproval.--\n ``(i) In general.--The Commission\nshall approve the listing of the digital\ncommodity unless the Commission finds that the\nlisting is inconsistent with this Act\n(including any regulation prescribed under this\nAct).\n ``(ii) Analysis required.--The\nCommission shall include, with any findings\nmade under clause (i), a detailed analysis of\nthe factors on which the decision is\nbased.\n ``(iii) Public findings.--The\nCommission shall make public any disapproval\ndecision, and any related findings and\nanalysis, made under this paragraph.\n ``(7) Eligible entity defined.--In this\nsubsection, the term `eligible entity' means a registered\nentity or group of registered entities acting\njointly.''.\n\nSEC. 404. REGISTRATION OF DIGITAL COMMODITY\nEXCHANGES.\n\n The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended\nby inserting after section 5h the following:\n\n``SEC. 5I. REGISTRATION OF DIGITAL COMMODITY\nEXCHANGES.\n\n ``(a) In General.--\n ``(1) Registration.--\n ``(A) In general.--A trading facility that\noffers or seeks to offer a cash or spot market in at\nleast 1 digital commodity shall register with the\nCommission as a digital commodity exchange.\n ``(B) Application.--A person desiring to\nregister as a digital commodity exchange shall submit\nto the Commission an application in such form and\ncontaining such information as the Commission may\nrequire for the purpose of making the determinations\nrequired for approval.\n ``(C) Exemptions.--A trading facility that\noffers or seeks to offer a cash or spot market in at\nleast 1 digital commodity shall not be required to\nregister under this section if the trading facility--\n\n ``(i) permits no more than a de\nminimis amount of trading activity, as the\nCommission may determine by rule or regulation,\nin a digital commodity; or\n ``(ii) serves only customers in a\nsingle State, territory, or possession of the\nUnited States.\n ``(2) Additional registrations.--\n ``(A) With the commission.--In order to\nfoster the development of fair and orderly markets,\nprotect customers, and promote responsible innovation,\nthe Commission--\n ``(i) shall prescribe rules to\nexempt an entity registered with the Commission\nunder more than 1 section of this Act from\nduplicative, conflicting, or unduly burdensome\nprovisions of this Act and the rules under this\nAct;\n ``(ii) shall prescribe rules to\naddress conflicts of interests and activities\nof the entity; and\n ``(iii) may, after an analysis of\nthe risks and benefits, prescribe rules to\nprovide for portfolio margining.\n ``(B) With a registered futures\nassociation.--\n ``(i) In general.--A registered\ndigital commodity exchange shall become and\nremain a member of a registered futures\nassociation and comply with rules related to\nsuch activity, if the registered digital\ncommodity exchange accepts customer funds\nrequired to be segregated under subsection\n(d).\n ``(ii) Rulemaking required.--The\nCommission shall require any registered futures\nassociation with a digital commodity exchange\nas a member to provide such rules as may be\nnecessary to further compliance with subsection\n(d), protect customers, and promote the public\ninterest.\n ``(C) Registration required.--A person\nrequired to be registered as a digital commodity\nexchange under this section shall register with the\nCommission as such regardless of whether the person is\nregistered with another State or Federal\nregulator.\n ``(b) Trading.--\n ``(1) Prohibition on certain trading practices.--\n\n ``(A) Section 4b shall apply to any\nagreement, contract, or transaction in a digital\ncommodity as if the agreement, contract, or transaction\nwere a contract of sale of a commodity for future\ndelivery.\n ``(B) Section 4c shall apply to any\nagreement, contract, or transaction in a digital\ncommodity as if the agreement, contract, or transaction\nwere a transaction involving the purchase or sale of a\ncommodity for future delivery.\n ``(C) Section 4b-1 shall apply to any\nagreement, contract, or transaction in a digital\ncommodity as if the agreement, contract, or transaction\nwere a contract of sale of a commodity for future\ndelivery.\n ``(2) Prohibition on acting as a counterparty.--\n\n ``(A) In general.--A digital commodity\nexchange or any affiliate of such an exchange shall not\ntrade on or subject to the rules of the digital\ncommodity exchange for its own account.\n ``(B) Exceptions.--Subject to any\nconditions, requirements, or limitations imposed by the\nCommission pursuant to subparagraph (C), a digital\ncommodity exchange may engage in trading on the\nexchange so long as the trading is not solely for the\npurpose of the profit of the exchange, including the\nfollowing:\n ``(i) Customer direction.--A\ntransaction for, or entered into at the\ndirection of, or for the benefit of, an\nunaffiliated customer.\n ``(ii) Risk management.--A\ntransaction to manage the credit, market, and\nliquidity risks associated with the digital\ncommodity business of the exchange.\n ``(iii) Operational needs.--A\ntransaction related to the operational needs of\nthe business of the digital commodity exchange\nor its affiliate.\n ``(iv) Functional use.--A\ntransaction related to the functional operation\nof a blockchain system.\n ``(C) Rulemaking.--The Commission may, by\nrule, establish conditions, requirements, or other\nlimitations on the activities of a digital commodity\nexchange and its affiliate permitted pursuant to\nsubparagraph (B) that are necessary for the protection\nof customers, the promotion of innovation, or the\nmaintenance of fair, orderly, and efficient\nmarkets.\n ``(D) Notice requirement.--In order for a\ndigital commodity exchange or any affiliate of a\ndigital commodity exchange to engage in trading on the\naffiliated exchange pursuant to subsection (B), notice\nmust be given to the Commission that shall enumerate\nhow any proposed activity is consistent with the\nexceptions in subsection (B) and the purposes of this\nAct.\n ``(c) Core Principles for Digital Commodity Exchanges.--\n\n ``(1) Compliance with core principles.--\n ``(A) In general.--To be registered, and\nmaintain registration, as a digital commodity exchange,\na digital commodity exchange shall comply with--\n\n ``(i) the core principles\ndescribed in this subsection; and\n ``(ii) any requirement that the\nCommission may impose by rule or regulation\npursuant to section 8a(5).\n ``(B) Reasonable discretion of a digital\ncommodity exchange.--Unless otherwise determined by the\nCommission by rule or regulation, a digital commodity\nexchange described in subparagraph (A) shall have\nreasonable discretion in establishing the manner in\nwhich the digital commodity exchange complies with the\ncore principles described in this subsection.\n ``(2) Compliance with rules.--A digital commodity\nexchange shall--\n ``(A) establish and enforce compliance\nwith any rule of the digital commodity exchange,\nincluding--\n ``(i) the terms and conditions of\nthe trades traded or processed on or through\nthe digital commodity exchange; and\n ``(ii) any limitation on access to\nthe digital commodity exchange;\n ``(B) establish and enforce trading, trade\nprocessing, and participation rules that will deter\nabuses and have the capacity to detect, investigate,\nand enforce those rules, including means--\n ``(i) to provide market\nparticipants with impartial access to the\nmarket; and\n ``(ii) to capture information that\nmay be used in establishing whether rule\nviolations have occurred; and\n ``(C) establish rules governing the\noperation of the exchange, including rules specifying\ntrading procedures to be used in entering and executing\norders traded or posted on the facility.\n ``(3) Listing standards for digital commodities.--\n\n ``(A) In general.--A digital commodity\nexchange shall establish policies and procedures to\npermit trading in a digital commodity only if--\n\n ``(i) reports with respect to the\ndigital commodity required under, as\napplicable, section 4B(b)(3) or 4B(b)(5)(C) of\nthe Securities Act of 1933 (or, with respect to\na digital commodity not issued in reliance on\nsection 4(a)(8) of the Securities Act of 1933,\na comparable set of reports, where required by\nthe Securities and Exchange Commission) have\nbeen filed with the Securities and Exchange\nCommission; or\n ``(ii) such other similar\ninformation as the Commission may, by rule or\nregulation require, that is related to the\nongoing development plan of the blockchain\nsystem and is able to be publicly ascertained,\nhas been provided to the public.\n ``(B) Public information requirements.--\n\n ``(i) In general.--A digital\ncommodity exchange shall--\n ``(I) permit trading in a\ndigital commodity only if the digital\ncommodity exchange reasonably\ndetermines that the information\nrequired by clause (ii) is correct,\ncurrent, and available to the public;\nand\n ``(II) establish policies\nand procedures to determine that the\ninformation provided pursuant to clause\n(ii) is correct, current, and available\nto the public.\n ``(ii) Required information.--With\nrespect to a digital commodity and each\nblockchain system to which the digital\ncommodity relates for which the digital\ncommodity exchange will make the digital\ncommodity available to the customers of the\ndigital commodity exchange, the following\ninformation:\n ``(I) Source code.--The\nsource code for any blockchain system\nto which the digital commodity\nrelates.\n ``(II) Transaction\nhistory.--A description of the steps\nnecessary to independently access,\nsearch, and verify the transaction\nhistory of any blockchain system to\nwhich the digital commodity relates, to\nthe extent any such independent access,\nsearch, and verification activities are\ntechnically feasible with respect to\nthe blockchain system.\n ``(III) Digital commodity\neconomics.--A narrative description of\nthe purpose of any blockchain system to\nwhich the digital commodity relates and\nthe operation of any such blockchain\nsystem, including--\n ``(aa) information\nexplaining the launch and\nsupply process, including the\nnumber of digital assets to be\nissued in an initial\nallocation, the total number of\ndigital commodities to be\ncreated, the release schedule\nfor the digital commodities,\nand the total number of digital\ncommodities then\noutstanding;\n ``(bb) information\ndetailing any applicable\nconsensus mechanism or process\nfor validating transactions,\nmethod of generating or mining\ndigital commodities, and any\nprocess for burning or\ndestroying digital commodities\non the blockchain\nsystem;\n ``(cc) an\nexplanation of governance\nmechanisms for implementing\nchanges to the blockchain\nsystem or forming consensus\namong holders of the digital\ncommodities; and\n ``(dd) sufficient\ninformation for a third party\nto create a tool for verifying\nthe transaction history of the\ndigital asset.\n ``(IV) Trading volume and\nvolatility.--The trading volume and\nvolatility of the digital commodity on\nthe exchange.\n ``(V) Additional\ninformation.--Such additional\ninformation as the Commission may\ndetermine by rule to be necessary for a\ncustomer to understand the financial\nand operational risks of a digital\ncommodity, and to be practically\nfeasible to provide.\n ``(iii) Format.--The Commission\nshall prescribe rules and regulations for the\nstandardization and simplification of\ndisclosures under clause (ii), including\nrequiring that disclosures--\n ``(I) be\nconspicuous;\n ``(II) use plain language\ncomprehensible to customers;\n ``(III) are not drafted in\na way that presumes the customer\nalready has a base knowledge,\nfamiliarity, or understanding of the\nbasic terminology, operation, and\nfunction of blockchain systems;\nand\n ``(IV) succinctly explain\nthe information that is required to be\ncommunicated to the customer.\n ``(iv) Reliance on previous\ndisclosures.--In complying with this\nsubparagraph, a digital commodity exchange may\nrely on and make available to the public\nrelevant information publicly disclosed to the\nCommission, the Securities and Exchange\nCommission, or an appropriate Federal banking\nagency.\n ``(C) Digital commodities held by related\nand digital commodity affiliated persons.--A digital\ncommodity exchange shall establish policies and\nprocedures designed to permit the trading of a unit of\na digital commodity acquired from the issuer and held\nby a digital commodity affiliated person or a digital\ncommodity related person, only in accordance with the\nrequirements of section 4C of the Securities Act of\n1933.\n ``(4) Treatment of customer assets.--A digital\ncommodity exchange shall establish policies and procedures that\nare designed to protect and ensure the safety of customer\nmoney, assets, and property.\n ``(5) Monitoring of trading and trade\nprocessing.--\n ``(A) In general.--A digital commodity\nexchange shall provide a competitive, open, and\nefficient market and mechanism for executing\ntransactions that protects the price discovery process\nof trading on the exchange.\n ``(B) Protection of markets and market\nparticipants.--A digital commodity exchange shall\nestablish and enforce rules--\n ``(i) to protect markets and\nmarket participants from abusive practices\ncommitted by any party, including abusive\npractices committed by a party acting as an\nagent for a participant; and\n ``(ii) to promote fair and\nequitable trading on the exchange.\n ``(C) Trading procedures.--A digital\ncommodity exchange shall--\n ``(i) establish and enforce rules\nor terms and conditions defining, or\nspecifications detailing--\n ``(I) trading procedures\nto be used in entering and executing\norders traded on or through the\nfacilities of the digital commodity\nexchange; and\n ``(II) procedures for\ntrade processing of digital commodities\non or through the facilities of the\ndigital commodity exchange;\nand\n ``(ii) monitor trading in digital\ncommodities to prevent manipulation, price\ndistortion, and disruptions, through\nsurveillance, compliance, and disciplinary\npractices and procedures, including methods for\nconducting real-time monitoring of trading and\ncomprehensive and accurate trade\nreconstructions.\n ``(6) Ability to obtain information.--A digital\ncommodity exchange shall--\n ``(A) establish and enforce rules that\nwill allow the facility to obtain any necessary\ninformation to perform any of the functions described\nin this section;\n ``(B) provide the information to the\nCommission on request; and\n ``(C) have the capacity to carry out such\ninternational information-sharing agreements as the\nCommission may require.\n ``(7) Emergency authority.--A digital commodity\nexchange shall adopt rules to provide for the exercise of\nemergency authority, in consultation or cooperation with the\nCommission or a registered entity, as is necessary and\nappropriate, including the authority to facilitate the\nliquidation or transfer of open positions in any digital\ncommodity or to suspend or curtail trading in a digital\ncommodity.\n ``(8) Timely publication of trading information.--\n\n ``(A) In general.--A digital commodity\nexchange shall make public timely information on price,\ntrading volume, and other trading data on digital\ncommodities to the extent prescribed by the\nCommission.\n ``(B) Capacity of digital commodity\nexchange.--A digital commodity exchange shall have the\ncapacity to electronically capture and transmit trade\ninformation with respect to transactions executed on\nthe exchange.\n ``(9) Recordkeeping and reporting.--\n ``(A) In general.--A digital commodity\nexchange shall--\n ``(i) maintain records relating to\nthe business of the exchange, including a\ncomplete audit trail, in a form and manner\nacceptable to the Commission for a period of 5\nyears;\n ``(ii) report to the Commission,\nin a form and manner acceptable to the\nCommission, such information as the Commission\ndetermines to be necessary or appropriate for\nthe Commission to perform the duties of the\nCommission under this Act; and\n ``(iii) keep any such records of\ndigital commodities which relate to a security\nopen to inspection and examination by the\nSecurities and Exchange Commission.\n ``(B) Information-sharing.--Subject to\nsection 8, and on request, the Commission shall share\ninformation collected under subparagraph (A) with--\n\n ``(i) the Board;\n ``(ii) the Securities and Exchange\nCommission;\n ``(iii) each appropriate Federal\nbanking agency;\n ``(iv) each appropriate State bank\nsupervisor (within the meaning of section 3 of\nthe Federal Deposit Insurance Act);\n ``(v) the Financial Stability\nOversight Council;\n ``(vi) the Department of Justice;\nand\n ``(vii) any other person that the\nCommission determines to be appropriate,\nincluding--\n ``(I) foreign financial\nsupervisors (including foreign futures\nauthorities);\n ``(II) foreign central\nbanks; and\n ``(III) foreign\nministries.\n ``(C) Confidentiality agreement.--Before\nthe Commission may share information with any entity\ndescribed in subparagraph (B), the Commission shall\nreceive a written agreement from the entity stating\nthat the entity shall abide by the confidentiality\nrequirements described in section 8 relating to the\ninformation on digital commodities that is\nprovided.\n ``(D) Providing information.--A digital\ncommodity exchange shall provide to the Commission\n(including any designee of the Commission) information\nunder subparagraph (A) in such form and at such\nfrequency as is required by the Commission.\n ``(10) Antitrust considerations.--Unless necessary\nor appropriate to achieve the purposes of this Act, a digital\ncommodity exchange shall not--\n ``(A) adopt any rules or take any actions\nthat result in any unreasonable restraint of trade;\nor\n ``(B) impose any material anticompetitive\nburden on trading.\n ``(11) Conflicts of interest.--The digital\ncommodity exchange shall establish and enforce rules--\n\n ``(A) to minimize conflicts of interest in\nthe decision making processes of the contract market;\nand\n ``(B) to establish a process for resolving\nconflicts of interest referred to in subparagraph\n(A).\n ``(12) Financial resources.--\n ``(A) In general.--A digital commodity\nexchange shall have adequate financial, operational,\nand managerial resources, as determined by the\nCommission, to discharge each responsibility of the\ndigital commodity exchange.\n ``(B) Minimum amount of financial\nresources.--A digital commodity exchange shall possess\nfinancial resources that, at a minimum, exceed the sum\nof--\n ``(i) the total amount that would\nenable the digital commodity exchange to cover\nthe operating costs of the digital commodity\nexchange for a 1-year period, as calculated on\na rolling basis; and\n ``(ii) the total amount necessary\nto meet the financial obligations of the\ndigital commodity exchange to all customers of\nthe digital commodity exchange.\n ``(13) Disciplinary procedures.--A digital\ncommodity exchange shall establish and enforce disciplinary\nprocedures that authorize the digital commodity exchange to\ndiscipline, suspend, or expel members or market participants\nthat violate the rules of the digital commodity exchange, or\nsimilar methods for performing the same functions, including\ndelegation of the functions to third parties.\n ``(14) Governance fitness standards.--\n ``(A) Governance arrangements.--A digital\ncommodity exchange shall establish governance\narrangements that are transparent and designed to\npermit consideration of the views of market\nparticipants.\n ``(B) Fitness standards.--A digital\ncommodity exchange shall establish and enforce\nappropriate fitness standards for--\n ``(i) officers and directors;\nand\n ``(ii) any individual or entity\nwith direct access to, or control of, customer\nassets.\n ``(15) System safeguards.--A digital commodity\nexchange shall--\n ``(A) establish and maintain a program of\nrisk analysis and oversight to identify and minimize\nsources of operational and security risks, through the\ndevelopment of appropriate controls and procedures, and\nautomated systems in accordance with industry\nstandards, that--\n ``(i) are reliable and secure;\nand\n ``(ii) have adequate scalable\ncapacity;\n ``(B) establish and maintain emergency\nprocedures, backup resources, and a plan for disaster\nrecovery that allow for--\n ``(i) the timely recovery and\nresumption of operations; and\n ``(ii) the fulfillment of the\nresponsibilities and obligations of the digital\ncommodity exchange; and\n ``(C) periodically conduct tests to verify\nthat the backup resources of the digital commodity\nexchange are sufficient to ensure continued--\n ``(i) order processing and trade\nmatching;\n ``(ii) price reporting;\n ``(iii) market surveillance;\nand\n ``(iv) maintenance of a\ncomprehensive and accurate audit\ntrail.\n ``(d) Holding of Customer Assets.--\n ``(1) In general.--A digital commodity exchange\nshall hold customer money, assets, and property in a manner to\nminimize the risk of loss to the customer or unreasonable delay\nin customer access to the money, assets, and property of the\ncustomer.\n ``(2) Segregation of funds.--\n ``(A) In general.--A digital commodity\nexchange shall treat and deal with all money, assets,\nand property that is received by the digital commodity\nexchange, or accrues to a customer as the result of\ntrading in digital commodities, as belonging to the\ncustomer.\n ``(B) Commingling prohibited.--Money,\nassets, and property described in subparagraph (A)\nshall be separately accounted for and shall not be\ncommingled with the funds of the digital commodity\nexchange or be used to margin, secure, or guarantee any\ntrades or accounts of any customer or person other than\nthe person for whom the same are held.\n ``(C) Exceptions.--\n ``(i) Use of funds.--\n ``(I) In general.--\nNotwithstanding subparagraph (A),\nmoney, assets, and property described\nin subparagraph (A) may, for\nconvenience, be commingled and\ndeposited in the same account or\naccounts with any bank, trust company,\nderivatives clearing organization, or\nqualified digital asset\ncustodian.\n ``(II) Withdrawal.--\nNotwithstanding subparagraph (A), such\nshare of the money, assets, and\nproperty described in subparagraph (A)\nas in the normal course of business\nshall be necessary to margin,\nguarantee, secure, transfer, adjust, or\nsettle a contract of sale of a digital\ncommodity with a registered entity may\nbe withdrawn and applied to such\npurposes, including the payment of\ncommissions, brokerage, interest,\ntaxes, storage, and other charges,\nlawfully accruing in connection with\nthe contract.\n ``(ii) Commission action.--\nNotwithstanding subparagraph (A), in accordance\nwith such terms and conditions as the\nCommission may prescribe by rule, regulation,\nor order, any money, assets, or property of the\ncustomers of a digital commodity exchange may\nbe commingled and deposited in customer\naccounts with any other money, assets, or\nproperty received by the digital commodity\nexchange and required by the Commission to be\nseparately accounted for and treated and dealt\nwith as belonging to the customer of the\ndigital commodity exchange.\n ``(3) Permitted investments.--Money described in\nparagraph (2) may be invested in obligations of the United\nStates, in general obligations of any State or of any political\nsubdivision of a State, and in obligations fully guaranteed as\nto principal and interest by the United States, or in any other\ninvestment that the Commission may by rule or regulation\nprescribe, and such investments shall be made in accordance\nwith such rules and regulations and subject to such conditions\nas the Commission may prescribe.\n ``(4) Customer protection during bankruptcy.--\n\n ``(A) Customer property.--All assets held\non behalf of a customer by a digital commodity\nexchange, and all money, assets, and property of any\ncustomer received by a digital commodity exchange for\ntrading or custody, or to facilitate, margin,\nguarantee, or secure contracts of sale of a digital\ncommodity (including money, assets, or property\naccruing to the customer as the result of the\ntransactions), shall be considered customer property\nfor purposes of section 761 of title 11, United States\nCode.\n ``(B) Transactions.--A transaction\ninvolving the sale of a unit of a digital commodity\noccurring on or subject to the rules of a digital\ncommodity exchange shall be considered a contract for\nthe purchase or sale of a commodity for future\ndelivery, on or subject to the rules of, a contract\nmarket or board of trade for purposes of the definition\nof `commodity contract' in section 761 of title 11,\nUnited States Code.\n ``(C) Exchanges.--A digital commodity\nexchange shall be considered a futures commission\nmerchant for purposes of section 761 of title 11,\nUnited States Code.\n ``(D) Assets removed from segregation.--\nAssets removed from segregation due to a customer\nelection under paragraph (6) shall not be considered\ncustomer property for purposes of section 761 of title\n11, United States Code.\n ``(5) Misuse of customer property.--\n ``(A) In general.--It shall be unlawful--\n\n ``(i) for any digital commodity\nexchange that has received any customer money,\nassets, or property for custody to dispose of,\nor use any such money, assets, or property as\nbelonging to the digital commodity exchange or\nany person other than a customer of the digital\ncommodity exchange; or\n ``(ii) for any other person,\nincluding any depository, other digital\ncommodity exchange, or digital asset custodian\nthat has received any customer money, assets,\nor property for deposit, to hold, dispose of,\nor use any such money, assets, or property, or\nproperty, as belonging to the depositing\ndigital commodity exchange or any person other\nthan the customers of the digital commodity\nexchange.\n ``(B) Use further defined.--For purposes\nof this section, `use' of a digital commodity includes\nutilizing any unit of a digital asset to participate in\na blockchain service defined in paragraph (6) or a\ndecentralized governance system associated with the\ndigital commodity or the blockchain system to which the\ndigital commodity relates in any manner other than that\nexpressly directed by the customer from whom the unit\nof a digital commodity was received.\n ``(6) Participation in blockchain services.--\n\n ``(A) Use of funds.--A digital commodity\nexchange (or a designee of a digital commodity\nexchange) may use a unit of a digital commodity\nbelonging to a customer to provide a blockchain service\nfor a blockchain system to which the unit of the\ndigital commodity relates if--\n ``(i) the customer expressly\npermits the use, in writing to the digital\ncommodity exchange; and\n ``(ii) the digital commodity\nexchange complies with subparagraph\n(B).\n ``(B) Limitations.--\n ``(i) In general.--The Commission\nshall, by rule, establish notice and disclosure\nrequirements, and may, by rule, establish any\nother limitations and rules related to a\npermission provided under subparagraph (A) that\nare reasonably necessary to protect customers,\nincluding eligible contract participants, non-\neligible contract participants, or any other\nclass of customers.\n ``(ii) Customer choice.--A digital\ncommodity exchange may not require a customer\nto provide the permission referred to in\nsubparagraph (A) as a condition of doing\nbusiness on the exchange.\n ``(C) Requirements.--The Commission may,\nby rule, waive or modify the requirements of paragraph\n(2) or subsection (h), to facilitate the use of a unit\nof a digital commodity belonging to a customer to\nprovide a blockchain service.\n ``(D) Blockchain service defined.--In this\nparagraph, the term `blockchain service' means any\nactivity relating to validating transactions on a\nblockchain system, providing security for a blockchain\nsystem, or other similar activity, including protocol\nconsensus participation activities described in section\n2(a)(30)(B) of the Securities Act of 1933, required for\nthe ongoing operation of a blockchain system.\n ``(e) Market Access Requirements.--The Commission may, by\nrule, impose any additional requirements related to the operations and\nactivities of the digital commodity exchange and an affiliated digital\ncommodity broker necessary to protect market participants, promote fair\nand equitable trading on the digital commodity exchange, and promote\nresponsible innovation.\n ``(f) Designation of Chief Compliance Officer.--\n ``(1) In general.--A digital commodity exchange\nshall designate an individual to serve as a chief compliance\nofficer.\n ``(2) Duties.--The chief compliance officer\nshall--\n ``(A) report directly to the board or to\nthe senior officer of the exchange;\n ``(B) review compliance with the core\nprinciples in this subsection;\n ``(C) in consultation with the board of\nthe exchange, a body performing a function similar to\nthat of a board, or the senior officer of the exchange,\nresolve any conflicts of interest that may\narise;\n ``(D) establish and administer the\npolicies and procedures required to be established\npursuant to this section;\n ``(E) ensure compliance with this Act and\nthe rules and regulations issued under this Act,\nincluding rules prescribed by the Commission pursuant\nto this section; and\n ``(F) establish procedures for the\nremediation of noncompliance issues found during\ncompliance office reviews, look backs, internal or\nexternal audit findings, self-reported errors, or\nthrough validated complaints.\n ``(3) Requirements for procedures.--In\nestablishing procedures under paragraph (2)(F), the chief\ncompliance officer shall design the procedures to establish the\nhandling, management response, remediation, retesting, and\nclosing of noncompliance issues.\n ``(4) Annual reports.--\n ``(A) In general.--In accordance with\nrules prescribed by the Commission, the chief\ncompliance officer shall annually prepare and sign a\nreport that contains a description of--\n ``(i) the compliance of the\ndigital commodity exchange with this Act;\nand\n ``(ii) the policies and\nprocedures, including the code of ethics and\nconflicts of interest policies, of the digital\ncommodity exchange.\n ``(B) Requirements.--The chief compliance\nofficer shall--\n ``(i) submit each report described\nin subparagraph (A) with the appropriate\nfinancial report of the digital commodity\nexchange that is required to be submitted to\nthe Commission pursuant to this section;\nand\n ``(ii) include in the report a\ncertification that, under penalty of law, the\nreport is accurate and complete.\n ``(g) Appointment of Trustee.--\n ``(1) In general.--If a proceeding under section\n5e results in the suspension or revocation of the registration\nof a digital commodity exchange, or if a digital commodity\nexchange withdraws from registration, the Commission, on notice\nto the digital commodity exchange, may apply to the appropriate\nUnited States district court where the digital commodity\nexchange is located for the appointment of a trustee.\n ``(2) Assumption of jurisdiction.--If the\nCommission applies for appointment of a trustee under paragraph\n(1)--\n ``(A) the court may take exclusive\njurisdiction over the digital commodity exchange and\nthe records and assets of the digital commodity\nexchange, wherever located; and\n ``(B) if the court takes jurisdiction\nunder subparagraph (A), the court shall appoint the\nCommission, or a person designated by the Commission,\nas trustee with power to take possession and continue\nto operate or terminate the operations of the digital\ncommodity exchange in an orderly manner for the\nprotection of customers subject to such terms and\nconditions as the court may prescribe.\n ``(h) Qualified Digital Asset Custodian.--A digital\ncommodity exchange shall hold in a qualified digital asset custodian\neach unit of a digital asset that is--\n ``(1) the property of a customer of the digital\ncommodity exchange;\n ``(2) required to be held by the digital commodity\nexchange under subsection (c)(12) of this section; or\n ``(3) otherwise so required by the Commission to\nreasonably protect customers.\n ``(i) Exemptions.--\n ``(1) In general.--In order to promote responsible\ninnovation and fair competition, or protect customers, the\nCommission may (on its own initiative or on application of the\ndigital commodity exchange) exempt, either unconditionally or\non stated terms or conditions or for stated periods and either\nretroactively or prospectively, or both, a digital commodity\nexchange from the requirements of this Act, if the Commission\ndetermines that--\n ``(A) the exemption would be consistent\nwith the public interest and the purposes of this Act;\nand\n ``(B) the exemption will not have a\nmaterial adverse effect on the ability of the\nCommission or the digital commodity exchange to\ndischarge regulatory or self-regulatory duties under\nthis Act.\n ``(2) Foreign exchanges.--The Commission may\nexempt, conditionally or unconditionally, a digital commodity\nexchange from registration under this section if the Commission\nfinds that the digital commodity exchange is subject to\ncomparable, comprehensive supervision and regulation on a\nconsolidated basis by the appropriate governmental authorities\nin the home country of the facility.\n ``(j) Customer Defined.--In this section, the term\n`customer' means any person that maintains an account for the trading\nof digital commodities directly with a digital commodity exchange\n(other than a person that is owned or controlled, directly or\nindirectly, by the digital commodity exchange) for its own behalf or on\nbehalf of any other person.\n ``(k) Federal Preemption.--Notwithstanding any other\nprovision of law, the Commission shall have exclusive jurisdiction over\nany digital commodity exchange registered under this section with\nrespect to activities and transactions subject to this\nAct.''.\n\nSEC. 405. QUALIFIED DIGITAL ASSET CUSTODIANS.\n\n The Commodity Exchange Act (7 U.S.C. 1 et seq.), as\namended by the preceding provisions of this Act, is amended by\ninserting after section 5i the following:\n\n``SEC. 5J. QUALIFIED DIGITAL ASSET CUSTODIANS.\n\n ``(a) In General.--A person is a qualified digital asset\ncustodian for purposes of this Act if the person--\n ``(1) holds digital assets on behalf of a person\nregistered under this Act or a customer of a person registered\nunder this Act; and\n ``(2) is in compliance with subsections (b) and\n(c).\n ``(b) Supervision Requirement.--A person is in compliance\nwith this subsection if the person is subject to--\n ``(1) supervision and examination for custody and\nsafekeeping of digital assets by an appropriate Federal banking\nagency, the National Credit Union Administration, the\nCommission, or the Securities and Exchange Commission;\nor\n ``(2) adequate supervision and appropriate\nregulation for custody and safekeeping of digital assets by--\n\n ``(A) a State bank supervisor (within the\nmeaning of section 3 of the Federal Deposit Insurance\nAct);\n ``(B) a State officer, agency, or other\nentity which has primary regulatory authority over\nnondepository State trust companies;\n ``(C) a State credit union supervisor, as\ndefined under section 6003 of the Anti-Money Laundering\nAct of 2020; or\n ``(D) an appropriate foreign governmental\nauthority in the home country of such person.\n ``(c) Other Requirements.--A person shall be in compliance\nwith this subsection if:\n ``(1) Not otherwise prohibited.--The person has\nnot been prohibited by its supervisor from engaging in an\nactivity with respect to the custody and safekeeping of digital\nassets.\n ``(2) Information sharing.--\n ``(A) In general.--The person shares\ninformation with the Commission on request and complies\nwith such requirements for periodic sharing of\ninformation regarding customer accounts that the person\nholds on behalf of an entity registered with the\nCommission as the Commission determines by rule are\nreasonably necessary to effectuate any of the\nprovisions, or to accomplish any of the purposes, of\nthis Act.\n ``(B) Provision of information.--If the\nperson is subject to regulation and examination by an\nappropriate Federal banking agency, the person may\nsatisfy any information request described in\nsubparagraph (A) by providing the Commission with a\ndetailed listing, in writing, of the digital assets of\na customer in the custody of, or use by, the\nperson.\n ``(3) Rulemaking for cftc entities.--\n ``(A) In general.--The Commission shall\nprescribe rules to permit a person registered with the\nCommission to be a qualified digital asset custodian in\ncompliance with this section.\n ``(B) Content.--In prescribing the rules\nunder subparagraph (A), the Commission shall require a\nperson registered with the Commission to--\n ``(i) implement requirement\nconsistent with the requirements in subsection\n(d)(1);\n ``(ii) establish sufficient system\nsafeguards;\n ``(iii) prevent or mitigate\nconflicts of interest, as appropriate;\nand\n ``(iv) establish separate\ngovernance arrangements for the custodial\nfunction of the entity.\n ``(d) Adequate Supervision and Appropriate Regulation.--\n\n ``(1) In general.--For purposes of subsection (b),\nthe terms `adequate supervision' and `appropriate regulation'\nmean such minimum standards for supervision and regulation as\nare reasonably necessary to protect the digital assets held by\na person registered under this Act, including standards\nrelating to the licensing, examination, and supervisory\nprocesses that require the person to, at a minimum--\n ``(A) receive a review and evaluation of\nownership, character and fitness, conflicts of\ninterest, business model, financial statements, funding\nresources, and policies and procedures of the\nperson;\n ``(B) hold capital sufficient for the\nfinancial integrity of the person;\n ``(C) protect customer assets;\n ``(D) establish and maintain books and\nrecords regarding the business of the person;\n ``(E) submit financial statements and\naudited financial statements to the applicable\nsupervisor described in subsection (b);\n ``(F) provide disclosures to the\napplicable supervisor described in subsection (b)\nregarding actions, proceedings, and other items as\ndetermined by the supervisor;\n ``(G) maintain and enforce policies and\nprocedures for compliance with applicable State and\nFederal laws, including those related to anti-money\nlaundering and cybersecurity;\n ``(H) establish a business continuity plan\nto ensure functionality in cases of disruption;\nand\n ``(I) establish policies and procedures to\nresolve complaints.\n ``(2) Rulemaking with respect to definitions.--\n\n ``(A) In general.--For purposes of this\nsection, the Commission may, by rule, further define\nthe terms `adequate supervision' and `appropriate\nregulation' as necessary and appropriate for the\nprotection of customers, and consistent with the\npurposes of this Act.\n ``(B) Existing digital asset custodians.--\nA trust company operating as a digital asset custodian\nbefore the effective date of a rulemaking under\nsubparagraph (A) is deemed subject to adequate\nsupervision and appropriate regulation if--\n ``(i) the trust company is\nexpressly permitted by a State bank supervisor\nto engage in the custody and safekeeping of\ndigital assets;\n ``(ii) the State bank supervisor\nhas established licensing, examination, and\nsupervisory processes that require the trust\ncompany to, at a minimum, meet the conditions\ndescribed in subparagraphs (A) through (I) of\nparagraph (1); and\n ``(iii) the trust company is in\ngood standing with its State bank\nsupervisor.\n ``(C) Transition period for certain\ncustodians.--In implementing the rulemaking under\nsubparagraph (A), the Commission shall provide a\ntransition period of not less than 2 years for any\ntrust company that is deemed subject to adequate\nsupervision and appropriate regulation under\nsubparagraph (B) on the effective date of the\nrulemaking.\n ``(e) Authority to Temporarily Suspend Standards.--The\nCommission may, by rule or order, temporarily suspend, in whole or in\npart, any requirement imposed under, or any standard referred to in,\nthis section, or any requirement to utilize a qualified digital asset\ncustodian, if the Commission determines that the suspension would be\nconsistent with the public interest and the purposes of this\nAct.''.\n\nSEC. 406. REGISTRATION AND REGULATION OF DIGITAL COMMODITY\nBROKERS AND DEALERS.\n\n The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended\nby inserting after section 4t the following:\n\n``SEC. 4U. REGISTRATION AND REGULATION OF DIGITAL COMMODITY\nBROKERS AND DEALERS.\n\n ``(a) Registration.--\n ``(1) Requirement.--It shall be unlawful for any\nperson to act as a digital commodity broker or digital\ncommodity dealer unless the person is registered as such with\nthe Commission.\n ``(2) Additional registration.--\n ``(A) Rules.--In order to foster the\ndevelopment of fair and orderly markets, protect\ncustomers, and promote responsible innovation, the\nCommission--\n ``(i) shall prescribe rules to\nexempt an entity registered with the Commission\nunder more than 1 section of this Act from\nduplicative, conflicting, or unduly burdensome\nprovisions of this Act and the rules under this\nAct;\n ``(ii) shall prescribe rules to\naddress conflicts of interests and the\nactivities of the entity; and\n ``(iii) may after an analysis of\nthe risks and benefits, prescribe rules to\nprovide for portfolio margining.\n ``(B) With membership in a registered\nfutures association.--Any person required to be\nregistered as a digital commodity broker or digital\ncommodity dealer under this section shall become and\nremain a member of a registered futures\nassociation.\n ``(b) Requirements.--\n ``(1) In general.--A person shall register as a\ndigital commodity broker or digital commodity dealer by filing\na registration application with the Commission.\n ``(2) Contents.--\n ``(A) In general.--The application shall\nbe made in such form and manner as is prescribed by the\nCommission, and shall contain such information as the\nCommission considers necessary concerning the business\nin which the applicant is or will be engaged.\n ``(B) Continual reporting.--A person that\nis registered as a digital commodity broker or digital\ncommodity dealer shall continue to submit to the\nCommission reports that contain such information\npertaining to the business of the person as the\nCommission may require.\n ``(3) Statutory disqualification.--Except to the\nextent otherwise specifically provided by rule, regulation, or\norder, it shall be unlawful for a digital commodity broker or\ndigital commodity dealer to permit any person who is associated\nwith a digital commodity broker or a digital commodity dealer\nand who is subject to a statutory disqualification to effect or\nbe involved in effecting a contract of sale of a digital\ncommodity on behalf of the digital commodity broker or the\ndigital commodity dealer, respectively, if the digital\ncommodity broker or digital commodity dealer, respectively,\nknew, or in the exercise of reasonable care should have known,\nof the statutory disqualification.\n ``(c) Rulemaking.--\n ``(1) In general.--The Commission shall prescribe\nsuch rules applicable to registered digital commodity brokers\nand registered digital commodity dealers as are appropriate to\ncarry out this section, including rules in the public interest\nthat limit the activities of digital commodity brokers and\ndigital commodity dealers.\n ``(2) Financing agreements.--\n ``(A) In general.--The Commission shall\nprescribe rules and regulations applicable to digital\ncommodity brokers or digital commodity dealers which\nshall set forth minimum requirements related to\ndisclosure, recordkeeping, margin financing\narrangements, rehypothecation, capital, reporting,\nbusiness conduct, documentation, and supervision of\nemployees and agents, in connection with--\n ``(i) an agreement described in\nsection 2(c)(2)(D)(iv); or\n ``(ii) any other margined,\nleveraged, or financing arrangement for the\npurchase or sale of a digital commodity with an\neligible contract participant.\n ``(B) Specific authority.--Except as\nprohibited in section 2(c)(2)(G)(iii), the Commission\nmay also make, promulgate, and enforce such rules and\nregulations as, in the judgment of the Commission, are\nreasonably necessary to effectuate any of the\nprovisions of, or to accomplish any of the purposes of,\nthis Act in connection with an agreement referred to in\nsubparagraph (A) of this paragraph.\n ``(d) Capital Requirements.--\n ``(1) In general.--Each digital commodity broker\nand digital commodity dealer shall meet such minimum capital\nrequirements as the Commission may prescribe to address the\nrisks associated with digital commodity trading and to ensure\nthat the digital commodity broker or digital commodity dealer,\nrespectively, is able, at all times, to--\n ``(A) meet, and continue to meet the\nobligations of such a registrant; and\n ``(B) fulfill obligations to customers or\ncounterparties for any margined, leveraged, or financed\ntransactions.\n ``(2) Futures commission merchants and other\ndealers.--Each futures commission merchant, introducing broker,\ndigital commodity broker, digital commodity dealer, broker, and\ndealer shall maintain sufficient capital to comply with the\nstricter of any applicable capital requirements to which the\nfutures commission merchant, introducing broker, digital\ncommodity broker, digital commodity dealer, broker, or dealer,\nrespectively, is subject under this Act or the Securities\nExchange Act of 1934 (15 U.S.C. 78a et seq.).\n ``(e) Reporting and Recordkeeping.--Each digital commodity\nbroker and digital commodity dealer--\n ``(1) shall make such reports as are required by\nthe Commission by rule or regulation regarding the\ntransactions, positions, and financial condition of the digital\ncommodity broker or digital commodity dealer,\nrespectively;\n ``(2) shall keep books and records in such form\nand manner and for such period as may be prescribed by the\nCommission by rule or regulation; and\n ``(3) shall keep the books and records open to\ninspection and examination by any representative of the\nCommission.\n ``(f) Daily Trading Records.--\n ``(1) In general.--Each digital commodity broker\nand digital commodity dealer shall maintain daily trading\nrecords of the transactions of the digital commodity broker or\ndigital commodity dealer, respectively, and all related records\n(including related forward or derivatives transactions) and\nrecorded communications, including electronic mail, instant\nmessages, and recordings of telephone calls, for such period as\nthe Commission may require by rule or regulation.\n ``(2) Information requirements.--The daily trading\nrecords shall include such information as the Commission shall\nrequire by rule or regulation.\n ``(3) Counterparty records.--Each digital\ncommodity broker and digital commodity dealer shall maintain\ndaily trading records for each customer or counterparty in a\nmanner and form that is identifiable with each digital\ncommodity transaction.\n ``(4) Audit trail.--Each digital commodity broker\nand digital commodity dealer shall maintain a complete audit\ntrail for conducting comprehensive and accurate trade\nreconstructions.\n ``(g) Business Conduct Standards.--\n ``(1) In general.--Each digital commodity broker\nand digital commodity dealer shall conform with such business\nconduct standards as the Commission, by rule or regulation,\nprescribes related to--\n ``(A) fraud, manipulation, and other\nabusive practices involving spot or margined,\nleveraged, or financed digital commodity transactions\n(including transactions that are offered but not\nentered into);\n ``(B) diligent supervision of the business\nof the registered digital commodity broker or digital\ncommodity dealer, respectively; and\n ``(C) such other matters as the Commission\ndeems appropriate.\n ``(2) Business conduct requirements.--The\nCommission shall, by rule, prescribe business conduct\nrequirements which--\n ``(A) require disclosure by a registered\ndigital commodity broker and registered digital\ncommodity dealer to any counterparty to the transaction\n(other than an eligible contract participant) of--\n\n ``(i) information about the\nmaterial risks and characteristics of the\ndigital commodity; and\n ``(ii) information about the\nmaterial risks and characteristics of the\ntransaction;\n ``(B) establish a duty for such a digital\ncommodity broker and such a digital commodity dealer to\ncommunicate in a fair and balanced manner based on\nprinciples of fair dealing and good faith;\n ``(C) establish standards governing\ndigital commodity broker and digital commodity dealer\nmarketing and advertising, including testimonials and\nendorsements; and\n ``(D) establish such other standards and\nrequirements as the Commission may determine are\nappropriate for the protection of customers.\n ``(3) Prohibition on fraudulent practices.--It\nshall be unlawful for a digital commodity broker or digital\ncommodity dealer to--\n ``(A) employ any device, scheme, or\nartifice to defraud any customer or\ncounterparty;\n ``(B) engage in any transaction, practice,\nor course of business that operates as a fraud or\ndeceit on any customer or counterparty; or\n ``(C) engage in any act, practice, or\ncourse of business that is fraudulent, deceptive, or\nmanipulative.\n ``(h) Duties.--\n ``(1) Risk management procedures.--Each digital\ncommodity broker and digital commodity dealer shall establish\nrobust and professional risk management systems adequate for\nmanaging the day-to-day business of the digital commodity\nbroker or digital commodity dealer, respectively.\n ``(2) Disclosure of general information.--Each\ndigital commodity broker and digital commodity dealer shall\ndisclose to the Commission information concerning--\n ``(A) the terms and conditions of the\ntransactions of the digital commodity broker or digital\ncommodity dealer, respectively;\n ``(B) the trading operations, mechanisms,\nand practices of the digital commodity broker or\ndigital commodity dealer, respectively;\n ``(C) financial integrity protections\nrelating to the activities of the digital commodity\nbroker or digital commodity dealer, respectively;\nand\n ``(D) other information relevant to\ntrading in digital commodities by the digital commodity\nbroker or digital commodity dealer,\nrespectively.\n ``(3) Ability to obtain information.--Each digital\ncommodity broker and digital commodity dealer shall--\n ``(A) establish and enforce internal\nsystems and procedures to obtain any necessary\ninformation to perform any of the functions described\nin this section; and\n ``(B) provide the information to the\nCommission, on request.\n ``(4) Conflicts of interest.--Each digital\ncommodity broker and digital commodity dealer shall establish,\nmaintain, and enforce written policies and procedures\nreasonably designed, taking into consideration the nature of\nthe business of the person, to mitigate any conflicts of\ninterest in transactions or arrangements with\naffiliates.\n ``(5) Antitrust considerations.--Unless necessary\nor appropriate to achieve the purposes of this Act, a digital\ncommodity broker or digital commodity dealer shall not--\n\n ``(A) adopt any process or take any action\nthat results in any unreasonable restraint of trade;\nor\n ``(B) impose any material anticompetitive\nburden on trading or clearing.\n ``(i) Designation of Chief Compliance Officer.--\n ``(1) In general.--Each digital commodity broker\nand digital commodity dealer shall designate an individual to\nserve as a chief compliance officer.\n ``(2) Duties.--The chief compliance officer\nshall--\n ``(A) report directly to the board or to\nthe senior officer of the registered digital commodity\nbroker or registered digital commodity\ndealer;\n ``(B) review the compliance of the\nregistered digital commodity broker or registered\ndigital commodity dealer with respect to the registered\ndigital commodity broker and registered digital\ncommodity dealer requirements described in this\nsection;\n ``(C) in consultation with the board of\ndirectors, a body performing a function similar to the\nboard, or the senior officer of the organization,\nresolve any conflicts of interest that may\narise;\n ``(D) be responsible for administering\neach policy and procedure that is required to be\nestablished pursuant to this section;\n ``(E) ensure compliance with this Act\n(including regulations), including each rule prescribed\nby the Commission under this section;\n ``(F) establish procedures for the\nremediation of noncompliance issues identified by the\nchief compliance officer through any--\n ``(i) compliance office\nreview;\n ``(ii) look-back;\n ``(iii) internal or external audit\nfinding;\n ``(iv) self-reported error;\nor\n ``(v) validated complaint;\nand\n ``(G) establish and follow appropriate\nprocedures for the handling, management response,\nremediation, retesting, and closing of noncompliance\nissues.\n ``(3) Annual reports.--\n ``(A) In general.--In accordance with\nrules prescribed by the Commission, the chief\ncompliance officer shall annually prepare and sign a\nreport that contains a description of--\n ``(i) the compliance of the\nregistered digital commodity broker or\nregistered digital commodity dealer with this\nAct (including regulations); and\n ``(ii) each policy and procedure\nof the registered digital commodity broker or\nregistered digital commodity dealer followed by\nthe chief compliance officer (including the\ncode of ethics and conflict of interest\npolicies).\n ``(B) Requirements.--The chief compliance\nofficer shall ensure that a compliance report under\nsubparagraph (A)--\n ``(i) accompanies each appropriate\nfinancial report of the registered digital\ncommodity broker or registered digital\ncommodity dealer that is required to be\nfurnished to the Commission pursuant to this\nsection; and\n ``(ii) includes a certification\nthat, under penalty of law, the compliance\nreport is accurate and complete.\n ``(j) Segregation of Digital Commodities.--\n ``(1) Holding of customer assets.--\n ``(A) In general.--Each digital commodity\nbroker and digital commodity dealer shall hold customer\nmoney, assets, and property in a manner to minimize the\nrisk of loss to the customer or unreasonable delay in\ncustomer access to the money, assets, and property of\nthe customer.\n ``(B) Qualified digital asset custodian.--\nEach digital commodity broker and digital commodity\ndealer shall hold in a qualified digital asset\ncustodian each unit of a digital asset that is--\n\n ``(i) the property of a customer\nor counterparty of the digital commodity broker\nor digital commodity dealer,\nrespectively;\n ``(ii) required to be held by the\ndigital commodity broker or digital commodity\ndealer under subsection (e); or\n ``(iii) otherwise so required by\nthe Commission to reasonably protect customers\nor promote the public interest.\n ``(2) Segregation of funds.--\n ``(A) In general.--Each digital commodity\nbroker and digital commodity dealer shall treat and\ndeal with all money, assets, and property that is\nreceived by the digital commodity broker or digital\ncommodity dealer, or accrues to a customer as the\nresult of trading in digital commodities, as belonging\nto the customer.\n ``(B) Commingling prohibited.--\n ``(i) In general.--Except as\nprovided in clause (ii), each digital commodity\nbroker and digital commodity dealer shall\nseparately account for money, assets, and\nproperty of a digital commodity customer, and\nshall not commingle any such money, assets, or\nproperty with the funds of the digital\ncommodity broker or digital commodity dealer,\nrespectively, or use any such money, assets, or\nproperty to margin, secure, or guarantee any\ntrades or accounts of any customer or person\nother than the person for whom the money,\nassets, or property are held.\n ``(ii) Exceptions.--\n ``(I) Use of funds.--\n\n ``(aa) In\ngeneral.--A digital commodity\nbroker or digital commodity\ndealer may, for convenience,\ncommingle and deposit in the\nsame account or accounts with\nany bank, trust company,\nderivatives clearing\norganization, or qualified\ndigital asset custodian money,\nassets, and property of\ncustomers.\n ``(bb)\nWithdrawal.--The share of the\nmoney, assets, and property\ndescribed in item (aa) as in\nthe normal course of business\nshall be necessary to margin,\nguarantee, secure, transfer,\nadjust, or settle a contract of\nsale of a digital commodity\nwith a registered entity may be\nwithdrawn and applied to such\npurposes, including the payment\nof commissions, brokerage,\ninterest, taxes, storage, and\nother charges, lawfully\naccruing in connection with the\ncontract.\n ``(II) Commission\naction.--In accordance with such terms\nand conditions as the Commission may\nprescribe by rule, regulation, or\norder, any money, assets, or property\nof the customers of a digital commodity\nbroker or digital commodity dealer may\nbe commingled and deposited in customer\naccounts with any other money, assets,\nor property received by the digital\ncommodity broker or digital commodity\ndealer, respectively, and required by\nthe Commission to be separately\naccounted for and treated and dealt\nwith as belonging to the customer of\nthe digital commodity broker or digital\ncommodity dealer,\nrespectively.\n ``(3) Permitted investments.--Money described in\nparagraph (2) may be invested in obligations of the United\nStates, in general obligations of any State or of any political\nsubdivision of a State, in obligations fully guaranteed as to\nprincipal and interest by the United States, or in any other\ninvestment that the Commission may by rule or regulation\nallow.\n ``(4) Customer protection during bankruptcy.--\n\n ``(A) Customer property.--All money,\nassets, or property described in paragraph (2) shall be\nconsidered customer property for purposes of section\n761 of title 11, United States Code.\n ``(B) Transactions.--A transaction\ninvolving a unit of a digital commodity occurring with\na digital commodity broker or digital commodity dealer\nshall be considered a contract for the purchase or sale\nof a commodity for future delivery, on or subject to\nthe rules of, a contract market or board of trade for\npurposes of the definition of a `commodity contract' in\nsection 761 of title 11, United States Code.\n ``(C) Brokers and dealers.--A digital\ncommodity broker and a digital commodity dealer shall\nbe considered a futures commission merchant for\npurposes of section 761 of title 11, United States\nCode.\n ``(D) Assets removed from segregation.--\nAssets removed from segregation due to a customer\nelection under paragraph (6) shall not be considered\ncustomer property for purposes of section 761 of title\n11, United States Code.\n ``(5) Misuse of customer property.--\n ``(A) In general.--It shall be unlawful--\n\n ``(i) for any digital commodity\nbroker or digital commodity dealer that has\nreceived any customer money, assets, or\nproperty for custody to dispose of, or use any\nsuch money, assets, or property as belonging to\nthe digital commodity broker or digital\ncommodity dealer, respectively, or any person\nother than a customer of the digital commodity\nbroker or digital commodity dealer,\nrespectively; or\n ``(ii) for any other person,\nincluding any depository, digital commodity\nexchange, other digital commodity broker, other\ndigital commodity dealer, or digital commodity\ncustodian that has received any customer money,\nassets, or property for deposit, to hold,\ndispose of, or use any such money, assets, or\nproperty, as belonging to the depositing\ndigital commodity broker or digital commodity\ndealer or any person other than the customers\nof the digital commodity broker or digital\ncommodity dealer, respectively.\n ``(B) Use further defined.--For purposes\nof this section, `use' of a digital commodity includes\nutilizing any unit of a digital asset to participate in\na blockchain service defined in paragraph (6) or a\ndecentralized governance system associated with the\ndigital commodity or the blockchain system to which the\ndigital commodity relates in any manner other than that\nexpressly directed by the customer from whom the unit\nof a digital commodity was received.\n ``(6) Participation in blockchain services.--\n\n ``(A) Use of funds.--A digital commodity\nbroker or digital commodity dealer (or a designee of a\ndigital commodity broker or a digital commodity dealer)\nmay use a unit of a digital commodity belonging to a\ncustomer to provide a blockchain service for a\nblockchain system to which the unit of the digital\ncommodity relates if--\n ``(i) the customer expressly\npermits the use, in writing to the digital\ncommodity broker or digital commodity dealer,\nas the case may be; and\n ``(ii) the digital commodity\nbroker or the digital commodity dealer, as the\ncase may be, complies with subparagraph\n(B).\n ``(B) Limitations.--\n ``(i) In general.--The Commission\nshall, by rule, establish notice and disclosure\nrequirements, and may, by rule, establish any\nother limitations and rules related to a\npermission provided under subparagraph (A) that\nare reasonably necessary to protect customers,\nincluding eligible contract participants, non-\neligible contract participants, or any other\nclass of customers.\n ``(ii) Customer choice.--A digital\ncommodity broker or digital commodity dealer\nmay not require a customer to provide the\npermission referred to in subparagraph (A) as a\ncondition of doing business with the broker or\ndealer.\n ``(C) Requirements.--The Commission may,\nby rule, waive or modify the requirements of paragraph\n(2) or subsection (h), to facilitate the use of a unit\nof a digital commodity belonging to a customer to\nprovide a blockchain service.\n ``(D) Blockchain service defined.--In this\nparagraph, the term `blockchain service' means any\nactivity relating to validating transactions on a\nblockchain system, providing security for a blockchain\nsystem, or other similar activity, including protocol\nconsensus participation activities described in section\n2(a)(30)(B) of the Securities Act of 1933, required for\nthe ongoing operation of a blockchain system.\n ``(k) Federal Preemption.--Notwithstanding any other\nprovision of law, the Commission shall have exclusive jurisdiction over\nany digital commodity broker or digital commodity dealer registered\nunder this section with respect to activities subject to this\nAct.\n ``(l) Exemptions.--In order to promote responsible\ninnovation and fair competition, or protect customers, the Commission\nmay (on its own initiative or on application of the digital commodity\nbroker or digital commodity dealer) exempt, unconditionally or on\nstated terms or conditions, or for stated periods, and retroactively or\nprospectively, or both, a digital commodity broker or digital commodity\ndealer from the requirements of this Act, if the Commission determines\nthat--\n ``(1)(A) the exemption would be consistent with\nthe public interest and the purposes of this Act; and\n ``(B) the exemption will not have a material\nadverse effect on the ability of the Commission to discharge\nregulatory duties under this Act; or\n ``(2) the digital commodity broker or digital\ncommodity dealer is subject to comparable, comprehensive\nsupervision and regulation by the appropriate government\nauthorities in the home country of the digital commodity broker\nor digital commodity dealer, respectively.''.\n\nSEC. 407. REGISTRATION OF ASSOCIATED PERSONS.\n\n (a) In General.--Section 4k of the Commodity Exchange Act\n(7 U.S.C. 6k) is amended--\n (1) by redesignating subsections (4) through (6)\nas subsections (5) through (7), respectively;\n (2) by inserting after subsection (3) the\nfollowing:\n ``(4) It shall be unlawful for any person to act as an\nassociated person of a digital commodity broker or an associated person\nof a digital commodity dealer unless the person is registered with the\nCommission under this Act and such registration shall not have expired,\nbeen suspended (and the period of suspension has not expired), or been\nrevoked. It shall be unlawful for a digital commodity broker or a\ndigital commodity dealer to permit such a person to become or remain\nassociated with the digital commodity broker or digital commodity\ndealer if the digital commodity broker or digital commodity dealer knew\nor should have known that the person was not so registered or that the\nregistration had expired, been suspended (and the period of suspension\nhas not expired), or been revoked.''; and\n (3) in subsection (5) (as so redesignated), by\nstriking ``or of a commodity trading advisor'' and inserting\n``of a commodity trading advisor, of a digital commodity\nbroker, or of a digital commodity dealer''.\n (b) Conforming Amendments.--The Commodity Exchange Act (7\nU.S.C. 1a et seq.) is amended by striking ``section 4k(6)'' each place\nit appears and inserting ``section 4k(7)''.\n\nSEC. 408. REGISTRATION OF COMMODITY POOL OPERATORS AND\nCOMMODITY TRADING ADVISORS.\n\n (a) In General.--Section 4m(3) of the Commodity Exchange\nAct (7 U.S.C. 6m(3)) is amended--\n (1) in subparagraph (A)--\n (A) by striking ``any commodity trading\nadvisor'' and inserting ``a commodity pool operator or\ncommodity trading advisor''; and\n (B) by striking ``acting as a commodity\ntrading advisor'' and inserting ``acting as a commodity\npool operator or commodity trading advisor'';\nand\n (2) in subparagraph (C), by inserting ``digital\ncommodities,'' after ``physical commodities,''.\n (b) Exemptive Authority.--Section 4m of such Act (7 U.S.C.\n6m) is amended by adding at the end the following:\n ``(4) Exemptive Authority.--The Commission shall\npromulgate rules to provide appropriate exemptions for commodity pool\noperators and commodity trading advisors, to provide relief from\nduplicative, conflicting, or unduly burdensome requirements or to\npromote responsible innovation, to the extent the exemptions foster the\ndevelopment of fair and orderly cash or spot digital commodity markets,\nare necessary or appropriate in the public interest, and are consistent\nwith the protection of customers.''.\n\nSEC. 409. EXCLUSION FOR DECENTRALIZED FINANCE\nACTIVITIES.\n\n The Commodity Exchange Act (7 U.S.C. 1 et seq.), as\namended by the preceding provisions of this Act, is amended by\ninserting after section 4u the following:\n\n``SEC. 4V. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO\nTHIS ACT.\n\n ``(a) In General.--Notwithstanding any other provision of\nthis Act, a person shall not be subject to this Act and the regulations\npromulgated under this Act based on the person directly or indirectly\nengaging in any of the following activities, whether singly or in\ncombination, in relation to the operation of a blockchain system or in\nrelation to decentralized finance trading protocol:\n ``(1) Compiling network transactions or relaying,\nsearching, sequencing, validating, or acting in a similar\ncapacity.\n ``(2) Providing computational work, operating a\nnode or oracle service, or procuring, offering, or utilizing\nnetwork bandwidth, or other similar incidental\nservices.\n ``(3) Providing a user-interface that enables a\nuser to read, and access data about a blockchain\nsystem.\n ``(4) Developing, publishing, or otherwise\ndistributing a blockchain system or a decentralized finance\nmessaging system.\n ``(5) Constituting, administering, or maintaining\na decentralized finance messaging system or decentralized\nfinance trading protocol, or operating or participating in a\nliquidity pool with respect thereto, for the purpose of\nexecuting a spot transaction for the purchase or sale of a\ndigital commodity.\n ``(6) Developing, publishing, constituting,\nadministering, maintaining, or otherwise distributing software\nor systems that create or deploy hardware or software,\nincluding wallets or other systems, facilitating an individual\nuser's own personal ability to keep, safeguard, or custody the\nuser's digital assets or related private keys.\n ``(b) Exceptions.--Subsection (a) shall not be interpreted\nto apply to the anti-fraud, anti-manipulation, or false reporting\nenforcement authorities of the Commission.''.\n\nSEC. 410. RESOURCES FOR IMPLEMENTATION AND\nENFORCEMENT.\n\n (a) Collection of Fees.--\n (1) In general.--The Commodity Futures Trading\nCommission (in this section referred to as the ``Commission'')\nshall charge and collect a fee from each person in provisional\nstatus registered with the Commission pursuant to section 106,\non--\n (A) the filing of the initial application\nfor registration; and\n (B) an annual basis thereafter for\nmaintaining provisional status.\n (2) Amount.--The fees authorized under paragraph\n(1) may be collected and available for obligation only in the\namounts provided in advance in an appropriation Act.\n (3) Authority to adjust fees.--Notwithstanding the\npreceding provisions of this subsection, to promote fair\ncompetition or innovation, the Commission, in its sole\ndiscretion, may reduce or eliminate any fee otherwise required\nto be paid by a small or medium filer under this\nsubsection.\n (b) Fee Schedule.--\n (1) In general.--The Commission shall publish in\nthe Federal Register a schedule of the fees to be charged and\ncollected under this section.\n (2) Content.--The fee schedule for a fiscal year\nshall include a written analysis of the estimate of the\nCommission of the total costs of carrying out the functions of\nthe Commission under this Act during the fiscal year.\n (3) Submission to congress.--Before publishing the\nfee schedule for a fiscal year, the Commission shall submit a\ncopy of the fee schedule to the Committees on Agriculture and\non Appropriations of the House of Representatives and the\nCommittees on Agriculture, Nutrition, and Forestry and on\nAppropriations of the Senate.\n (4) Timing.--\n (A) 1st fiscal year.--The Commission shall\npublish the fee schedule for the fiscal year in which\nthis Act is enacted, within 30 days after the date of\nthe enactment of this Act.\n (B) Subsequent fiscal years.--The\nCommission shall publish the fee schedule for each\nsubsequent fiscal year, not less than 90 days before\nthe due date prescribed by the Commission for payment\nof the annual fee for the fiscal year.\n (c) Late Payment Penalty.--\n (1) In general.--The Commission may impose a\npenalty against a person that fails to pay an annual fee\ncharged under this section, within 30 days after the due date\nprescribed by the Commission for payment of the fee.\n (2) Amount.--The amount of the penalty shall be--\n\n (A) 5 percent of the amount of the fee\ndue, multiplied by\n (B) the whole number of consecutive 30-day\nperiods that have elapsed since the due date.\n (d) Reimbursement of Excess Fees.--To the extent that the\ntotal amount of fees collected under this section during a fiscal year\nthat begins after the date of the enactment of this Act exceeds the\namount provided under subsection (a)(2) with respect to the fiscal\nyear, the Commission shall reimburse the excess amount to the persons\nwho have timely paid their annual fees, on a pro-rata basis that\nexcludes penalties, and shall do so within 60 days after the end of the\nfiscal year.\n (e) Deposit of Fees Into the Treasury.--All amounts\ncollected under this section shall be credited to the currently\napplicable appropriation, account, or fund of the Commission as\ndiscretionary offsetting collections, and shall be available for the\npurposes authorized in subsection (f) only to the extent and in the\namounts provided in advance in appropriations Acts.\n (f) Authorization of Appropriations.--In addition to\namounts otherwise authorized to be appropriated to the Commission,\nthere is authorized to be appropriated to the Commission amounts\ncollected under this section to cover the costs of carrying out the\nfunctions of the Commission under this Act.\n (g) Expedited Hiring Authority.--\n (1) Appointment authority.--The Chairman, pursuant\nto section 6(a), may appoint individuals to a position\ndescribed in paragraph (2) of this subsection--\n (A) in accordance with the statutes,\nrules, and regulations governing appointments to\npositions in the excepted service (as defined in\nsection 2103 of title 5, United States Code);\nand\n (B) without regard to any statute, rule,\nor regulation governing appointments to positions in\nthe competitive service (as defined in section 2102 of\nsuch title).\n (2) Position described.--A position referred to in\nsubparagraph (1) is a position at the Commission that--\n\n (A) is in the competitive service (as\ndefined in section 2102 of such title); and\n (B) requires specialized knowledge of\ndigital commodities markets, financial and capital\nmarket formation or regulation, financial market\nstructures or surveillance, data collection or\nanalysis, or information technology, cybersecurity, or\nsystem safeguards.\n (3) Rule of construction.--The appointment of a\ncandidate to a position under this subsection shall not be\nconsidered to cause the position to be converted from the\ncompetitive service to the excepted service.\n (h) Sunset.--The authorities provided by this section\nshall expire at the end of the 4th fiscal year that begins after the\ndate of the enactment of this Act.\n\nSEC. 411. REQUIREMENTS RELATED TO CONTROL PERSONS.\n\n The Commodity Exchange Act (7 U.S.C. 1 et seq.), as\namended the preceding provisions of this Act, is amended by inserting\nafter section 4v the following:\n\n``SEC. 4W. LIMITATION ON TRANSACTIONS BY BLOCKCHAIN CONTROL\nPERSONS.\n\n ``(a) Limitation.--It shall be unlawful for a blockchain\ncontrol person with respect to a blockchain system certified as a\nmature blockchain system in accordance with section 42 of the\nSecurities Exchange Act of 1934 to sell a unit of a digital commodity\nrelated to the blockchain system unless the person files notice with\nthe Commission, in a form and manner determined by the Commission, that\nthe person has or intends to obtain an authority described in\nsubsection (b)(1) with respect to the blockchain system, and complies\nwith rules adopted by the Commission that require--\n ``(1) disclosure of information to the Commission\nand the public about the material activities, as determined by\nthe Commission, of the blockchain control person; and\n ``(2)(A) the use of a digital commodity broker to\neffect the sale; or\n ``(B) such other sales restrictions applicable to\nthe blockchain control person, or any affiliated blockchain\ncontrol person, to prevent manipulation and distortion of the\nvalue of the digital commodity and promote further maturity of\nthe blockchain system to which the digital commodity\nrelates.\n ``(b) Definitions.--In this section:\n ``(1) Blockchain control person.--The term\n`blockchain control person' means, with respect to a blockchain\nsystem, any person or group of persons under common control,\nother than a decentralized governance system, who--\n ``(A) has the unilateral authority,\ndirectly or indirectly, through any contract,\narrangement, understanding, relationship, or otherwise,\nto control or materially alter the functionality,\noperation, or rules of consensus or agreement of the\nblockchain system or its related digital commodity;\nor\n ``(B) has the unilateral authority to\ndirect the voting, in the aggregate, of 20 percent or\nmore of the outstanding voting power of the blockchain\nsystem by means of a related digital commodity, nodes\nor validators, a decentralized governance system, or\notherwise, in a blockchain system which can be altered\nby a voting system.\n ``(2) Affiliated blockchain control person.--The\nterm `affiliated blockchain control person' means any person\ndirectly or indirectly controlling, controlled by, or under\ncommon control with a blockchain control person, as the\nCommission by rule or regulation, may determine will effectuate\nthe purposes of this section.''.\n\nSEC. 412. OTHER TRADABLE ASSETS.\n\n The Commodity Exchange Act (7 U.S.C. 1 et seq.), as\namended by the preceding provisions of this Act, is amended--\n (1) by inserting after section 4w the\nfollowing:\n\n``SEC. 4X. TRADING REQUIREMENTS FOR OTHER TRADABLE\nASSETS.\n\n ``(a) Limitation.--A contract of sale of a tradable asset\nshall not be offered, solicited, traded, facilitated, executed,\ncleared, reported, or otherwise dealt in, on or subject to the rules of\na registered entity, or by any other entity registered with the\nCommission, except in accordance with subsection (b).\n ``(b) Requirements.--\n ``(1) Treatment of tradable assets.--A contract of\nsale of a tradable asset that is offered, solicited, traded,\nfacilitated, executed, cleared, reported, or otherwise dealt in\non or subject to the rules of a registered entity, or by any\nother entity registered with the Commission, shall be treated\nas a digital commodity for purposes of this Act.\n ``(2) Additional rulemaking authority.--In\naddition to the other requirements of this Act, the Commission\nmay, by rule or regulation, impose additional obligations on\nany person registered under this Act offering, soliciting,\ntrading, facilitating, executing, clearing, reporting, or\notherwise dealing in a contract of sale of a tradable asset, or\nclass thereof, pursuant to paragraph (1) as are necessary for\nthe protection of customers, the promotion of innovation, and\nthe maintenance of fair, orderly, and efficient markets,\nincluding additional obligations related to--\n ``(A) disclosure;\n ``(B) recordkeeping;\n ``(C) capital;\n ``(D) reporting;\n ``(E) business conduct;\n ``(F) documentation;\n ``(G) supervision of employees;\nand\n ``(H) segregation.\n ``(c) Tradable Asset Defined.--In this section, the term\n`tradable asset' means a digital asset other than--\n ``(1) a digital commodity that is treated as such\nother than by reason of subsection (b)(1) of this section;\nor\n ``(2) a digital asset excluded from the definition\nof digital commodity pursuant to subclause (I) through (VII) of\nsection 1a(16)(F)(iii).''; and\n (2) by inserting after section 6d the\nfollowing:\n\n``SEC. 6E. PROHIBITION ON TRADING CERTAIN DIGITAL\nASSETS.\n\n ``(a) In General.--A contract of sale of a digital\ncommodity or tradable asset (as defined in section 4x) shall not be\noffered, solicited, traded, facilitated, executed, cleared, reported,\nor otherwise dealt in on or subject to the rules of a registered\nentity, or by any other entity registered with the Commission, if the\nprimary purpose of the digital commodity or tradable asset is to be\nused to--\n ``(1) commit fraud or market\nmanipulation;\n ``(2) further a scheme found in a final action by\na court of competent jurisdiction to be in violation of\ncampaign finance or government ethics laws; or\n ``(3) engage in any other conduct that would\nresult in abusive practices or be disruptive to market\nintegrity.\n ``(b) Guidance on Fraudulent, Manipulative, or Disruptive\nTradable Assets.--The Commission may, after public notice and comment,\nissue guidance establishing criteria for determining if the primary\npurpose of a digital commodity or tradable asset (as so defined) is to\nbe used to commit fraud or market manipulation, or engage in any other\nconduct that would result in abusive practices or be disruptive to\nmarket integrity.''.\n\nSEC. 413. CONFLICT OF INTEREST RULEMAKING.\n\n Not later than 360 days after the date of the enactment\nof this Act, the Commodity Futures Trading Commission shall issue rules\nestablishing requirements for the identification, mitigation, and\nresolution of conflicts of interest among and across registered\nentities (within the meaning of the Commodity Exchange Act) and persons\nrequired to be registered with the Commission, including conflicts of\ninterest related to vertically integrated market structures and their\nvarying responsibilities.\n\nSEC. 414. EFFECTIVE DATE.\n\n Unless otherwise provided in this title, this title and\nthe amendments made by this title shall take effect 270 days after the\ndate of the enactment of this Act.\n\nSEC. 415. SENSE OF CONGRESS.\n\n It is the sense of Congress that nothing in this Act or\nany amendment made by this Act should be interpreted to authorize any\nentity to regulate any commodity, other than a digital commodity, on\nany spot market.\n\nTITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS\n\nSEC. 501. FINDINGS; SENSE OF CONGRESS.\n\n (a) Findings.--Congress finds the following:\n (1) Entrepreneurs and innovators are building and\ndeploying this next generation of the internet.\n (2) Digital commodity networks represent a new way\nfor people to join together and cooperate with one another to\nundertake certain activities.\n (3) Digital commodities have the potential to be\nthe foundational building blocks of these systems, aligning the\neconomic incentive for individuals to cooperate with one\nanother to achieve a common purpose.\n (4) The digital commodity ecosystem has the\npotential to grow our economy and improve everyday lives of\nAmericans by facilitating collaboration through the use of\ntechnology to manage activities, allocate resources, and\nfacilitate decision making.\n (5) Blockchain systems and the digital commodities\nthey empower provide control, enhance transparency, reduce\ntransaction costs, and increase efficiency if proper\nprotections are put in place for investors, consumers, our\nfinancial system, and our national security.\n (6) Blockchain technology facilitates new types of\nnetwork participation which businesses in the United States may\nutilize in innovative ways.\n (7) Other digital commodity companies are setting\nup their operations outside of the United States, where\ncountries are establishing frameworks to embrace the potential\nof blockchain technology and digital commodities and provide\nsafeguards for consumers.\n (8) Digital commodities, despite the purported\nanonymity, provide law enforcement with an exceptional tracing\ntool to identify illicit activity and bring criminals to\njustice.\n (9) The Financial Services Committee of the House\nof Representatives has held multiple hearings highlighting\nvarious risks that digital commodities can pose to the\nfinancial markets, consumers, and investors that must be\naddressed as we seek to harness the benefits of these\ninnovations.\n (b) Sense of Congress.--It is the sense of Congress that--\n\n (1) the United States should seek to prioritize\nunderstanding the potential opportunities of the next\ngeneration of the internet;\n (2) the United States should seek to foster\nadvances in technology that have robust evidence indicating\nthey can improve our financial system and create more fair and\nequitable access to financial services for everyday Americans\nwhile protecting our financial system, investors, and\nconsumers;\n (3) the United States must support the responsible\ndevelopment of digital commodities and the underlying\ntechnology in the United States or risk the shifting of the\ndevelopment of such assets and technology outside of the United\nStates, to less regulated countries;\n (4) Congress should consult with public and\nprivate sector stakeholders to understand how to enact a\nfunctional framework tailored to the specific risks and unique\nbenefits of different digital commodity-related activities,\ndistributed ledger technology, distributed networks, and mature\nblockchain systems;\n (5) Congress should enact a functional framework\ntailored to the specific risks of different digital commodity-\nrelated activities and unique benefits of distributed ledger\ntechnology, distributed networks, and mature blockchain\nsystems; and\n (6) consumers and market participants will benefit\nfrom a framework for digital commodities consistent with\nlongstanding investor protections in securities and commodities\nmarkets, yet tailored to the unique benefits and risks of the\ndigital commodity ecosystem.\n\nSEC. 502. STRATEGIC HUB FOR INNOVATION AND FINANCIAL\nTECHNOLOGY.\n\n Section 4 of the Securities Exchange Act of 1934 (15\nU.S.C. 78d) is amended by adding at the end the following:\n ``(k) Strategic Hub for Innovation and Financial\nTechnology.--\n ``(1) Establishment.--Not later than 180 days\nafter the date of the enactment of this subsection, the\nSecurities and Exchange Commission shall establish a committee\nto be known as the Strategic Hub for Innovation and Financial\nTechnology (referred to in this subsection as the `FinHub') to\nsupport engagement on emerging technologies in the financial\nsector.\n ``(2) Members.--The composition of FinHub shall be\ndetermined by the Commission, drawing from relevant divisions\nas appropriate, including the Division of Trading and Markets,\nDivision of Corporate Finance, and Division of Investment\nManagement.\n ``(3) Responsibilities.--FinHub shall--\n ``(A) serve as a resource for the\nCommission on emerging financial technology\nadvancements;\n ``(B) engage with market participants\nworking on emerging financial technologies;\nand\n ``(C) facilitate communication between the\nCommission and businesses working in emerging financial\ntechnology fields with information on the Commission,\nits rules, and regulations.\n ``(4) Report to the commission.--\n ``(A) In general.--Not later than October\n31 of each year after 2025, FinHub shall provide an\nannual summary of its engagement activities to the\nCommission, which shall be included in the Commission's\nannual report to Congress.\n ``(B) Confidentiality.--Each report\nsubmitted under this paragraph shall not contain\nconfidential information.''.\n\nSEC. 503. CODIFICATION OF LABCFTC.\n\n (a) In General.--Section 18 of the Commodity Exchange Act\n(7 U.S.C. 22) is amended by adding at the end the following:\n ``(c) LabCFTC.--\n ``(1) Establishment.--There is established in the\nCommission LabCFTC.\n ``(2) Purpose.--The purposes of LabCFTC are to--\n\n ``(A) promote responsible financial\ntechnology innovation and fair competition for the\nbenefit of the American public;\n ``(B) serve as an information platform to\ninform the Commission about new financial technology\ninnovation; and\n ``(C) provide outreach to financial\ntechnology innovators to discuss their innovations and\nthe regulatory framework established by this Act and\nthe regulations promulgated thereunder.\n ``(3) Director.--LabCFTC shall have a Director,\nwho shall be appointed by the Commission and serve at the\npleasure of the Commission. Notwithstanding section 2(a)(6)(A),\nthe Director shall report directly to the Commission and\nperform such functions and duties as the Commission may\nprescribe.\n ``(4) Duties.--LabCFTC shall--\n ``(A) advise the Commission with respect\nto rulemakings or other agency or staff action\nregarding financial technology;\n ``(B) provide internal education and\ntraining to the Commission regarding financial\ntechnology;\n ``(C) advise the Commission regarding\nfinancial technology that would bolster the\nCommission's oversight functions;\n ``(D) engage with academia, students, and\nprofessionals on financial technology issues, ideas,\nand technology relevant to activities under this\nAct;\n ``(E) provide persons working in emerging\ntechnology fields with information on the Commission,\nits rules and regulations, and the role of a registered\nfutures association; and\n ``(F) encourage persons working in\nemerging technology fields to engage with the\nCommission and obtain feedback from the Commission on\npotential regulatory issues.\n ``(5) Report to congress.--\n ``(A) In general.--Not later than October\n31 of each year after 2025, LabCFTC shall submit to the\nCommittee on Agriculture of the House of\nRepresentatives and the Committee on Agriculture,\nNutrition, and Forestry of the Senate a report on its\nactivities.\n ``(B) Contents.--Each report required\nunder paragraph (1) shall include--\n ``(i) the total number of persons\nthat met with LabCFTC;\n ``(ii) a summary of general issues\ndiscussed during meetings with the\nperson;\n ``(iii) information on steps\nLabCFTC has taken to improve Commission\nservices, including responsiveness to the\nconcerns of persons;\n ``(iv) recommendations made to the\nCommission with respect to the regulations,\nguidance, and orders of the Commission and such\nlegislative actions as may be appropriate;\nand\n ``(v) any other information\ndetermined appropriate by the Director of\nLabCFTC.\n ``(C) Confidentiality.--A report under\nparagraph (A) shall abide by the confidentiality\nrequirements in section 8.\n ``(6) Records and engagement.--The Commission\nshall--\n ``(A) maintain systems of records to track\nengagements with the public through LabCFTC;\n ``(B) store communications and materials\nreceived in connection with any such engagement in\naccordance with Commission policies and procedures on\ndata retention and confidentiality; and\n ``(C) take reasonable steps to protect any\nconfidential or proprietary information received\nthrough LabCFTC engagement.''.\n (b) Conforming Amendments.--Section 2(a)(6)(A) of such Act\n(7 U.S.C. 2(a)(6)(A)) is amended--\n (1) by striking ``paragraph and in'' and inserting\n``paragraph,''; and\n (2) by inserting ``and section 18(c)(3),'' before\n``the executive''.\n (c) Effective Date.--The Commodity Futures Trading\nCommission shall implement the amendments made by this section\n(including complying with section 18(c)(7) of the Commodity Exchange\nAct) within 180 days after the date of the enactment of this\nAct.\n\nSEC. 504. STUDY ON DECENTRALIZED FINANCE.\n\n (a) In General.--The Commodity Futures Trading Commission,\nthe Securities and Exchange Commission, and the Secretary of the\nTreasury shall jointly carry out a study on decentralized finance that\nanalyzes--\n (1) the nature, size, role, and use of\ndecentralized finance blockchain applications;\n (2) the operation of blockchain applications that\ncomprise decentralized finance;\n (3) the interoperability of blockchain\napplications and other blockchain systems;\n (4) the interoperability of blockchain\napplications and software-based systems, including websites and\nwallets;\n (5) the decentralized governance systems through\nwhich blockchain applications may be developed, published,\nconstituted, administered, maintained, or otherwise\ndistributed, including--\n (A) whether the systems enhance or detract\nfrom--\n (i) the decentralization of the\ndecentralized finance; and\n (ii) the inherent benefits and\nrisks of the decentralized governance system;\nand\n (B) any procedures, requirements, or best\npractices that would mitigate the risks identified in\nsubparagraph (A)(ii);\n (6) the benefits of decentralized finance,\nincluding--\n (A) operational resilience and\navailability of blockchain systems;\n (B) interoperability of blockchain\nsystems;\n (C) market competition and\ninnovation;\n (D) transaction efficiency;\n (E) transparency and traceability of\ntransactions; and\n (F) disintermediation;\n (7) the risks of decentralized finance,\nincluding--\n (A) pseudonymity of users and\ntransactions;\n (B) disintermediation; and\n (C) cybersecurity\nvulnerabilities;\n (8) the extent to which decentralized finance has\nintegrated with the traditional financial markets and any\npotential risks or improvements to the stability of the\nmarkets;\n (9) how the levels of illicit activity in\ndecentralized finance compare with the levels of illicit\nactivity in traditional financial markets;\n (10) methods for addressing illicit activity in\ndecentralized finance and traditional markets that are tailored\nto the unique attributes of each;\n (11) how decentralized finance may increase the\naccessibility of cross-border transactions; and\n (12) the feasibility of embedding self-executing\ncompliance and risk controls into decentralized\nfinance.\n (b) Consultation.--In carrying out the study required\nunder subsection (a), the Commodity Futures Trading Commission and the\nSecurities and Exchange Commission shall consult with the Secretary of\nthe Treasury on the factors described under paragraphs (7) through (10)\nof subsection (a).\n (c) Report.--Not later than 1 year after the date of\nenactment of this Act, the Commodity Futures Trading Commission and the\nSecurities and Exchange Commission shall jointly submit to the relevant\ncongressional committees a report that includes the results of the\nstudy required by subsection (a).\n (d) GAO Study.--The Comptroller General of the United\nStates shall--\n (1) carry out a study on decentralized finance\nthat analyzes the information described under paragraphs (1)\nthrough (12) of subsection (a); and\n (2) not later than 1 year after the date of\nenactment of this Act, submit to the relevant congressional\ncommittees a report that includes the results of the study\nrequired by paragraph (1).\n (e) Definitions.--In this section:\n (1) Decentralized finance.--\n (A) In general.--The term ``decentralized\nfinance'' means blockchain applications (including\ndecentralized finance trading protocols and related\ndecentralized finance messaging systems) that allow\nusers to engage in financial transactions in a self-\ndirected manner so that a third-party intermediary does\nnot effectuate the transactions or take custody of\ndigital commodities of a user during any part of the\ntransactions.\n (B) Relationship to excluded activities.--\nThe term ``decentralized finance'' shall not be\ninterpreted to limit or exclude any activity from the\nactivities described in section 15I(a) of the\nSecurities Exchange Act of 1934 or section 4v(a) of the\nCommodity Exchange Act.\n (2) Relevant congressional committees.--The term\n``relevant congressional committees'' means--\n (A) the Committees on Financial Services\nand Agriculture of the House of Representatives;\nand\n (B) the Committees on Banking, Housing,\nand Urban Affairs and Agriculture, Nutrition, and\nForestry of the Senate.\n\nSEC. 505. STUDY ON NON-FUNGIBLE TOKENS.\n\n (a) In General.--The Comptroller General of the United\nStates shall carry out a study of non-fungible tokens that analyzes--\n\n (1) the nature, size, role, purpose, and use of\nnon-fungible tokens;\n (2) the similarities and differences between non-\nfungible tokens and other digital commodities, including\ndigital commodities and permitted payment stablecoins, and how\nthe markets for those digital commodities intersect with each\nother;\n (3) how non-fungible tokens are minted by issuers\nand subsequently administered to purchasers;\n (4) how non-fungible tokens are stored after being\npurchased by a consumer;\n (5) the interoperability of non-fungible tokens\nbetween different blockchain systems;\n (6) the scalability of different non-fungible\ntokens marketplaces;\n (7) the benefits of non-fungible tokens, including\nverifiable digital ownership;\n (8) the risks of non-fungible tokens, including--\n\n (A) intellectual property\nrights;\n (B) cybersecurity risks; and\n (C) market risks;\n (9) whether and how non-fungible tokens have\nintegrated with traditional marketplaces, including those for\nmusic, real estate, gaming, events, and travel;\n (10) whether and how non-fungible tokens can be\nused to facilitate commerce or other activities through the\nrepresentation of documents, identification, contracts,\nlicenses, and other commercial, government, or personal\nrecords;\n (11) any potential risks to traditional markets\nfrom such integration; and\n (12) the levels and types of illicit activity in\nnon-fungible tokens markets.\n (b) Report.--Not later than 1 year after the date of the\nenactment of this Act, the Comptroller General, shall make publicly\navailable a report that includes the results of the study required by\nsubsection (a).\n\nSEC. 506. STUDY ON EXPANDING FINANCIAL LITERACY AMONGST\nDIGITAL COMMODITY HOLDERS.\n\n (a) In General.--The Commodity Futures Trading Commission\nwith the Securities and Exchange Commission shall jointly conduct a\nstudy to identify--\n (1) the existing level of financial literacy among\nretail digital commodity holders, including subgroups of\ninvestors identified by the Commodity Futures Trading\nCommission with the Securities and Exchange\nCommission;\n (2) methods to improve the timing, content, and\nformat of financial literacy materials regarding digital\ncommodities provided by the Commodity Futures Trading\nCommission and the Securities and Exchange\nCommission;\n (3) methods to improve coordination between the\nSecurities and Exchange Commission and the Commodity Futures\nTrading Commission with other agencies, including the Financial\nLiteracy and Education Commission as well as nonprofit\norganizations and State and local jurisdictions, to better\ndisseminate financial literacy materials;\n (4) the efficacy of current financial literacy\nefforts with a focus on rural communities and communities with\nmajority minority populations;\n (5) the most useful and understandable relevant\ninformation, including clear disclosures, that retail digital\ncommodity holders need to make informed financial decisions\nbefore engaging with or purchasing a digital commodity or\nservice that is typically sold to retail investors of digital\ncommodities;\n (6) the most effective public-private partnerships\nin providing financial literacy regarding digital commodities\nto consumers;\n (7) the most relevant metrics to measure\nsuccessful improvement of the financial literacy of an\nindividual after engaging with financial literacy efforts;\nand\n (8) in consultation with the Financial Literacy\nand Education Commission, a strategy (including to the extent\npracticable, measurable goals and objectives) to increase\nfinancial literacy of investors regarding digital\ncommodities.\n (b) Report.--Not later than 1 year after the date of the\nenactment of this Act, the Commodity Futures Trading Commission and the\nSecurities and Exchange Commission shall jointly submit a written\nreport on the study required by subsection (a) to the Committees on\nFinancial Services and on Agriculture of the House of Representatives\nand the Committees on Banking, Housing, and Urban Affairs and on\nAgriculture, Nutrition, and Forestry of the Senate.\n\nSEC. 507. STUDY ON FINANCIAL MARKET INFRASTRUCTURE\nIMPROVEMENTS.\n\n (a) In General.--The Commodity Futures Trading Commission\nand the Securities and Exchange Commission shall jointly conduct a\nstudy to assess whether additional guidance or rules are necessary to\nfacilitate the development of tokenized securities and derivatives\nproducts, and to the extent such guidance or rules would foster the\ndevelopment of fair and orderly financial markets, be necessary or\nappropriate in the public interest, and be consistent with the\nprotection of investors and customers.\n (b) Report.--\n (1) Time limit.--Not later than 1 year after the\ndate of enactment of this Act, the Commodity Futures Trading\nCommission and the Securities and Exchange Commission shall\njointly submit to the relevant congressional committees a\nreport that includes the results of the study required by\nsubsection (a).\n (2) Relevant congressional committees defined.--In\nthis section, the term ``relevant congressional committees''\nmeans--\n (A) the Committees on Financial Services\nand on Agriculture of the House of Representatives;\nand\n (B) the Committees on Banking, Housing,\nand Urban Affairs and on Agriculture, Nutrition, and\nForestry of the Senate.\n\nSEC. 508. STUDY ON BLOCKCHAIN IN PAYMENTS.\n\n (a) Study Required.--The Secretary of the Treasury shall\nconduct a study on the potential use of blockchain technology by the\ndomestic private sector to address--\n (1) fraud in payments;\n (2) transaction costs and transaction\ntimes;\n (3) automated payments; and\n (4) efficiency in commercial\ntransactions.\n (b) Report to Congress.--Not later than one year after the\ndate of enactment of this Act, the Secretary shall submit a report to\nthe Committee on Financial Services of the House of Representatives and\nthe Committee on Banking, Housing, and Urban Affairs of the Senate that\nsummarizes the findings of the study required under subsection\n(a).\n (c) Rule of Construction.--Nothing in this section shall\nbe construed to mandate the use of blockchain technology by any public\nor private entity.\n\nSEC. 509. STUDY ON ILLICIT USE OF DIGITAL ASSETS.\n\n (a) In General.--One year after the date of the enactment\nof this Act, the Secretary of the Treasury, in consultation with the\nSecurities and Exchange Commission and the Commodity Futures Trading\nCommission, shall conduct a comprehensive review of how Foreign\nTerrorist Organizations and Transnational Criminal Syndicates utilize\ndigital assets in connection with illicit activities.\n (b) Report.--Not later than 180 days after completing the\nreview under subsection (a), the Secretary of the Treasury shall issue\na report to the Committees on Agriculture and on Financial Services of\nthe House of Representatives and the Committees on Agriculture,\nNutrition, and Forestry and on Banking, Housing, and Urban Affairs of\nthe Senate on the findings of the Secretary, including--\n (1) an assessment of how Foreign Terrorist\nOrganizations and Transnational Criminal Syndicates utilize\ndigital assets in connection with illicit activities;\nand\n (2) recommendations to assist the Securities and\nExchange Commission and the Commodity Futures Trading\nCommission in strengthening compliance and enforcement of\ndigital assets-related entities registered with their\nrespective agencies.\n\nSEC. 510. GAO STUDY ON CERTAIN CENTRALIZED INTERMEDIARIES THAT\nARE PRIMARILY LOCATED IN FOREIGN JURISDICTIONS.\n\n (a) In General.--The Comptroller General of the United\nStates, in consultation with the Secretary of the Treasury, shall\nconduct a study to--\n (1) assess the risks posed by centralized\nintermediaries that are primarily located in foreign\njurisdictions that provide services to U.S. persons without\nregulatory requirements that are substantially similar to the\nrequirements of the Bank Secrecy Act; and\n (2) provide any regulatory or legislative\nrecommendations to address these risks under paragraph\n(1).\n (b) Report.--Not later than 1 year after the date of\nenactment of this Act, the Comptroller General shall issue a report to\nCongress containing all findings and determinations made in carrying\nout the study required under subsection (a).\n\nSEC. 511. STUDIES ON FOREIGN ADVERSARY\nPARTICIPATION.\n\n (a) In General.--The Secretary of the Treasury, in\nconsultation with the Commodity Futures Trading Commission and the\nSecurities and Exchange Commission, shall, not later than 1 year after\ndate of the enactment of this section, conduct a study and submit a\nreport to the relevant congressional committees that--\n (1) identifies any digital commodity registrants\nwhich are owned by governments of foreign\nadversaries;\n (2) determines whether any governments of foreign\nadversaries are collecting trading data about United States\npersons in the digital commodity markets; and\n (3) evaluates whether any proprietary intellectual\nproperty of digital commodity registrants is being misused or\nstolen by any governments of foreign adversaries.\n (b) GAO Study and Report.--\n (1) In general.--The Comptroller General shall,\nnot later than 1 year after date of the enactment of this\nsection, conduct a study and submit a report to the relevant\ncongressional committees that--\n (A) identifies any digital commodity\nregistrants which are owned by governments of foreign\nadversaries;\n (B) determines whether any governments of\nforeign adversaries are collecting trading data about\nUnited States persons in the digital commodity markets;\nand\n (C) evaluates whether any proprietary\nintellectual property of digital commodity registrants\nis being misused or stolen by any governments of\nforeign adversaries.\n (c) Definitions.--In this section:\n (1) Digital commodity registrant.--The term\n``digital commodity registrant'' means any person required to\nregister as a digital commodity exchange, digital commodity\nbroker, or digital commodity dealer under the Commodity\nExchange Act.\n (2) Foreign adversaries.--The term ``foreign\nadversaries'' means the foreign governments and foreign non-\ngovernment persons determined by the Secretary of Commerce to\nbe foreign adversaries under section 7.4(a) of title 15, Code\nof Federal Regulations.\n (3) Relevant congressional committees.--The term\n``relevant congressional committees'' means--\n (A) the Committees on Financial Services\nand Agriculture of the House of Representatives;\nand\n (B) the Committees on Banking, Housing,\nand Urban Affairs and Agriculture, Nutrition, and\nForestry of the Senate.\n\nSEC. 512. CONFORMING AMENDMENTS.\n\n The GENIUS Act is amended--\n (1) in section 2, by amending paragraph (7) to\nread as follows:\n ``(7) Digital asset service provider.--The term\n`digital asset service provider' means any entity registered or\nrequired to be registered with the Securities and Exchange\nCommission or the Commodity Futures Trading\nCommission.'';\n (2) in section 4(a)--\n (A) by amending paragraph (3) to read as\nfollows:\n ``(3) Monthly certification; examination of\nreports by registered public accounting firm.--\n ``(A) In general.--A permitted payment\nstablecoin issuer shall, each month, have the\ninformation disclosed in the previous month-end report\nrequired under paragraph (1)(C) examined by a\nregistered public accounting firm and such examination\nshall be performed in accordance with standards for\nattestation engagements issued or adopted by the\nprimary Federal payment stablecoin regulator or, in the\ncase of a State qualified payment stablecoin issuer,\nthe State payment stablecoin regulator.\n ``(B) Certification.--Each month, the\nChief Executive Officer and Chief Financial Officer of\na permitted payment stablecoin issuer shall submit to,\nas applicable, the primary Federal payment stablecoin\nregulator or, in the case of a State qualified payment\nstablecoin issuer, the State payment stablecoin\nregulator, a certification that, based on such\nofficers' knowledge, the previous monthly report\nrequired under paragraph (1)(C)--\n ``(i) does not contain any untrue\nstatement of material fact or omit to state a\nmaterial fact necessary in order to make the\nstatements made, in light of the circumstances\nunder which such statements were made, not\nmisleading; and\n ``(ii) fairly presented in all\nmaterial respects the information required\nunder paragraph (1)(C) for the period presented\nin such report.\n ``(C) Criminal penalty.--Any person who\nsubmits a certification required under subparagraph (B)\nknowing that such certification is false shall be\nsubject to the same criminal penalties as those set\nforth under section 1350(c) of title 18, United States\nCode.\n ``(D) Internal controls over permitted\npayment stablecoin issuer's requirements.--\n ``(i) In general.--Management of a\npermitted payment stablecoin issuer shall\nestablish and maintain an adequate internal\ncontrol structure and procedures for the\nrequirements under this paragraph and\nparagraphs (1) and (2) in accordance with a\nframework determined acceptable by the primary\nFederal payment stablecoin regulator or, in the\ncase of a State qualified payment stablecoin\nissuer, the State payment stablecoin\nregulator.\n ``(ii) Attestation report.--A\npermitted payment stablecoin issuer shall\nobtain an annual attestation report by an\nindependent registered public accounting firm\nattesting to management's assertions concerning\nthe effectiveness of the internal control\nstructure and procedures for compliance with\nthe requirements described in this paragraph\nand paragraphs (1) and (2). Such attestation\nshall be made in accordance with standards for\nattestation engagements issued or adopted by\nthe primary Federal payment stablecoin\nregulator or, in the case of a State qualified\npayment stablecoin issuer, the State payment\nstablecoin regulator.''; and\n (B) by amending paragraph (12) to read as\nfollows:\n ``(12) Non-financial companies.--\n ``(A) Prohibition on non-financial company\nownership.--It shall be unlawful for a company that\nderives a majority of its revenues from activities that\nare not financial activities to retain or acquire\ncontrol of a nonbank entity that is--\n ``(i) a Federal qualified payment\nstablecoin issuer; or\n ``(ii) a State qualified payment\nstablecoin issuer.\n ``(B) Financial activities defined.--\n\n ``(i) In general.--In this\nparagraph, the term `financial activities'\nmeans--\n ``(I) a financial\nactivity, within the meaning of section\n4(k) of the Bank Holding Company Act of\n1956 (12 U.S.C. 1843(k));\n ``(II) issuing, redeeming,\nproviding custodial or safekeeping\nservices for, buying, selling, making a\nmarket in, or managing a reserve for\npayment stablecoins;\n ``(III) providing\nelectronic wallet services for payment\nstablecoins; or\n ``(IV) an activity\ndetermined by the Board to be a\nfinancial activity pursuant to clause\n(ii).\n ``(ii) Establishing additional\nfinancial activities.--Not later than 180 days\nafter the date of enactment of the CLARITY Act\nof 2025, the Board, in consultation with the\nSecretary of the Treasury and the Comptroller,\nshall issue rules, consistent with the purposes\nof this Act, to establish--\n ``(I) a list of additional\nactivities that are financial\nactivities for purposes of clause (i),\nincluding applicable digital asset\nactivities that are financial\nactivities; and\n ``(II) a streamlined\nprocedure for a nonbank entity to\nsubmit an activity to the Board for\npurposes of the Board determining\nwhether such activity should be added\nto the list of additional activities\nthat are financial activities for\npurposes of clause (i).'';\nand\n (3) by adding at the end the following:\n\n``SEC. 21. COMMODITY-BACKED PAYMENT STABLECOINS.\n\n ``(a) Rule of Construction.--Nothing in this Act shall be\nconstrued to prohibit or limit a commodity-backed payment stablecoin\nissuer from issuing a commodity-backed payment stablecoin in accordance\nwith regulations established by a State commodity-backed payment\nstablecoin regulator.\n ``(b) Preservation of Federal Authority.--Nothing in this\nsection shall be construed to alter or limit the jurisdiction of the\nCommodity Futures Trading Commission over any matter within the\nCommission's authority under applicable law.\n ``(c) Definitions.--For purposes of this\nsection:\n ``(1) Commodity-backed payment stablecoin.--The\nterm `commodity-backed payment stablecoin' means a digital\nasset--\n ``(A) that is, or is designed to be, used\nas a means of payment or settlement;\n ``(B) that is denominated in a highly\nliquid, publicly traded physical commodity, such as\ngold;\n ``(C) the issuer of which is obligated\nto--\n ``(i) convert, redeem, or\nrepurchase for a fixed amount of the\ndenominated highly liquid, publicly traded\nphysical commodity; and\n ``(ii) custody or cause to be\ncustodied, for the benefit of the holders of\nthe payment stablecoin, an amount of the\nphysical commodity equal to or greater than the\ntotal amount of outstanding payment\nstablecoins, for the purpose of converting,\nredeeming, or repurchasing the digital asset;\nand\n ``(D) that is not--\n ``(i) a security issued by--\n\n ``(I) an investment\ncompany registered under section 8(a)\nof the Investment Company Act of 1940\n(15 U.S.C. 80a-8(a)); or\n ``(II) a person that would\nbe an investment company under the\nInvestment Company Act of 1940 but for\nparagraphs (1) and (7) of section 3(c)\nof that Act (15 U.S.C. 80a-\n3(c));\n ``(ii) a deposit (as defined under\nsection 3 of the Federal Deposit Insurance Act\n(12 U.S.C. 1813)), regardless of the technology\nused to record such deposit;\n ``(iii) an account (as defined in\nsection 101 of the Federal Credit Union Act (12\nU.S.C. 1752)), regardless of the technology\nused to record such account; or\n ``(iv) an interest or\nparticipation in a commodity pool (as defined\nin section 1a(10) of the Commodity Exchange Act\n(7 U.S.C. 1a)).\n ``(2) Commodity-backed payment stablecoin\nissuer.--The term `commodity-backed payment stablecoin issuer'\nmeans--\n ``(A) an entity that issues a commodity-\nbacked payment stablecoin; and\n ``(B) an entity that is approved to issue\nsuch commodity-backed payment stablecoins by a State\ncommodity-backed payment stablecoin\nregulator.\n ``(3) Physical commodity.--The term `physical\ncommodity' means any exempt commodity (as defined in section\n1a(21) of the Commodity Exchange Act (7 U.S.C. 1a)) which can\nbe physically delivered.\n ``(4) State commodity-backed payment stablecoin\nregulator.--The term `State commodity-backed payment stablecoin\nregulator' means a State agency that has primary regulatory and\nsupervisory authority over entities that issue commodity-backed\npayment stablecoins in such State.\n\n``SEC. 22. PROTECTION OF SELF-CUSTODY.\n\n ``(a) In General.--A United States individual shall retain\nthe right to--\n ``(1) maintain a hardware wallet or software\nwallet for the purpose of facilitating the individual's own\nlawful custody of digital assets; and\n ``(2) engage in direct, peer-to-peer transactions\nin digital assets with another individual or entity for the\nindividual's own lawful purposes using a hardware wallet or\nsoftware wallet, if--\n ``(A) such other individual or entity is\nnot a financial institution (as defined in section 5312\nof title 31, United States Code); and\n ``(B) the transactions do not involve any\nproperty or interests in property that are blocked\npursuant to, or are otherwise prohibited by, United\nStates sanctions.\n ``(b) Application.--This section--\n ``(1) applies solely to personal use by\nindividuals; and\n ``(2) does not apply to individuals acting in a\ncustodial or fiduciary capacity for others.\n ``(c) Rule of Construction.--Nothing in this section shall\nbe construed to limit the authority of the Secretary of the Treasury,\nthe Securities and Exchange Commission, the Commodity Futures Trading\nCommission, or the primary Federal payment stablecoin regulators to\ncarry out any enforcement action or special measure authorized under\napplicable law, including--\n ``(1) the Bank Secrecy Act, section 9714 of the\nCombating Russian Money Laundering Act (31 U.S.C. 5318A note),\nand section 7213A of the Fentanyl Sanctions Act (21 U.S.C.\n2313a); or\n ``(2) any other law relating to illicit finance,\nmoney laundering, terrorism financing, or United States\nsanctions.''.\n\nTITLE VI--ANTI-CBDC SURVEILLANCE STATE ACT\n\nSEC. 601. SHORT TITLE.\n\n This title may be cited as the ``Anti-CBDC Surveillance\nState Act''.\n\nSEC. 602. PROHIBITION ON FEDERAL RESERVE BANKS RELATING TO\nCERTAIN PRODUCTS OR SERVICES FOR INDIVIDUALS AND\nPROHIBITION ON DIRECTLY ISSUING A CENTRAL BANK DIGITAL\nCURRENCY.\n\n Section 16 of the Federal Reserve Act (12 U.S.C. 411 et\nseq.) is amended by adding at the end the following new\nparagraph:\n ``(18)(A) A Federal reserve bank may not--\n ``(i) offer financial products or services directly to an\nindividual;\n ``(ii) maintain an account on behalf of an individual;\nor\n ``(iii) issue a central bank digital currency, or any\ndigital asset that is substantially similar under any other name or\nlabel.\n ``(B) In this paragraph, the term `central bank digital\ncurrency' has the meaning given that term under section\n10(11)(D).''.\n\nSEC. 603. PROHIBITION ON FEDERAL RESERVE BANKS INDIRECTLY\nISSUING A CENTRAL BANK DIGITAL CURRENCY.\n\n Section 16 of the Federal Reserve Act (12 U.S.C. 411 et\nseq.), as amended by section 2, is further amended by adding at the end\nthe following paragraph:\n ``(19)(A) A Federal reserve bank may not offer a central\nbank digital currency, or any digital asset that is substantially\nsimilar under any other name or label, indirectly to an individual\nthrough a financial institution or other intermediary.\n ``(B) In this paragraph, the term `central bank digital\ncurrency' has the meaning given that term under section\n10(11)(D).''.\n\nSEC. 604. PROHIBITION WITH RESPECT TO CENTRAL BANK DIGITAL\nCURRENCY.\n\n Section 10 of the Federal Reserve Act (12 U.S.C. 241 et\nseq.) is amended by inserting before paragraph (12) the\nfollowing:\n ``(11) Prohibition with respect to central bank\ndigital currency.--\n ``(A) In general.--The Board of Governors\nof the Federal Reserve System may not test, study,\ndevelop, create, or implement a central bank digital\ncurrency, or any digital asset that is substantially\nsimilar under any other name or label.\n ``(B) Monetary policy.--The Board of\nGovernors of the Federal Reserve System and the Federal\nOpen Market Committee may not use a central bank\ndigital currency to implement monetary policy, or any\ndigital asset that is substantially similar under any\nother name or label.\n ``(C) Exception.--Subparagraph (A) and\nsections 16(18)(A)(iii) and 16(19)(A) may not be\nconstrued to prohibit any dollar-denominated currency\nthat is open, permissionless, and private, and fully\npreserves the privacy protections of United States\ncoins and physical currency.\n ``(D) Central bank digital currency\ndefined.--In this paragraph, the term `central bank\ndigital currency' means a form of digital money or\nmonetary value that is--\n ``(i) denominated in the national\nunit of account;\n ``(ii) a direct liability of the\nFederal Reserve System; and\n ``(iii) widely available to the\ngeneral public.''.\n\nSEC. 605. SENSE OF CONGRESS.\n\n It is the sense of Congress that the Board of Governors of\nthe Federal Reserve System currently does not have the authority to\nissue a central bank digital currency, or any digital asset that is\nsubstantially similar under any other name or label, and will not have\nsuch authority unless Congress grants it under Congress's Article 1\nSection 8 powers.\n\nSECTION 1. SHORT TITLE; TABLE OF CONTENTS.\n\n(a) Short Title.--This Act may be cited as the ``Digital Asset\nMarket Clarity Act''.\n(b) Table of Contents.--The table of contents for this Act is as\nfollows:\n\nSec. 1. Short title; table of contents.\nSec. 2. Definitions.\n\nTITLE I--RESPONSIBLE SECURITIES INNOVATION\n\nSec. 101. Short title.\nSec. 102. Disclosure requirements for certain transactions involving\nancillary assets.\nSec. 103. Exemption and rulemaking for certain transactions involving\nancillary assets.\nSec. 104. Special disposition restrictions by related persons.\nSec. 105. Characteristics of network tokens.\nSec. 106. Exemptive authority.\nSec. 107. Modernization of recordkeeping requirements.\nSec. 108. Modernization of securities regulations for digital asset\nactivities.\nSec. 109. Insider trading with respect to ancillary asset transactions.\nSec. 110. Securities Investor Protection Corporation applicability.\nSec. 111. Investor and consumer protection enforcement.\n\nTITLE II--PROTECTING AGAINST ILLICIT FINANCE\n\nSec. 201. Treatment under the Bank Secrecy Act and sanctions laws.\nSec. 202. Digital asset examination standards.\nSec. 203. Preventing Illicit Finance Through Partnership Act.\nSec. 204. Financial Technology Protection Act.\nSec. 205. Digital asset kiosks.\nSec. 206. Study on illicit use of digital assets.\n\nTITLE III--RESPONSIBLE INNOVATION IN DECENTRALIZED FINANCE\n\nSec. 301. Rulemaking on application of existing securities intermediary\nrequirements and existing Bank Secrecy Act\nrequirements to non-decentralized finance\ntrading protocols.\nSec. 302. Illicit finance obligations for distributed ledger messaging\nsystems.\nSec. 303. Special measure relating to certain transmittals of funds.\nSec. 304. Offshore stablecoin report.\nSec. 305. Temporary hold for certain digital asset transactions.\nSec. 306. Voluntary cybersecurity program for decentralized finance\ntrading protocols.\nSec. 307. Amendments to monetary instrument definition.\nSec. 308. Risk management standards for digital asset intermediaries.\nSec. 309. Study on digital asset mixers and tumblers.\nSec. 310. GAO study on intermediaries in foreign jurisdictions.\nSec. 311. Studies on foreign adversary activities.\nSec. 312. Treasury study on cybersecurity standards.\nSec. 313. Studies on financial stability risks of decentralized finance\ntrading and credit in digital commodity\nmarkets.\n\nTITLE IV--RESPONSIBLE BANKING INNOVATION\n\nSec. 401. Permissibility of digital asset activities.\nSec. 402. Joint rules for portfolio margining determinations.\nSec. 403. Capital requirements to address netting agreements.\nSec. 404. Prohibiting interest and yield on payment stablecoins.\nSec. 405. Expanded securities portfolio margin accounts under the\nSecurities Investor Protection Act of 1970.\n\nTITLE V--RESPONSIBLE REGULATORY INNOVATION\n\nSec. 501. CFTC-SEC Micro-Innovation Sandbox.\nSec. 502. International cooperation.\nSec. 503. Automated regulatory compliance study.\nSec. 504. Report on legislative recommendations.\nSec. 505. Tokenization of securities.\nSec. 506. Voluntary adoption of National Institute of Standards and\nTechnology post-quantum cryptography\nstandards.\nSec. 507. International coordination to combat digital asset illicit\nfinance.\nSec. 508. Annual report on foreign digital asset trading volume,\ncompliance with United States standards and\nremediation actions.\nSec. 509. AI innovation labs.\n\nTITLE VI--PROTECTING SOFTWARE DEVELOPERS AND SOFTWARE INNOVATION\n\nSec. 601. Protecting software developers.\nSec. 602. Safe harbor for nonfungible tokens.\nSec. 603. Study on nonfungible tokens.\nSec. 604. Blockchain Regulatory Certainty Act.\nSec. 605. Keep Your Coins Act.\n\nTITLE VII--PROTECTING CUSTOMER PROPERTY\n\nSec. 701. Customer property protections for ancillary assets and\ndigital commodities in bankruptcy.\nSec. 702. Insolvency safe harbor.\n\nTITLE VIII--CUSTOMER PROTECTION\n\nSec. 801. Educational materials.\nSec. 802. Savings clauses.\nSec. 803. Study on expanding financial literacy.\nSec. 804. Consultation with SIPC regarding mandatory broker-dealer\ndisclosures to investors concerning the\nstatus of payment stablecoins and digital\ncommodities.\n\nTITLE IX--OTHER MATTERS\n\nSec. 901. Joint Advisory Committee on Digital Assets.\nSec. 902. Memorandum of understanding.\nSec. 903. FinCEN appropriations.\nSec. 904. Build Now Act.\nSec. 905. Rulemakings.\nSec. 906. Effective date.\n\nSEC. 2. DEFINITIONS.\n\nIn this Act:\n(1) Ancillary asset; ancillary asset originator; network\ntoken.--The terms ``ancillary asset'', ``ancillary asset\noriginator'', and ``network token'' have the meanings given\nthose terms in section 4B(a) of the Securities Act of 1933, as\nadded by this Act.\n(2) Bank secrecy act.--The term ``Bank Secrecy Act''\nmeans--\n(A) section 21 of the Federal Deposit Insurance Act\n(12 U.S.C. 1829b);\n(B) chapter 2 of title I of Public Law 91-508 (12\nU.S.C. 1951 et seq.); and\n(C) subchapter II of chapter 53 of title 31, United\nStates Code.\n(3) Commission.--Except where otherwise expressly provided,\nthe term ``Commission'' means the Securities and Exchange\nCommission.\n(4) Coordinated control.--With respect to any distributed\nledger system and a related ancillary asset, the term\n``coordinated control'' has the meaning given the term by the\nCommission pursuant to rules adopted under section 104(b).\n(5) Decentralized governance system.--\n(A) In general.--The term ``decentralized\ngovernance system'' means, with respect to a\ndistributed ledger system, any transparent, rules-based\nsystem permitting persons to form consensus or reach\nagreement in the development, provision, publication,\nmaintenance, or administration of the distributed\nledger system, in which participation is not limited\nto, or under the control of, any person or group of\npersons under common control.\n(B) Relationship of persons to decentralized\ngovernance systems.--With respect to a decentralized\ngovernance system, the decentralized governance system\nand any persons participating in the decentralized\ngovernance system shall be treated as separate persons\nunless those persons are under common control or acting\npursuant to an agreement to act in concert.\n(C) Legal entities for decentralized governance\nsystems.--The term ``decentralized governance system''\nshall include a legal entity, including a decentralized\nunincorporated nonprofit association or other entity\ncreated pursuant to State law, used to implement the\nrules-based system described in subparagraph (A),\nprovided that the legal entity does not operate\npursuant to centralized management. For the purposes of\nthis subparagraph, the delegation of ministerial or\nadministrative authority at the direction of the\nparticipants in a decentralized governance system shall\nnot be construed to be centralized management.\n(D) Rule of construction.--For purposes of this\nAct, and the amendments made by this Act, a\ndecentralized governance system shall not be deemed to\nbe a person or a group of persons acting under common\ncontrol.\n(6) Digital asset; digital asset service provider.--The\nterms ``digital asset'' and ``digital asset service provider''\nhave the meanings given those terms in section 2 of the GENIUS\nAct (12 U.S.C. 5901).\n(7) Digital asset intermediary.--The term ``digital asset\nintermediary'' means a person that is engaged in digital asset\nactivities and required by law to register with the Commodity\nFutures Trading Commission or with the Commission under the\nSecurities Exchange Act of 1934 (15 U.S.C. 78a et seq.).\n(8) Digital commodity.--The term ``digital commodity'' has\nthe meaning given the term in section 1a of the Commodity\nExchange Act (7 U.S.C. 1a), as added by this Act.\n(9) Distributed ledger.--The term ``distributed ledger''\nmeans technology--\n(A) through which data is shared across a network\nthat creates a public digital ledger of verified\ntransactions or information among network participants;\nand\n(B) in which cryptography is used to link the data\ndescribed in subparagraph (A) to--\n(i) maintain the integrity of the digital\nledger described in that subparagraph; and\n(ii) execute other functions.\n(10) Distributed ledger application.--The term\n``distributed ledger application'' means executable software\nthat is deployed to and maintained on a distributed ledger and\ncomposed of source code that is publicly available, including a\nsmart contract or any network of smart contracts, or other\nsimilar technology.\n(11) Distributed ledger protocol.--The term ``distributed\nledger protocol'' means publicly available source code of a\ndistributed ledger that is executed by the network participants\nof a distributed ledger to facilitate its functioning, or other\nsimilar technology.\n(12) Distributed ledger system.--The term ``distributed\nledger system'' means a distributed ledger (together with its\ndistributed ledger protocol), a distributed ledger application,\nor a network of distributed ledger applications.\n(13) Related person.--The term ``related person'', with\nrespect to an ancillary asset originator or an ancillary\nasset--\n(A) means--\n(i) any person that is, or within the\npreceding 36-month period was--\n(I) a founder or person serving in\na similar capacity with respect to the\nancillary asset originator; and\n(II) a beneficial owner of not less\nthan 4 percent of the total amount of\noutstanding units of an ancillary asset\nassociated with the ancillary asset\noriginator;\n(ii) any person that is, or in the\npreceding 12-month period was, an executive\nofficer, director, trustee, general partner,\nowner of more than 10 percent of any class of\nequity shares of the ancillary asset\noriginator, or person serving in a similar\ncapacity with respect to the ancillary asset\noriginator;\n(iii) any person, or group of persons under\ncommon control, that beneficially owns, or in\nthe preceding 6-month period owned, 10 percent\nor more of the total amount of outstanding\nunits of the ancillary asset; and\n(iv) any person, or group of persons under\ncommon control, that beneficially owns, or in\nthe preceding 6-month period owned, covered\ntokens (as that term is defined in section\n104(a)) that equal not less than 2 percent of\nthe total amount of outstanding units of the\nancillary asset; and\n(B) does not include a decentralized governance\nsystem.\n(14) Securities laws.--The term ``securities laws'' has the\nmeaning given the term in section 3(a) of the Securities\nExchange Act of 1934 (15 U.S.C. 78c(a)).\n(15) Smart contract.--The term ``smart contract'' means a\nself-executing contract or program that--\n(A) is stored on a distributed ledger system; and\n(B) automatically executes or enforces digital\nasset transactions upon the occurrence of explicit,\npre-determined conditions encoded in the contract or\nprogram, without intervention, other than to provide\ndata, by any entity or natural person.\n\nTITLE I--RESPONSIBLE SECURITIES INNOVATION\n\nSEC. 101. SHORT TITLE.\n\nThis title may be cited as the ``Lummis-Gillibrand Responsible\nFinancial Innovation Act of 2026''.\n\nSEC. 102. DISCLOSURE REQUIREMENTS FOR CERTAIN TRANSACTIONS INVOLVING\nANCILLARY ASSETS.\n\n(a) In General.--The Securities Act of 1933 (15 U.S.C. 77a et seq.)\nis amended by inserting after section 4A (15 U.S.C. 77d-1) the\nfollowing:\n\n``SEC. 4B. REQUIREMENTS WITH RESPECT TO CERTAIN TRANSACTIONS INVOLVING\nANCILLARY ASSETS.\n\n``(a) Definitions.--In this section:\n``(1) Ancillary asset.--The term `ancillary asset' means a\nnetwork token, the value of which is dependent upon the\nentrepreneurial or managerial efforts of an ancillary asset\noriginator or a related person, as those concepts are further\nspecified by the Commission by regulation.\n``(2) Ancillary asset originator.--\n``(A) In general.--The term `ancillary asset\noriginator' means, with respect to a particular\nancillary asset, a person that (whether directly or\nthrough 1 or more subsidiary or controlled entities)--\n``(i) initially offers, sells, or\ndistributes the ancillary asset; or\n``(ii) during the 12-month period beginning\non the date on which the ancillary asset is\ninitially offered, sold, or distributed,\ncontrols or causes the initial offer, sale, or\ndistribution of that ancillary asset.\n``(B) Joint and several liability.--For the\npurposes of this paragraph, if the person that\ninitially offered, sold, or distributed an ancillary\nasset (or otherwise sold, distributed, controlled, or\ncaused the initial offer, sale, or distribution of the\nancillary asset) did not receive the largest amount of\nthose ancillary assets distributed in the 12-month\nperiod following the commencement of that offer, sale,\nor distribution, then that person, solely for purposes\nof subsection (c), shall be jointly and severally\nconsidered to be an ancillary asset originator with\nrespect to that ancillary asset (with the person that\ncontrolled such offer, sale, or distribution) along\nwith the person (including a person under direct or\nindirect control of that person) that received the\nlargest amount of those ancillary assets in that\nperiod, other than ancillary assets received--\n``(i) in an intermediary capacity;\n``(ii) solely through a gratuitous\ndistribution;\n``(iii) through an offer, sale, or\ndistribution of a security to the public\nregistered under section 5; or\n``(iv) otherwise in a broad and public\nmanner that the Commission determines, pursuant\nto regulation, should not subject the person to\ndisclosure requirements under subsection (d).\n``(C) Rulemaking.--Not later than 360 days after\nthe date of enactment of this section, the Commission\nshall, after providing notice and the opportunity for\ncomment, issue rules regarding the circumstances under\nwhich persons that are jointly and severally considered\nan ancillary asset originator pursuant to subparagraph\n(B) are responsible for furnishing the disclosures\nrequired under subsection (d) on behalf of the\nancillary asset originator.\n``(3) Certification covered party.--The term `certification\ncovered party' means--\n``(A) an ancillary asset originator;\n``(B) a subsidiary of the ancillary asset\noriginator;\n``(C) a related person of the ancillary asset\noriginator; or\n``(D) any entity that directly or indirectly\ncontrols or is controlled by a common entity with the\nancillary asset originator.\n``(4) Decentralized governance system; digital asset;\ndigital asset intermediary; related person; securities laws.--\nThe terms `decentralized governance system', `digital asset',\n`digital asset intermediary', `related person', and `securities\nlaws' have the meanings given those terms in section 2 of the\nDigital Asset Market Clarity Act.\n``(5) Gratuitous distribution.--\n``(A) In general.--The term `gratuitous\ndistribution'--\n``(i) means a distribution of a network\ntoken, including a distribution effected by an\nagent or other service provider engaged solely\nin an administrative or ministerial capacity,\nin exchange for not more than a nominal value\nof cash, property, services, or other assets in\na broad, equitable, and non-discretionary\nmanner; and\n``(ii) includes, without limitation, the\nmechanisms and methods of distribution\ndescribed in subparagraph (B).\n``(B) Mechanisms and methods of distribution.--The\nmechanisms and methods of distribution described in\nthis subparagraph are the following:\n``(i) Self staking.--The distribution of a\nunit of a network token, as a programmatic\nresult of validating or staking activity for a\ndistributed ledger system's consensus\nmechanism, including the staking of a network\ntoken, and the operation of a node, validator,\nor substantially similar software for such\nactivity where the owner of the staked network\ntoken and the operator of the node, validator,\nor substantially similar software are the same\nperson or entity.\n``(ii) Self-custodial staking with a third\nparty.--The distribution of a unit of a network\ntoken, as a programmatic result of validating\nor staking activity for a distributed ledger\nsystem's consensus mechanism, including the\nstaking of a network token, and the operation\nof a node, validator, or substantially similar\nsoftware for such activity in which--\n``(I) the owner of the staked\nnetwork token, and operator of the\nnode, validator, or substantially\nsimilar software for such activity are\ndifferent persons or entities; and\n``(II) the operator of the node,\nvalidator, or substantially similar\nsoftware does not maintain custody or\ncontrol of the staked network token.\n``(iii) Liquid staking.--The distribution\nof network tokens, as the issuance, transfer,\nor redemption of liquid staking tokens\nrepresenting a pro rata interest in staked\nnetwork tokens, and their associated rewards,\nprovided that such tokens are issued as\nadministrative or ministerial receipts and are\nnot providing discretionary management\nauthority.\n``(iv) Custodial and ancillary staking\nservices.--\n``(I) In general.--Subject to the\nrules issued pursuant to subclause\n(II), the provision of custodial or\nancillary staking services enabling the\nowner of a network token to participate\nin validating or staking activity for a\ndistributed ledger system's consensus\nmechanism that results in the\nprogrammatic distribution of a unit of\na network token, provided that such\ncustodial or ancillary services are\nexclusively administrative or\nministerial in nature.\n``(II) Rulemaking to define the\ncustodial and ancillary staking\nservices.--The Commission shall issue\nrules defining the custodial and\nancillary staking services described in\nsubclause (I) that are exclusively\nadministrative or ministerial in\nnature, consistent with what is\nnecessary or appropriate for the public\ninterest or for the protection of\ninvestors.\n``(v) Programmatic and automated\ndistributions.--The automated, programmatic,\nprotocol-defined, or rules-based distribution\nof network tokens achieved through the\ntransparent functioning of a distributed ledger\nsystem, a distributed ledger, or distributed\nledger applications, in which--\n``(I) distributions occur pursuant\nto public, transparent, rules-based\nparameters that are publicly available\nand are accessible on a permissionless\nbasis, without individualized or real-\ntime negotiation with recipients;\n``(II) recipients receive network\ntokens as a direct, programmatic result\nof objective, verifiable network\nparticipation, consumption, or\ncontribution, including consensus\nparticipation, data availability,\nbandwidth, governance, or use and\ninteraction with the protocol or\napplication;\n``(III) the number of network\ntokens received is proportionate to the\nverifiable service, usage, or\ncontribution;\n``(IV) any expected utility or\nvalue of the network tokens arises\nprimarily from decentralized network\nparticipation and market forces, rather\nthan the discretionary actions of any\nsingle person or affiliated group; and\n``(V) no person or group has\nunilateral authority to alter,\nrestrict, or direct the issuance\nparameters or distribution mechanisms\nof the distributed ledger system, and\nany modification occurs only through a\ndecentralized governance system.\n``(vi) Technology-neutral clause.--The\ndistribution employing a mechanism, protocol,\nor technology not specifically described in\nclauses (i) through (v), without regard to\nwhether such mechanism, protocol, or technology\nis in existence at the time of enactment of\nthis section, and without regard to terminology\nor underlying technical framework, provided\nsuch distribution meets the requirements\ndescribed in subparagraph (A)(i).\n``(6) Investment company.--The term `investment company'\nhas the meaning given the term in section 3(a) of the\nInvestment Company Act of 1940 (15 U.S.C. 80a-3(a)).\n``(7) Network token.--\n``(A) In general.--The term `network token' means a\ndigital commodity that is intrinsically linked to a\ndistributed ledger system and that derives, or is\nreasonably expected to derive, its value from the use\nof such distributed ledger system, and, pursuant to the\nDigital Asset Market Clarity Act and the amendments\nmade by the Digital Asset Market Clarity Act, is\ntreated as a non-security solely for purposes of the\nsecurities laws.\n``(B) Disqualifying financial rights.--The term\n`network token' does not include any of the following:\n``(i) Any security, consistent with the\ncategories of disqualifying financial rights\ndescribed in clause (ii).\n``(ii) An investment contract or a\ncertificate of interest or participation in any\nprofit-sharing agreement that represents, gives\nthe holder, or is substantially economically or\nfunctionally equivalent to, any of the\nfollowing, as the Commission shall establish by\nrule:\n``(I) A debt or equity interest, or\nan option on a debt or equity interest,\nin a person.\n``(II) Liquidation rights with\nrespect to a person.\n``(III) An entitlement to, or a\nreasonable expectation of, an interest,\ndividend, or other payment, or direct\nor indirect transfer of value, from a\nperson (other than a decentralized\ngovernance system).\n``(IV) An express or implied\nfinancial interest in (including a\nlimited partnership interest or\ninterest in intellectual property of),\nor provided by, a person (other than a\ndecentralized governance system).\n``(iii) Any interest that is, represents,\nor is functionally equivalent to an interest in\nan investment company or a company (as defined\nin section 2 of the Investment Company Act of\n1940 (15 U.S.C. 80a-2)) that would be an\ninvestment company under section 3(a) of that\nAct (15 U.S.C. 80a-3(a)) but for the exclusions\nprovided from that definition by section 3(c)\nof that Act (15 U.S.C. 80a-3(c)).\n``(iv) Any interest that is, represents, or\nis functionally equivalent to an interest in\nany entity or person that is not an investment\ncompany but holds or will hold assets other\nthan securities.\n``(C) Rule of construction.--A digital commodity--\n``(i) shall be deemed to be intrinsically\nlinked to a distributed ledger system if the\ndigital commodity is directly related to the\nfunctionality or operation of the distributed\nledger system or to the activities or services\nfor which the distributed ledger system is\ncreated or utilized; and\n``(ii) shall not be disqualified from being\ndeemed a network token due to the granting of\neconomic interests or voting capabilities with\nrespect to a distributed ledger system or its\ndecentralized governance system, as further\nclarified by the Commission through the final\nrules adopted under section 105 of the Lummis-\nGillibrand Responsible Financial Innovation Act\nof 2026.\n``(b) Treatment of Network Tokens and Transactions.--\n``(1) In general.--The offer, sale, or distribution of an\nancillary asset by, or caused by, an ancillary asset\noriginator, including through an underwriter, shall be\nconsidered to be an offer, sale, or distribution of an\ninvestment contract involving an ancillary asset, except with\nrespect to a gratuitous distribution.\n``(2) Treatment as non-security.--Except as provided in\nthis section, and subject to paragraph (3), a network token\nshall be treated as a non-security, to the extent materially\nconsistent with the requirements and conditions of this\nsection, for purposes of --\n``(A) section 2(a)(1);\n``(B) section 3(a) of the Securities Exchange Act\nof 1934 (15 U.S.C. 78c(a));\n``(C) section 2(a) of the Investment Company Act of\n1940 (15 U.S.C. 80a-2(a));\n``(D) section 202(a) of the Investment Advisers Act\nof 1940 (15 U.S.C. 80b-2(a));\n``(E) section 16 of the Securities Investor\nProtection Act of 1970 (15 U.S.C. 78lll); or\n``(F) any applicable requirement of State law that\nis functionally equivalent to the provisions described\nin subparagraphs (A) through (E), including any\nprovision of State law that directly or indirectly\nprohibits, limits, or imposes any conditions on the\nuse, offer, sale, transfer, or disposition of a network\ntoken in a manner that is--\n``(i) not substantially similar to\nprohibitions, limitations, or conditions\nimposed by that State relating to assets that\nare commodities under the laws of that State;\nand\n``(ii) inconsistent with this section.\n``(3) Secondary market treatment.--\n``(A) In general.--Except as provided in this\nsection (including the limitation under subparagraph\n(B)), and to the extent materially consistent with the\nrequirements and conditions of this section, the offer,\nsale, or distribution of a network token by a person\nshall be treated as not involving the offer, sale, or\ndistribution of a security under--\n``(i) section 2(a)(1);\n``(ii) the Securities Exchange Act of 1934\n(15 U.S.C. 78a et seq.);\n``(iii) the Investment Company Act of 1940\n(15 U.S.C. 80a-1 et seq.);\n``(iv) the Investment Advisers Act of 1940\n(15 U.S.C. 80b-1 et seq.);\n``(v) the Securities Investor Protection\nAct of 1970 (15 U.S.C. 78aaa et seq.); and\n``(vi) any applicable requirement of State\nlaw that is functionally equivalent to the\nprovisions described in clauses (i) through\n(v), including any provision of State law that\ndirectly or indirectly prohibits, limits, or\nimposes any conditions on the use, offer, sale,\ntransfer, or disposition of a network token in\na manner that is--\n``(I) not substantially similar to\nprohibitions, limitations, or\nconditions imposed by that State\nrelating to assets that are commodities\nunder the laws of that State; and\n``(II) inconsistent with this\nsection.\n``(B) Limitation.--Subparagraph (A) shall not apply\nif the applicable network token is offered, sold, or\ndistributed pursuant to the offer, sale, or\ndistribution of a security by an ancillary asset\noriginator or underwriter.\n``(4) Treatment of gratuitous distributions.--\n``(A) In general.--A gratuitous distribution, by\nitself, shall be presumed to not constitute an offer,\nsale, or distribution of a security for the purposes\nof--\n``(i) section 2(a)(1);\n``(ii) section 3(a) of the Securities\nExchange Act of 1934 (15 U.S.C. 78c(a));\n``(iii) section 2(a) of the Investment\nCompany Act of 1940 (15 U.S.C. 80a-2(a));\n``(iv) section 202(a) of the Investment\nAdvisers Act of 1940 (15 U.S.C. 80b-2(a));\n``(v) section 16 of the Securities Investor\nProtection Act of 1970 (15 U.S.C. 78lll); or\n``(vi) any applicable requirement of State\nlaw, or any provision of State law that is\nfunctionally equivalent to the provisions\ndescribed in clauses (i) through (v), including\nany provision of State law that directly or\nindirectly prohibits, limits, or imposes any\nconditions on the use, offer, sale, transfer,\nor disposition of a network token in a manner\nthat is--\n``(I) not substantially similar to\nprohibitions, limitations, or\nconditions imposed by that State\nrelating to assets that are commodities\nunder the laws of that State; and\n``(II) inconsistent with this\nsection.\n``(B) Savings clause.--Nothing in this paragraph\nmay be construed to limit, impair, or otherwise affect\nthe anti-fraud or anti-manipulation authorities of the\nCommission, the Commodity Futures Trading Commission,\nor a State regulator.\n``(5) Prior certification.--\n``(A) Submission and default treatment.--\n``(i) In general.--\n``(I) Presumption.--For purposes of\nthis section, there shall be a\nrebuttable presumption that a network\ntoken, including a network token\ndistributed in the manner described in\nparagraph (4), is an ancillary asset\nunless the originator of that network\ntoken, or a digital asset intermediary\n(as provided under subsection (c)(4)),\nsubmits to the Commission a completed\nwritten certification, supported by\nreasonable evidence, as defined by the\nCommission, sufficient to demonstrate\nthat the network token is not an\nancillary asset.\n``(II) Contents.--A certification\nsubmitted under subclause (I) shall\ninclude a statement in accordance with\nsubsection (d)(3)(B)(i).\n``(ii) Notification.--The Commission shall\nnotify the Commodity Futures Trading Commission\nof each certification made pursuant to clause\n(i) and of any final agency action with respect\nto that certification.\n``(iii) Reciprocal notice.--The Commission\nshall receive a copy of any certification and\nsupporting materials submitted to the Commodity\nFutures Trading Commission under section 203(d)\nof the Digital Commodity Intermediaries Act.\n``(B) Automatic effectiveness.--A certification\nsubmitted under subparagraph (A) by an originator or a\ndigital asset intermediary shall become effective upon\nthe earlier of--\n``(i) the date on which the Commission\nnotifies the originator or digital asset\nintermediary in writing that the Commission\ndoes not object to the certification; or\n``(ii) if the Commission has not issued a\nrebuttal to the originator or digital asset\nintermediary in accordance with subparagraph\n(C), 60 days after the date on which the\noriginator or digital asset intermediary\nsubmits the certification.\n``(C) Commission denial.--\n``(i) Authority to deny.--Subject to\nclauses (ii) and (iii), the Commission may deny\na certification submitted under subparagraph\n(A) by an originator or digital asset\nintermediary only during the 60-day period\ndescribed in subparagraph (B)(ii) or upon\ndetermining, based on reasonable evidence, that\na material change in circumstances has occurred\nafter the submission of the certification,\nwhether or not the certification has taken\neffect.\n``(ii) Notice of intent to deny.--If the\nCommission intends to deny a certification\nsubmitted under subparagraph (A), the\nCommission shall--\n``(I) either not later than 20\nbusiness days after the date on which\nthe certification is submitted, or\npromptly after determining that a\nmaterial change in circumstances has\noccurred, provide to the applicable\noriginator or digital asset\nintermediary notice of the intent of\nthe Commission to deny that\ncertification; and\n``(II) provide to the applicable\noriginator or digital asset\nintermediary a 10-day period following\nthe provision of notice under subclause\n(I) during which--\n``(aa) interested persons\nshall have an opportunity to\nsubmit written data, views, and\narguments relating to that\ncertification; and\n``(bb) the Commodity\nFutures Trading Commission may,\nat the discretion of the\nCommodity Futures Trading\nCommission, submit input\nregarding whether the\napplicable asset--\n\n``(AA) satisfies\nthe requirements for\nbeing considered an\nancillary asset; or\n\n``(BB) includes any\ndisqualifying financial\nright described in\nsubsection (a)(7)(B).\n\n``(iii) Requirements after notice of\nintent.--After the 10-day period described in\nclause (ii)(II), the Commission shall--\n``(I) upon request of the\napplicable originator or digital asset\nintermediary, provide an opportunity\nfor the oral presentation of data,\nviews, and arguments by certification\ncovered parties;\n``(II) have a vote of the\nCommission (which, notwithstanding\nsection 4A of the Securities Exchange\nAct of 1934 (15 U.S.C. 78d-1), may not\nbe delegated to an employee or employee\nboard or to any individual\nCommissioner) to deny the certification\nafter a finding that the applicable\nasset--\n``(aa) is an ancillary\nasset; or\n``(bb) includes any\ndisqualifying financial right\ndescribed in subsection\n(a)(7)(B); and\n``(III) notify the Commodity\nFutures Trading Commission of each\ndenial made under subclause (II).\n``(iv) Interested person.--For purposes of\nthis subparagraph, the term `interested person'\nmeans, with respect to a network token--\n``(I) the ancillary asset\noriginator with respect to that network\ntoken (referred to in this clause as\n`the originator');\n``(II) a subsidiary of the\noriginator;\n``(III) a related person of the\noriginator;\n``(IV) any entity that directly or\nindirectly controls or is controlled by\na common entity with the originator;\n``(V) any broker or dealer (as\nthose terms are defined in section 3(a)\nof the Securities Exchange Act of 1934\n(15 U.S.C. 78c(a))), or an exchange\nregistered pursuant to section 6 of\nthat Act (15 U.S.C. 78f), that operates\nin connection with digital assets; or\n``(VI) any person registered with\nthe Commodity Futures Trading\nCommission that operates or proposes to\noperate in connection with digital\nassets.\n``(D) Certification filed by digital asset\nintermediary.--\n``(i) In general.--A certification\nsubmitted by a digital asset intermediary under\nthis paragraph shall only become effective if--\n``(I) the digital asset\nintermediary has--\n``(aa) conducted a\nreasonable inquiry of publicly\navailable information,\nappropriate under the\ncircumstances, regarding\nwhether the applicable\noriginator has engaged in\nentrepreneurial and managerial\nefforts with respect to the\napplicable network token during\nthe most recent 180-day period,\nor is likely to engage in those\nefforts in the future; and\n``(bb) concluded that the\nefforts described in item (aa)\nhave not occurred or are not\nreasonably likely to occur; and\n``(II) subject to clause (ii), the\napplicable originator has certified\nthat there is not (and, during the most\nrecent 180-day period, there has not\nbeen) material, non-public information\nregarding entrepreneurial or managerial\nefforts with respect to the applicable\nnetwork token in the possession of the\noriginator or a related party.\n``(ii) Limitation.--Clause (i)(II) shall\nnot be required if the applicable digital asset\nintermediary, after a reasonable inquiry,\nappropriate under the circumstances, determines\nthat the applicable originator, or any person\njointly and severally liable pursuant to\nsubsection (a)(2)(B), is not capable of\nsubmitting the applicable certification.\n``(E) Final agency action.--Denial under this\nparagraph constitutes final agency action reviewable\nunder applicable law.\n``(F) Tolling.--Any applicable period specified in\nthis paragraph may be tolled, for periods of not longer\nthan 60 days, during the 3-year period following the\neffective date of the Digital Asset Market Clarity Act,\nupon a showing in writing that the originator or\ndigital asset intermediary has not substantially\nresponded to a request for information from the\nCommission within a reasonable time.\n``(G) Withdrawal.--An originator or digital asset\nintermediary may withdraw a certification submitted\nunder subparagraph (A) at any time before approval.\n``(H) Designated commission office.--The Commission\nshall designate an office that shall--\n``(i) acknowledge receipt of certifications\nsubmitted under subparagraph (A);\n``(ii) support those seeking certification\nunder subparagraph (A) by providing guidance\nregarding the mechanics of preparing and\nsubmitting those certifications; and\n``(iii) route certifications submitted\nunder subparagraph (A), together with any\nassociated comments or recommendations, to the\nappropriate division or office of the\nCommission for review.\n``(I) Misstatements or omissions.--Any material\nmisstatement or omission to state a material fact,\nincluding with respect to continuing compliance, in a\ncertification that has become effective under this\nparagraph shall constitute grounds for the Commission,\nconsistent with the securities laws, to issue an order\ndenying, suspending, or revoking the effectiveness of\nthe certification and to pursue any appropriate\nenforcement action.\n``(c) Disclosure Requirements for Certain Transactions Involving\nAncillary Assets.--\n``(1) Specified initial and periodic disclosure\nrequirements.--\n``(A) In general.--An ancillary asset originator\nshall be subject to the initial and periodic disclosure\nrequirements under subsection (d) upon the occurrence\nof the earlier of the following:\n``(i) Any offer, sale, or distribution of\nan ancillary asset after the effective date of\nthe Digital Asset Market Clarity Act by, or\nthat is caused by, that ancillary asset\noriginator pursuant to--\n``(I) Regulation Crypto, as adopted\npursuant to section 103 of the Lummis-\nGillibrand Responsible Financial\nInnovation Act of 2026;\n``(II) the filing of an effective\nregistration statement under this Act;\n``(III) the filing of an offering\nstatement described in section 3(b)(2);\nor\n``(IV) an offering conducted\npursuant to section 4(a)(6).\n``(ii)(I) The first secondary market offer,\nsale, or distribution of an ancillary asset in\nthe United States after the effective date of\nthe Digital Asset Market Clarity Act that\nconstitutes a public offering, whether by the\nancillary asset originator or any other person.\n``(II) For the purposes of subclause (I),\nthe term `public offering' shall be interpreted\nconsistent with the meaning of that term under\nsection 4(a)(2).\n``(B) Exclusion.--Subparagraph (A) shall not apply\nif--\n``(i) the aggregate gross proceeds from the\noffer, sale, or distribution of the applicable\nancillary asset (together with any related\nassets sold in those offers, sales, or\ndistributions) were $5,000,000 or less\n(adjusted for inflation) during the 12-month\nperiod immediately following the date of the\nfirst such offer, sale, or distribution; or\n``(ii) the average daily aggregate value of\ntrading in the applicable ancillary asset in\nall spot markets open to the public in the\nUnited States for which trading volume is\ngenerally available is $5,000,000 or less\n(adjusted for inflation) during the 12-month\nperiod (or such shorter period as the\nCommission may determine) immediately following\nthe commencement of compliance with the\ndisclosure requirements under subsection (d)\n(as determined pursuant to paragraph (2) of\nthis subsection), based on the knowledge of the\nancillary asset originator after due inquiry\n(or, if the ancillary asset has not yet traded\non spot markets open to the public in the\nUnited States, the trading volume is reasonably\nexpected to be $5,000,000 or less (adjusted for\ninflation) during the 12-month period\nimmediately following the reporting date\nspecified by paragraph (2)).\n``(C) Calculation.--For the purposes of this\nparagraph, the calculation of daily aggregate value\nshall be based on a reasonable calculation of public\ndata.\n``(2) Commencement of compliance with specified initial and\nperiodic disclosure requirements.--\n``(A) In general.--An ancillary asset originator\nsubject to the requirements of paragraph (1) shall\ncomply with the disclosure requirements under\nsubsection (d)--\n``(i) before--\n``(I) any initial offer, sale, or\ndistribution described in paragraph\n(1)(A)(i); or\n``(II) a secondary market offer,\nsale, or distribution described in\nparagraph (1)(A)(ii); and\n``(ii) semiannually thereafter.\n``(B) Exclusion.--The requirements of this\nparagraph shall not apply to an offer, sale, or\ndistribution of an ancillary asset that occurs after\nthe effective date of the Digital Asset Market Clarity\nAct if an ancillary asset originator has submitted a\ncertification under subsection (d)(3)(B) and the\nCommission has not denied that certification within a\n60-day period after the completion of the process under\nthat subsection.\n``(3) Transition rule.--\n``(A) In general.--An ancillary asset originator\nthat initially offered, sold, or distributed (or\notherwise controlled or caused the offer, sale, or\ndistribution of) a security involving an ancillary\nasset before the effective date of the Digital Asset\nMarket Clarity Act shall comply with the periodic\ndisclosure requirements under subsection (d), if\napplicable, beginning on the date that is 1 year after\nthat effective date.\n``(B) Effect on certification.--An ancillary asset\noriginator, or any other certification covered party,\nsubject to this paragraph that meets the requirements\nof subsection (d)(3) may furnish a certification as\nprovided in that subsection without complying with the\nperiodic disclosure requirements under subsection (d),\nif the Commission has not denied that certification\nwithin a 60-day period after the completion of the\nprocess under that subsection.\n``(C) Period of disclosures.--The disclosures\nrequired under subparagraph (A) shall apply with\nrespect to the 3-year period preceding the effective\ndate described in that subparagraph.\n``(4) Digital asset intermediaries.--\n``(A) In general.--Other than as provided under\nsubparagraph (B), with respect to an ancillary asset\nthat is listed for trading on a digital asset\nintermediary, that digital asset intermediary may, in\nlieu of the applicable ancillary asset originator,\nsatisfy the requirements of subsection (d) in\naccordance with such rules as the Commission shall\njointly adopt with the Commodity Futures Trading\nCommission.\n``(B) Allocation of disclosure responsibility.--\n``(i) Originator filings.--A digital asset\nintermediary may not satisfy the requirements\nof subsection (d) in lieu of the applicable\nancillary asset originator, if--\n``(I) the ancillary asset\noriginator is incorporated, organized,\nor otherwise registered under the laws\nof the United States or of any State;\nand\n``(II) the applicable ancillary\nasset is--\n``(aa) offered, sold, or\ndistributed after the effective\ndate of the Digital Asset\nMarket Clarity Act pursuant\nto--\n\n``(AA) an\ninvestment contract\nthat is offered, sold,\nor distributed pursuant\nto Regulation Crypto,\nas adopted pursuant to\nsection 103 of the\nLummis-Gillibrand\nResponsible Financial\nInnovation Act of 2026;\n\n``(BB) the filing\nof an effective\nregistration statement\nunder this Act (other\nthan a registration\nstatement on the form\ndescribed in section\n239.31 or 239.33 of\ntitle 17, Code of\nFederal Regulations, or\nthe successor to either\nsuch form);\n\n``(CC) the filing\nof an offering\nstatement described in\nsection 3(b)(2); or\n\n``(DD) an offering\nconducted pursuant to\nsection 4(a)(6); or\n\n``(bb) first offered or\nsold after the effective date\nof the Digital Asset Market\nClarity Act in a transaction\ndescribed in paragraph\n(1)(A)(ii).\n``(ii) Commission determination.--\n``(I) In general.--If, after\nnotice, comment, and the opportunity\nfor a hearing, the Commission\ndetermines that it is in the public\ninterest or necessary for the\nprotection of investors, including with\nrespect to an ancillary asset\noriginator incorporated or organized in\na foreign jurisdiction, the Commission\nmay require an ancillary asset\noriginator, after a transition period,\nto file the disclosures required under\nsubsection (d).\n``(II) Extraterritorial effect.--\nSubclause (I) shall apply\nextraterritorially.\n``(C) Standard of liability.--Notwithstanding any\nother provision of this Act, it shall be unlawful for a\ndigital asset intermediary to file disclosures under\nsubsection (d) pursuant to this paragraph that contain\nany material misstatement or omission to state a\nmaterial fact required to be stated therein, or\nnecessary to make the statements therein not\nmisleading, unless that digital asset intermediary did\nnot know (and, in the exercise of reasonable care,\ncould not have known) of that misstatement or omission.\n``(5) Failure to comply.--Subject to the requirements of\nthis section, an ancillary asset shall not be listed for\ntrading on a digital asset intermediary if the Commission and\nthe Commodity Futures Trading Commission jointly find that the\nancillary asset originator that initially offered, sold, or\ndistributed the ancillary asset after the effective date of the\nDigital Asset Market Clarity Act (or, if a digital asset\nintermediary is satisfying the requirements of this subsection\nin lieu of that ancillary asset originator in accordance with\nparagraph (4), such digital asset intermediary) has materially\nfailed to furnish the required disclosures under this\nsubsection after a reasonable opportunity to cure, as provided\nby joint rule of the Commission and the Commodity Futures\nTrading Commission in a manner that is consistent with the\nconsiderations under subsection (d)(5).\n``(d) Specified Initial and Periodic Disclosure Requirements.--\n``(1) In general.--\n``(A) Furnishing of information.--An ancillary\nasset originator that is subject to the requirements of\nparagraph (1) or (3) of subsection (c), or a digital\nasset intermediary acting in accordance with subsection\n(c)(4), shall furnish to the Commission, in such form\nas the Commission may prescribe by rule after providing\nnotice and the opportunity for comment, and until the\nrequirement terminates under paragraph (3) of this\nsubsection, the information described in paragraph (2)\nof this subsection, to the extent that the information\nis material and known, or reasonably knowable, to the\nancillary asset originator or digital asset\nintermediary.\n``(B) Requirements for rules.--A rule prescribed\nunder subparagraph (A) shall be reasonably tailored,\nincluding by adjusting the scope, form, and content of\nrequired disclosures, based on--\n``(i) the size of the applicable ancillary\nasset originator in accordance with section\n108(a) of the Lummis-Gillibrand Responsible\nFinancial Innovation Act of 2026;\n``(ii) the aggregate amount of ancillary\nassets offered, sold, or distributed by the\napplicable ancillary asset originator to the\npublic in the United States; and\n``(iii) whether the applicable ancillary\nasset and any related distributed ledger system\nis subject to coordinated control, as defined\nby the Commission pursuant to rules adopted\nunder section 104(b) of the Lummis-Gillibrand\nResponsible Financial Innovation Act of 2026.\n``(2) Categories of information.--The information required\nunder paragraph (1) shall include the following with respect to\nthe applicable ancillary asset originator and the related\nancillary asset:\n``(A) Basic corporate information regarding the\nancillary asset originator and the ancillary asset\nactivities of the ancillary asset originator, which may\ninclude the following items, as the Commission shall\ndetermine by rule:\n``(i) The experience of the ancillary asset\noriginator (or persons controlling the\nancillary asset originator) in developing\nancillary assets.\n``(ii) If the ancillary asset originator\n(or persons controlling the ancillary asset\noriginator) has previously distributed\nancillary assets, information on the subsequent\ndistribution history of those ancillary assets,\nincluding price history, if the information is\npublicly available.\n``(iii) The activities that the ancillary\nasset originator has taken in the relevant\ndisclosure period, and is projecting to take in\nthe 1-year period following the submission of\nthe disclosure, with respect to promoting the\nuse, value, or resale of the ancillary asset\n(including any activity to facilitate the\ncreation or maintenance of a trading market for\nthe ancillary asset and any distributed ledger\nsystem, application, or system that uses the\nancillary asset).\n``(iv) The anticipated cost of the\nactivities of the ancillary asset originator\ndescribed in clause (iii), whether the\nancillary asset originator has unencumbered,\nliquid funds equal to that amount, and, if the\nancillary asset originator does not have those\nfunds, the anticipated plan of operations of\nthe ancillary asset originator for the portion\nof time where those liquid funds are less than\nthe anticipated cost of the activities of the\nancillary asset originator.\n``(v) The experience of the ancillary asset\noriginator with the use of a distributed ledger\nsystem or distributed ledger technology.\n``(vi) The identities and expertise of the\nboard of directors (or equivalent body) and\nsenior management of the ancillary asset\noriginator, the experience or functions of whom\nare material to the development or value of the\nancillary asset, as well as any personnel\nchanges relating to the ancillary asset\noriginator during the period covered by the\ndisclosure.\n``(vii) Financial statements of the\nancillary asset originator that are--\n``(I) if the aggregate amount of\nsuch ancillary assets offered, sold, or\ndistributed to the public does not\nexceed $25,000,000 in gross proceeds,\nreviewed by a public accountant that is\nindependent of the ancillary asset\noriginator; or\n``(II) if the aggregate amount of\nsuch ancillary assets offered, sold, or\ndistributed to the public exceeds\n$25,000,000 in gross proceeds, audited\nby a public accountant that is\nindependent of the ancillary asset\noriginator.\n``(viii) A description of any legal\nproceedings in which the ancillary asset\noriginator is engaged.\n``(ix) Risk factors arising from the\nactivities of the ancillary asset originator\nwith respect to the ancillary asset, and not\ngenerally applicable to other kinds of\nancillary assets, that may limit the utility or\nliquidity of the ancillary asset, investor\ndemand with respect to the ancillary asset, or\nthe market price or value of the ancillary\nasset.\n``(x) Information relating to ownership of\nthe ancillary asset by--\n``(I) persons owning not less than\n10 percent of any class of equity\nsecurity or other ownership interest of\nthe ancillary asset originator; and\n``(II) the board of directors (or\nequivalent body) and senior management\nof the ancillary asset originator, if\nthose individuals, in the aggregate,\nown not less than 5 percent of the\nancillary asset.\n``(xi) For any material transactions\ninvolving the ancillary asset between the\nancillary asset originator and any related\nperson, a description, in the aggregate, of the\nparties, the number of ancillary assets\ninvolved, and a summary of any material\nfeatures of the transactions, including any\nmaterial terms or ongoing obligations.\n``(xii) A summary, in the aggregate by\nyear, of transactions in ancillary assets\nduring the 4-year period preceding the\nfurnishing of the disclosure, by the ancillary\nasset originator and persons that directly or\nindirectly control the ancillary asset\noriginator.\n``(xiii) Purchases or similar acquisitions\nof ancillary assets by the ancillary asset\noriginator and affiliates of the ancillary\nasset originator.\n``(xiv) A statement, made in good faith,\nfrom the chief financial officer of the\nancillary asset originator or equivalent\nofficial, stating whether the ancillary asset\noriginator reasonably expects to maintain or\nhave the financial resources to continue\nbusiness as a going concern for the 12-month\nperiod following the furnishing of the\ndisclosure, absent a change in circumstances.\n``(xv) The current state and timeline for\nthe development of the distributed ledger\nsystem to which the ancillary asset relates,\ndetailing if, how, and when the distributed\nledger system and the related ancillary asset\nare intended to no longer be subject to\ncoordinated control, including by related\npersons, if the distributed ledger system has\nnot yet received a certification under section\n104(d) of the Lummis-Gillibrand Responsible\nFinancial Innovation Act of 2026.\n``(B) Economic and technical information relating\nto the ancillary asset, which may include the following\nitems, as the Commission shall determine by rule:\n``(i) A general description of the\nancillary asset and the distributed ledger\nsystem to which that ancillary asset relates,\nincluding--\n``(I) a plain-English description\nof how the applicable distributed\nledger, distributed ledger system, or\ndistributed ledger application\nfunctions;\n``(II) the intended or known\nfunctionality and uses of the ancillary\nasset and any associated fees for use\nor disposition of the ancillary asset;\n``(III) the market for the\nancillary asset;\n``(IV) other assets or services\nthat may compete with the ancillary\nasset;\n``(V) the total supply of the\nancillary asset or the manner and rate\nof the ongoing production or creation\nof the ancillary asset; and\n``(VI) the governance and consensus\nmechanism for the ancillary asset and\nthat distributed ledger system, if\napplicable, including for validating\ntransactions and implementing changes\nto the distributed ledger system, the\nmethod of generating or mining\nancillary assets, and any process for\nburning or destroying units of the\nancillary asset on a distributed ledger\nsystem.\n``(ii) If the ancillary asset originator\nhas offered, sold, or otherwise provided\nancillary assets to affiliates, investors,\nemployees, intermediaries, or resellers, a\ndescription of the amount of assets offered,\nsold, or otherwise provided to such persons and\na summary of any material resale restrictions\nor other material obligations arising from\nrelated contracts, agreements, or other\narrangements.\n``(iii) If ancillary assets were\ndistributed by the ancillary asset originator\nwithout charge or upon meeting certain\nconditions, a description of the distributions,\nin the aggregate, along with the identity of\nany recipient that received more than 5 percent\nof the total amount of ancillary assets\n(calculated as a percentage of the total supply\nof such asset at the time of distribution).\n``(iv) The amount of ancillary assets owned\nby the ancillary asset originator.\n``(v) For the 12-month period following the\nfurnishing of the disclosure, a description of\nthe current state and anticipated timeline for\nthe development of the distributed ledger\nsystem to which that ancillary asset relates,\nincluding--\n``(I) plans of the ancillary asset\noriginator to support (or to cease\nsupporting) the use or development of\nthe ancillary asset, including markets\nfor the ancillary asset and that\ndistributed ledger system;\n``(II) the various roles that exist\nor are intended to exist in connection\nwith any applicable distributed ledger,\ndistributed ledger system, or\ndistributed ledger application, such as\nusers, service providers, developers,\ntransaction validators, and governance\nparticipants;\n``(III) a discussion of any\nmechanisms by which control or\nauthority are exerted with respect to\nthat distributed ledger system, if\napplicable, or the related ancillary\nasset; and\n``(IV) any critical operational\ndependencies of any applicable\ndistributed ledger, distributed ledger\nsystem, or distributed ledger\napplication or of the related ancillary\nasset.\n``(vi) Risk factors that may materially\naffect the liquidity of the ancillary asset,\ninvestor demand with respect to the ancillary\nasset, or the market price or value of the\nancillary asset.\n``(vii) To the extent available to the\nancillary asset originator, the average daily\nprice for a constant unit of value of the\nancillary asset during the relevant reporting\nperiod, as well as the 12-month high and low\nprices for the ancillary asset, as calculated\nbased on the 3 exchanges with the largest\ntrading volume in that ancillary asset.\n``(viii) If applicable, and subject to\ncybersecurity best practices, information\nrelating to any external audit of the code and\nfunctionality of the ancillary asset, including\nthe entity performing the audit and the\nexperience of the entity in conducting similar\naudits.\n``(ix) Information relating to custodial\nservices available for the ancillary asset.\n``(x) Information on intellectual property\nrights claimed or disputed relating to the\nancillary asset.\n``(xi) A description of the technology\nunderlying the initial distribution and trading\nof the ancillary asset, including the source\ncode for the ancillary asset, if applicable,\nand technical requirements for holding,\naccessing, and transferring the ancillary\nasset.\n``(xii) If applicable, a description of the\nsteps necessary to independently access,\nsearch, and verify the transaction history of\nthe ancillary asset.\n``(C) In addition to the information expressly\nrequired to be included under subparagraphs (A) and\n(B), the ancillary asset originator or digital asset\nintermediary, as applicable, shall provide such further\nmaterial information, if any, as may be necessary to\nensure that the statements made in the disclosure are\nnot, in light of the circumstances under which the\nstatements are made, materially misleading.\n``(3) Termination of requirements.--\n``(A) Termination.--The obligation of an ancillary\nasset originator to provide disclosures under paragraph\n(1) shall terminate on the date that a certification\nbecomes effective under subparagraph (B), including\nthrough an approval or deemed approval.\n``(B) Certification.--\n``(i) In general.--A certification covered\nparty may submit to the Commission a\ncertification, based on the knowledge of the\ncertification covered party after due inquiry\nand supported by reasonable evidence, that\nstates--\n``(I) that--\n``(aa) during the 180-day\nperiod preceding the date on\nwhich the certification covered\nparty submits the\ncertification, and as of the\ndate of submission, no\ncertification covered party has\nengaged in more than a nominal\nlevel of entrepreneurial or\nmanagerial efforts (as defined\nby the Commission by rule),\nwhich shall not, for the\npurposes of this clause,\ninclude providing\nadministrative services alone;\n``(bb) any efforts\ndescribed in item (aa) were not\na primary factor in determining\nthe value of the related\nancillary asset (which may\ninclude that any essential\npromises made by the\ncertification covered party\nhave been fulfilled); and\n``(cc) a certification is\neffective under section 104(d)\nof the Lummis-Gillibrand\nResponsible Financial\nInnovation Act of 2026;\n``(II) in good faith that the\ncertification covered party does not\nreasonably expect there to be any\nefforts that would render the\ncertification covered party unable to\nprovide a new certification following\nthe date of the certification; and\n``(III) that substantially all\nmaterial information that is reasonably\nexpected to contribute to the value of\nthe ancillary assets offered, sold, or\ndistributed to the public by the\nancillary asset originator is, and is\nreasonably expected to remain,\navailable to the public.\n``(ii) Change in circumstances.--\n``(I) Effectiveness of the\ncertification.--A certification under\nclause (i) shall remain effective until\nthe date on which any certification\ncovered party engages in\nentrepreneurial or managerial efforts\nthat would render the certification\ncovered party unable to meet the\nstandards of the certification.\n``(II) New disclosures required.--\nOn and after the date described in\nsubclause (I), the certification\ncovered party undertaking efforts\ndescribed in that subclause shall be\nresponsible for furnishing to the\nCommission the disclosures required\nunder paragraph (1), including a\ndescription of the change in\ncircumstances.\n``(III) Periodic disclosures.--The\nfurnishing of disclosures pursuant to\nsubclause (II) shall restart the\nschedule for periodic disclosures under\nparagraph (1).\n``(IV) Prior certifications.--A\ncertification submitted under clause\n(i) before a change in circumstances\nshall not be deemed false or misleading\nsolely by reason of subsequent\nreengagement under this clause.\n``(iii) Commission denial.--\n``(I) In general.--The Commission\nmay deny a certification submitted\nunder clause (i) by a certification\ncovered party by--\n``(aa) issuing a written\nnotice of objection to the\ncertification submitted under\nclause (i) or upon determining\nthat more than a nominal level\nof entrepreneurial or\nmanagerial efforts has been\nundertaken by any certification\ncovered party after the\nsubmission of the\ncertification; and\n``(bb) providing to the\ncertification covered party 10\ndays notice of the intent of\nthe Commission to deny that\ncertification, during which\nperiod interested persons shall\nhave an opportunity to submit\nwritten data, views, and\narguments relating to that\ncertification.\n``(II) Requirements after notice of\nintent.--After the 10-day period\ndescribed in subclause (I)(bb), the\nCommission shall--\n``(aa) upon request of the\ncertification covered party,\nprovide an opportunity for the\noral presentation of data,\nviews, and arguments by any\ninterested persons; and\n``(bb) have a vote of the\nCommission on whether to grant\nor deny the certification,\nbased on a finding as to\nwhether the applicable\nancillary asset meets the\nstandard for certification\nunder clause (i).\n``(III) Final agency action.--\nDenial under this clause constitutes\nfinal agency action reviewable under\napplicable law.\n``(iv) Deemed approval.--If the Commission\nfails to issue a written notice of objection or\nnon-objection within 90 days after submission\nof a certification under clause (i), the\ncertification shall be deemed approved by the\nCommission.\n``(v) Withdrawal.--A certification covered\nparty may withdraw a certification submitted\nunder clause (i) at any time before that\ncertification is approved or denied.\n``(vi) Designated commission office.--The\nCommission shall designate an office that\nshall--\n``(I) acknowledge the receipt of\ncertifications submitted under clause\n(i);\n``(II) support certification\ncovered parties seeking certification\nunder clause (i) by providing guidance\nregarding the mechanics of preparing\nand submitting those certifications;\nand\n``(III) route certifications\nsubmitted under clause (i), together\nwith any associated comments or\nrecommendations, to the appropriate\ndivision or office of the Commission\nfor review.\n``(vii) Advance review.--\n``(I) In general.--A certification\ncovered party may submit a\ncertification under clause (i) before\nthe offer, sale, or distribution of a\nnetwork token.\n``(II) Intended originator.--In\nsubmitting for a certification for\nadvance review under subclause (I), a\ncertification covered party shall\nidentify the person intending to offer,\nsell, or distribute the applicable\nnetwork token, and that person shall be\ntreated as the applicable ancillary\nasset originator for the purposes of\nthis subparagraph.\n``(viii) Tolling.--Any applicable period\nspecified in this subparagraph may be tolled,\nfor periods of not longer than 60 days, during\nthe 3-year period following the effective date\nof the Digital Asset Market Clarity Act, upon a\nshowing in writing that the submitting\ncertification covered party has not\nsubstantially responded to a request for\ninformation from the Commission within a\nreasonable time.\n``(ix) Misstatements or omissions.--Any\nmaterial misstatement or omission to state a\nmaterial fact, including with respect to\ncontinuing compliance, in a certification that\nhas become effective under this subparagraph\nshall constitute grounds for the Commission,\nconsistent with the securities laws, to--\n``(I) issue an order denying,\nsuspending, or revoking the\neffectiveness of that certification;\nand\n``(II) pursue any appropriate\nenforcement action.\n``(4) Voluntary disclosure.--An ancillary asset originator\nmay voluntarily furnish to the Commission the information\nrequired under this subsection if the ancillary asset\noriginator determines that it is reasonably likely that the\nancillary asset originator will become subject to the\nrequirements of paragraph (1) or (3) of subsection (c) in the\nfuture.\n``(5) Rulemaking considerations.--In adopting rules under\nthis subsection, the Commission shall--\n``(A) require only such information as the\nCommission finds to be necessary or appropriate to\nprotect investors, maintain fair, orderly, and\nefficient markets, and facilitate capital formation,\ninnovation, and efficiency;\n``(B) include in any final versions of those rules\na cost-benefit analysis evaluating the effects of any\nsuch rule on innovation, efficiency, competition,\nmaintaining fair and orderly markets, and capital\nformation, including the competitiveness of United\nStates market participants; and\n``(C) act jointly with the Commodity Futures\nTrading Commission to establish a process for\nimplementing the requirements of this subsection,\nincluding with respect to listing and disclosures, that\nis consistent and coordinated with the listing process\nfor digital asset intermediaries.\n``(6) Limitations.--Rules adopted under this subsection\nshall not require the inclusion of financial statements of an\nancillary asset originator, except with respect to the\ndisclosure of financial information under paragraph (2).\n``(e) Exemptions.--The Commission may, by order, exempt an\nancillary asset originator or digital asset intermediary, or any class\nof ancillary asset originators or digital asset intermediaries, from\nspecified requirements under subsection (d) if it is in the public\ninterest or for the protection of investors, consistent with the\npurposes of this section and subject to such conditions as the\nCommission determines necessary to protect investors and in the public\ninterest.\n``(f) Confidential Treatment of Certain Information.--Subject to\nCommission rules and procedures, an ancillary asset originator required\nto furnish to the Commission disclosures under subsection (d), or a\ndigital asset intermediary furnishing those disclosures in lieu of such\nan ancillary asset originator, may submit a request for confidential\ntreatment of information included in such disclosures pursuant to\nprocedures the Commission shall establish and that are modeled on or\nidentical to section 230.406 of title 17, Code of Federal Regulations,\nor any successor regulation.\n``(g) Effect of Failure to Comply.--The failure of an ancillary\nasset originator or digital asset intermediary to comply with a\nprovision of this section shall not, by itself, cause an ancillary\nasset offered, sold, or distributed by that ancillary asset originator\n(or that the ancillary asset originator caused to be offered, sold, or\ndistributed) to be a security under any applicable law.\n``(h) Liability for False or Misleading Statements.--\n``(1) In general.--It shall be unlawful for an ancillary\nasset originator, in any initial and periodic disclosure,\ncertification, or other document furnished under this section,\nto make an untrue statement of a material fact or omit to state\na material fact required to be stated therein or necessary to\nmake the statements therein not misleading.\n``(2) Rule of construction.--Nothing in this subsection may\nbe construed as limiting the application of section 240.10b-5\nof title 17, Code of Federal Regulations, or any successor\nregulation, to false or misleading disclosure statements or\npreventing any private right of action otherwise available\nunder the securities laws.\n``(i) Special Disposition Restrictions by Related Persons.--\n``(1) In general.--The Commission shall adopt rules,\nconsistent with section 104 of the Lummis-Gillibrand\nResponsible Financial Innovation Act of 2026, establishing\nlimitations on the disposition of certain ancillary assets with\nspecified characteristics by related persons.\n``(2) Considerations.--In adopting rules under paragraph\n(1), the Commission shall consider what is necessary or\nappropriate to protect investors, promote capital formation,\nand maintain fair and orderly markets, which may include the\nprevention of insider self-dealing or other abuses of a\nprivileged position.\n``(j) Safe Harbor for Forward-Looking Statements.--In any action\nagainst an ancillary asset originator or digital asset intermediary\narising under this Act that is based on an untrue statement of a\nmaterial fact or omission of a material fact necessary to make the\nstatement not misleading, no liability shall arise with respect to any\nforward-looking statement (including any statement of plans,\nobjectives, projections, expectations, or assumptions concerning future\nperformance, financial position, development milestones, asset utility,\nsystem adoption, or market conditions) made in an ancillary asset\ndisclosure, statement, or other document furnished pursuant to this\nsection, if the statement is--\n``(1) identified as forward-looking; and\n``(2) accompanied by meaningful cautionary language that\nidentifies important factors that could cause actual results to\ndiffer materially.\n``(k) Transactions Before Effective Date.--\n``(1) Primary transactions.--Notwithstanding any other\nprovision of law, neither the Commission nor any private\nplaintiff may initiate, pursue, or maintain any action, or an\nappeal of an action, for a violation of section 5 or 12(a)(1)\nof this Act arising from any offer, sale, or distribution of\nancillary assets occurring before the effective date of the\nDigital Asset Market Clarity Act, provided that the ancillary\nasset originator or a certification covered party complies with\nany applicable requirements under subsection (c)(3).\n``(2) Primary transactions related to fraud.--Nothing in\nparagraph (1) shall limit the ability of the Commission to\nbring an action based on the anti-fraud or anti-manipulation\nauthorities of the Commission.\n``(3) Secondary transactions.--Notwithstanding any other\nprovision of law, the offer, sale, or distribution of a network\ntoken by a person occurring before the effective date of the\nDigital Asset Market Clarity Act shall be treated as not\ninvolving the offer, sale, or distribution of a security\nunder--\n``(A) section 2(a)(1);\n``(B) section 3(a) of the Securities Exchange Act\nof 1934 (15 U.S.C. 78c(a));\n``(C) section 2(a) of the Investment Company Act of\n1940 (15 U.S.C. 80a-2(a));\n``(D) section 202(a) of the Investment Advisers Act\nof 1940 (15 U.S.C. 80b-2(a));\n``(E) section 16 of the Securities Investor\nProtection Act of 1970 (15 U.S.C. 78lll); or\n``(F) any applicable requirement of State law that\nis functionally equivalent to the provisions described\nin subparagraphs (A) through (E), including any\nprovision of State law that directly or indirectly\nprohibits, limits, or imposes any conditions on the\nuse, offer, sale, transfer, or disposition of a network\ntoken in a manner that is--\n``(i) not substantially similar to\nprohibitions, limitations, or conditions\nimposed by that State relating to assets that\nare commodities under the laws of that State;\nand\n``(ii) inconsistent with this section.\n``(4) No inference of liability.--Nothing in paragraph (1),\n(2), or (3) may be construed as an admission, acknowledgment,\nor inference of liability for any act, transaction, or conduct\noccurring before the effective date of the Digital Asset Market\nClarity Act.\n``(5) Rules of construction.--Nothing in this subsection\nmay be construed to--\n``(A) impair vested rights or contractual\nobligations lawfully established before the effective\ndate of the Digital Asset Market Clarity Act; or\n``(B) limit the authority of the Commission to\nbring an action against an ancillary asset originator\nor a related person for securities fraud or\nmanipulation in connection with a statement, a\ndisclosure, or conduct by that ancillary asset\noriginator or related person, except that the\nCommission may not exercise that authority to treat a\nnetwork token as a security or regulate secondary\nmarket trading.\n``(l) Rules of Construction.--Nothing in this section may be\nconstrued to--\n``(1) preclude the Commission from bringing an appropriate\naction or entering into a settlement agreement relating to a\nviolation or alleged violation of this section;\n``(2) permit compliance with this section to be used in any\nadministrative or judicial proceeding as evidence that an\nancillary asset is a security;\n``(3) prohibit the offer, sale, or distribution of a\ndigital asset in reliance on an exemption from registration\nunder this Act, other than Regulation Crypto (as adopted\npursuant to section 103 of the Lummis-Gillibrand Responsible\nFinancial Innovation Act of 2026); or\n``(4) require more than 1 person to furnish the disclosures\nrequired under subsection (d), unless otherwise provided by the\nCommission by rule.\n``(m) Anti-Evasion.--\n``(1) Anti-evasion.--The Commission may issue such\nregulations as the Commission considers necessary or\nappropriate in the public interest or for the protection of\ninvestors to administer and prevent willful evasion of--\n``(A) this section;\n``(B) sections 103 and 104 of the Lummis-Gillibrand\nResponsible Financial Innovation Act of 2026; and\n``(C) with respect to an ancillary asset originator\nand related persons, the securities laws amended by the\nLummis-Gillibrand Responsible Financial Innovation Act\nof 2026.\n``(2) Considerations.--In adopting rules under this\nsection--\n``(A) the form, label, and written documentation of\nan agreement, contract, or transaction, or an entity,\nshall not be dispositive in determining whether the\nagreement, contract, or transaction, or the entity, has\nbeen entered into or structured to willfully evade the\nrequirements of this section;\n``(B) the Commission may consider whether, based on\nthe totality of facts and circumstances, the principal\npurpose of any arrangement, allocation of rights,\ninterposition of entities, or sequencing of steps is to\nwillfully circumvent the requirements of this section\nor the restrictions set forth in section 104 of the\nLummis-Gillibrand Responsible Financial Innovation Act\nof 2026, by satisfying the literal terms while\ndefeating the purpose and policy of this section;\n``(C) for purposes of subparagraph (B), factors\nthat may be considered, without being dispositive, in\ndetermining whether a principal purpose to willfully\ncircumvent this section exists may include--\n``(i) removal of a disqualifying financial\nright described in subsection (a)(7)(B) from\nthe instrument coupled with its re-introduction\nthrough a substantially equivalent right held\nby a related person or controlled vehicle,\nincluding, by way of example, any nominally\nindependent foundation, decentralized\nautonomous organization, laboratory, or similar\narrangement;\n``(ii) circular or non-commercial flows of\nvalue among related persons designed to\nsimulate network utility; and\n``(iii) timing of steps designed to\ntrigger, accelerate, or delay certification or\ntermination of disclosure obligations without a\nmaterial change in circumstances relating to\nthe asset; and\n``(D) the Commission shall provide that evasion\nshall not have occurred if an agreement, contract, or\ntransaction is entered into for a legitimate business\npurpose and is not structured with a principal purpose\nof willfully circumventing the requirements of this\nsection.\n``(n) Fiduciary Obligations.--\n``(1) Fiduciary duties under state law.--Nothing in this\nsection, or in any rule issued under this section, may be\nconstrued to limit, preempt, or otherwise affect any fiduciary\nduty of an ancillary asset originator, or of any director,\nofficer, or controlling person of an ancillary asset\noriginator, arising under the laws of any State.\n``(2) Preservation of fiduciary and other duties to\ncustomers, clients, and shareholders.--Nothing in this section,\nor in any rule issued under this section, may be construed to\nlimit, preempt, or otherwise affect any fiduciary duty that any\nperson owes to a customer, client, or shareholder under any\nother provision of Federal or State law, including in\nconnection with the offer, sale, transfer, distribution, or\ncustody of an ancillary asset.\n``(o) Savings Clause.--Except as provided by the Digital Asset\nMarket Clarity Act and the amendments made by that Act, nothing in this\nsection may be construed to limit the authority of the Commission under\nthe securities laws.''.\n(b) Rulemaking.--Not later than 360 days after the date of\nenactment of this Act, the Commission shall conduct a notice and\ncomment rulemaking as necessary or appropriate to carry out section 4B\nof the Securities Act of 1933, as added by subsection (a).\n\nSEC. 103. EXEMPTION AND RULEMAKING FOR CERTAIN TRANSACTIONS INVOLVING\nANCILLARY ASSETS.\n\n(a) Adoption of Regulation Crypto.--The Commission shall adopt\nrules under the Securities Act of 1933 (15 U.S.C. 77a et seq.) and the\nSecurities Exchange Act of 1934 (15 U.S.C. 78a et seq.), which shall be\nreferred to collectively as ``Regulation Crypto'', to implement\nsubsections (b), (c), and (d) of this section.\n(b) Exemption for Certain Transactions Involving Ancillary\nAssets.--\n(1) Exemption.--\n(A) In general.--Rules adopted by the Commission\nunder this section shall provide that the registration\nrequirements of the Securities Act of 1933 (15 U.S.C.\n77a et seq.) shall not apply to an offer, sale, or\ndistribution of an investment contract involving an\nancillary asset, if the offer, sale, or distribution\ndoes not exceed the greater of--\n(i) $50,000,000 in gross proceeds per\ncalendar year for a period of not longer than 4\nyears; or\n(ii) 10 percent of the total dollar value\nof those ancillary assets that are outstanding,\nas of the date of that offer, sale, or\ndistribution.\n(B) Continued application of certain provisions.--\nSections 12(a)(2) and 17 of the Securities Act of 1933\n(15 U.S.C. 77l(a)(2), 77q) shall apply with respect to\nan offer, sale, or distribution of an investment\ncontract involving an ancillary asset that is described\nin subparagraph (A).\n(2) Limitation.--An ancillary asset originator may not\nraise more than $200,000,000 in total gross proceeds in\nreliance on the rules adopted under subsection (a).\n(3) Review and adjustment for inflation.--\n(A) In general.--Not later than 2 years after the\ndate of enactment of this Act, and every 2 years\nthereafter, the Commission shall--\n(i) review the amounts described in\nparagraphs (1)(A)(i) and (2);\n(ii) adjust the amounts described in\nparagraphs (1)(A)(i) and (2) to account for\ninflation; and\n(iii) increase the amounts described in\nparagraphs (1)(A)(i) and (2) as the Commission\ndetermines appropriate, if that action would be\nin the public interest and consistent with the\nprotection of investors.\n(B) Report.--If the Commission, after conducting a\nreview under subparagraph (A), determines not to\nincrease the amount described in paragraph (1)(A)(i) or\n(2) (other than to adjust that amount for inflation, as\nrequired under subparagraph (A)(ii) of this paragraph),\nthe Commission shall submit to the Committee on\nBanking, Housing, and Urban Affairs of the Senate and\nthe Committee on Financial Services of the House of\nRepresentatives a report detailing the reasons that the\nCommission did not increase that amount.\n(c) Conditions for Exemption.--The following conditions shall apply\nto the exemption provided under subsection (b):\n(1) Initial disclosures.--Not later than 30 days before the\ndate on which the applicable ancillary asset originator, any\naffiliate of the ancillary asset originator, or any underwriter\nof an investment contract, offers, sells, or distributes an\nancillary asset in reliance on the rules adopted under\nsubsection (a), the ancillary asset originator shall furnish to\nthe Commission the disclosures required under section 4B(d) of\nthe Securities Act of 1933, as added by this Act, subject to\nthe periodic semiannual disclosure requirements of that\nsection.\n(2) Coordinated control.--If the applicable ancillary asset\nis reliant on a distributed ledger system that, together with\nthat ancillary asset, is subject to coordinated control,\nincluding by related persons, the restrictions on disposition\nunder section 104 shall apply.\n(3) Criteria.--The applicable ancillary asset originator\nmay not be--\n(A) a company that is not organized under, and\nsubject to, the laws of a State or territory of the\nUnited States or the District of Columbia;\n(B) a development-stage company that either--\n(i) has no specific business plan or\npurpose; or\n(ii) has indicated that the business plan\nof the company is to merge with or acquire an\nunidentified company;\n(C) an investment company (as defined in section\n3(a) of the Investment Company Act of 1940 (15 U.S.C.\n80a-3(a))) or a company (as defined in section 2 of\nthat Act (15 U.S.C. 80a-2)) that would be an investment\ncompany under section 3(a) of that Act (15 U.S.C. 80a-\n3(a)) but for the exclusions provided from that\ndefinition by section 3(c) of that Act (15 U.S.C. 80a-\n3(c)), provided that, solely for the purposes of\nevaluating eligibility to rely on the exemption\nprovided under subsection (b), an ancillary asset\noriginator shall not be deemed to be an investment\ncompany solely by virtue of investing, reinvesting,\nowning, holding, or trading ancillary assets, including\nancillary assets offered for sale by the ancillary\nasset originator;\n(D) a person issuing fractional undivided interests\nin other commodities;\n(E) a person that is or has been subject to any\norder of the Commission entered pursuant to section\n12(j) of the Securities Exchange Act of 1934 (15 U.S.C.\n78l(j)) after the date of enactment of this Act and\nduring the 5-year period preceding the offer and sale;\n(F) a person that is or has been disqualified\npursuant to section 230.506(d) of title 17, Code of\nFederal Regulations, or any successor regulation,\nunless waived by order of the Commission;\n(G) a person that is or has been disqualified\npursuant to section 230.251 through 230.263 of title\n17, Code of Federal Regulations (commonly referred to\nas ``Regulation A''), or any successor regulations,\nunless waived by order of the Commission; or\n(H) a person convicted of a felony offense\ninvolving insider trading, embezzlement, cybercrime,\nmoney laundering, financing of terrorism, or financial\nfraud, within the last 10 years.\n(4) Furnishing notice of reliance.--The applicable\nancillary asset originator shall electronically furnish to the\nCommission a notice of reliance on the rules adopted under\nsubsection (a) not fewer than 30 days before the date on which\nthe ancillary asset originator first offers, sells, or\ndistributes an ancillary asset in reliance on those rules,\nwhich shall contain the following information:\n(A) The name of the ancillary asset originator.\n(B) A statement by a person duly authorized by the\nancillary asset originator that the conditions of those\nrules are satisfied.\n(C) The website where the summary documents of the\nancillary asset originator, if any, may be found and\nmade available for public consumption.\n(D) An email address at which the ancillary asset\noriginator may be contacted.\n(5) Public availability.--The Commission shall require that\nthe disclosures furnished to the Commission under section 4B(d)\nof the Securities Act of 1933, as added by this Act, be made\npublicly available in a manner that provides timely and\ncontinuing access.\n(6) Form and manner.--The disclosures furnished to the\nCommission under section 4B(d) of the Securities Act of 1933,\nas added by this Act, shall be prepared, furnished, and made\npublic in the form and manner prescribed by the Commission,\nincluding through the use of electronic furnishing, web\nposting, machine-readable formats, and plain-English legends,\nas the Commission determines necessary or appropriate in the\npublic interest or for the protection of investors.\n(d) Status Under Securities Laws.--\n(1) In general.--A disclosure furnished under section 4B of\nthe Securities Act of 1933, as added by this Act, including an\ninitial or periodic disclosure furnished under subsection (d)\nof such section 4B, and any other document furnished under the\nrules adopted under subsection (a) of this section, shall be\ndeemed to be--\n(A) a ``prospectus'' solely--\n(i) for purposes of section 12(a)(2) of the\nSecurities Act of 1933 (15 U.S.C. 77l(a)(2));\nand\n(ii) with respect to the person that is the\npurchasing party in a transaction made in\nreliance on the rules adopted under subsection\n(a); and\n(B) a ``statement'' solely for purposes of--\n(i) section 17(a) of the Securities Act of\n1933 (15 U.S.C. 77q(a));\n(ii) section 10(b) of the Securities\nExchange Act of 1934 (15 U.S.C. 78j(b)); and\n(iii) section 240.10b-5 of title 17, Code\nof Federal Regulations, or any successor\nregulation.\n(2) Registration statement.--\n(A) In general.--A disclosure furnished under\nsection 4B of the Securities Act of 1933, as added by\nthis Act, including an initial or periodic disclosure\nfurnished under subsection (d) of such section 4B, or\nany other document furnished pursuant to the rules\nadopted under subsection (a), shall not be deemed to be\na ``registration statement'' for purposes of section 11\nof the Securities Act of 1933 (15 U.S.C. 77k) or to\nhave been filed under the Securities Exchange Act of\n1934 (15 U.S.C. 78a et seq.).\n(B) Civil liability.--Liability under section\n12(a)(2) of the Securities Act of 1933 (15 U.S.C.\n77l(a)(2)) relating to a disclosure furnished under\nsection 4B of the Securities Act of 1933, as added by\nthis Act, including an initial or periodic disclosure\nfurnished under subsection (d) of such section 4B, or\nany other document furnished pursuant to the rules\nadopted under subsection (a), shall only apply to the\nperson making statements in that disclosure or other\ndocument, and only a person that purchased an ancillary\nasset in a transaction involving disclosures provided\npursuant to the rules adopted under subsection (a)\nshall have a claim under such section 12(a)(2).\n(3) Forward-looking statements.--In any action against an\nancillary asset originator under this title or the amendments\nmade by this title that is based on an untrue statement of a\nmaterial fact or omission of a material fact necessary to make\nthe statement not misleading, no liability shall arise with\nrespect to any forward-looking statement (including a statement\nof plans, objectives, projections, expectations, or assumptions\nconcerning future performance, financial position, development\nmilestones, digital asset utility, system adoption, or market\nconditions) made in a disclosure, statement, or other document\nfurnished pursuant to section 4B of the Securities Act of 1933,\nas added by this Act, including an initial or periodic\ndisclosure furnished under subsection (d) of such section 4B,\nor furnished under this section, if the statement is--\n(A) identified as forward-looking; and\n(B) accompanied by meaningful cautionary language\nthat identifies important factors that could cause\nactual results to differ materially.\n\nSEC. 104. SPECIAL DISPOSITION RESTRICTIONS BY RELATED PERSONS.\n\n(a) Definitions.--In this section:\n(1) Certification covered party.--The term ``certification\ncovered party'' means, with respect to an ancillary asset--\n(A) the ancillary asset originator;\n(B) a subsidiary of the ancillary asset originator;\n(C) a related person of the ancillary asset\noriginator; or\n(D) any entity that directly or indirectly controls\nor is controlled by a common entity with an ancillary\nasset originator.\n(2) Covered token.--The term ``covered token'' means any\nunit of an ancillary asset that was acquired from the ancillary\nasset originator with respect to that ancillary asset or an\nagent or underwriter thereof.\n(3) Distributed ledger control person.--The term\n``distributed ledger control person'' means, with respect to a\ndistributed ledger system, any person or group of persons under\ncommon control, other than a decentralized governance system,\nthat has the unilateral authority, directly or indirectly,\nthrough any contract, arrangement, understanding, relationship,\nor otherwise, to control or materially alter the functionality,\noperation, or rules of consensus or agreement of the\ndistributed ledger system or a related ancillary asset.\n(b) Coordinated Control.--\n(1) In general.--The Commission shall adopt rules, based on\nthe criteria described in paragraph (2), to define the\ncircumstances under which a distributed ledger system, together\nwith a related ancillary asset, is considered to be under\ncoordinated control.\n(2) Considerations.--In adopting rules under paragraph (1),\nthe Commission shall consider the following criteria as indicia\nthat a distributed ledger system described in that paragraph,\ntogether with the related ancillary asset, is considered to be\nunder coordinated control:\n(A) Open digital system.--The extent to which the\ndistributed ledger system is not--\n(i) a distributed ledger, the protocol of\nwhich is freely and publicly available;\n(ii) a distributed ledger application the\nsource code of which is--\n(I) freely and publicly available\nvia open-source code; and\n(II) recorded on a distributed\nledger described in clause (i); or\n(iii) an analogue to a distributed ledger\nor distributed ledger application described in\nclause (i) or (ii), as determined by the\nCommission by rule or order.\n(B) Permissionless and credibly neutral digital\nsystem.--The extent to which a person or group of\npersons under common control has--\n(i) the unilateral authority, via operation\nof the distributed ledger system, to restrict,\ncensor, or prohibit use of the distributed\nledger system, including any applicable system-\nbased user activity; or\n(ii) private permissions, hard-coded\nprivileges, or similar capabilities granted by\nthe source code of the distributed ledger\nsystem that provides preferential treatment\ncompared to other similarly situated persons.\n(C) Distributed digital network.--The extent to\nwhich a person or group of persons under common control\nhas beneficial ownership of, in the aggregate, more\nthan 49 percent of the total amount of outstanding\nunits of the ancillary asset or voting power with\nrespect to any governance system that relates to the\ndistributed ledger system.\n(D) Autonomous distributed ledger system.--The\nextent to which--\n(i) the distributed ledger system has not\nyet reached an autonomous state; and\n(ii) a person or group of persons under\ncommon control has the unilateral authority,\ndirectly or indirectly, to alter or change the\nfunctionality, operation, or rules of consensus\nor agreement of the distributed ledger system.\n(E) Economic independence.--The extent to which the\nprimary programmatic mechanisms of the distributed\nledger system that are intended to facilitate\nsubstantial value accrual to the ancillary asset\nthrough the functioning of the distributed ledger\nsystem are not yet functional.\n(3) Safe harbors.--\n(A) In general.--The Commission shall establish\nsafe harbors under which a distributed ledger system,\ntogether with a related ancillary asset, will not be\nconsidered to be under coordinated control for the\npurposes of section 103(c)(2).\n(B) Decentralized governance systems.--\n(i) In general.--For the purposes of this\nsection, a decentralized governance system\nshall not be considered to be a person or a\ngroup of persons under common control.\n(ii) Distributed ledger systems.--For the\npurposes of this section, a distributed ledger\nsystem, together with any related ancillary\nasset, shall not be precluded from being\nconsidered to not be under coordinated control\nsolely based on a functional, administrative,\nclerical, or ministerial action of a\ndecentralized governance system, including any\nsuch action taken by a person acting on behalf\nof and at the direction of that decentralized\ngovernance system, as determined by the\nCommission and consistent with the protection\nof investors, maintenance of fair, orderly, and\nefficient markets, and the facilitation of\ncapital formation.\n(C) Emergency measures.--For the purposes of this\nsection, a pre-defined, temporary, rules-based\ncybersecurity emergency measure that is exercised by an\nincident response or security council exclusively in\nresponse to a specific and documented cybersecurity\nincident or imminent threat pursuant to publicly\ndisclosed, on-chain authorization mechanisms, that is\nstrictly limited in scope and duration solely to\naddress that cybersecurity incident or imminent threat,\nand that is exercised without unilateral control by any\nsingle person, shall not alone constitute common\ncontrol or an agreement to work in concert, if those\nrules and mechanisms, including the procedures and\noperational limits governing the emergency measure, are\ndisclosed in publicly available written documentation\nreasonably available to the applicable Federal agency\nby a decentralized autonomous organization or similar\nlegal entity sufficiently in advance of any exercise of\nthe emergency measure.\n(D) Nonexclusive.--The safe harbors established\nunder subparagraphs (A), (B), and (C) shall not be\nexclusive and the Commission shall consider such other\ncircumstances as the Commission finds in the public\ninterest or for the protection of investors.\n(4) Evidence.--The Commission may, in adopting rules under\nthis subsection, require such certifications, third party\nverifications, or other evidence as the Commission determines\nnecessary or appropriate to determine whether a distributed\nledger system is under coordinated control for the purposes of\nsection 103(c)(2).\n(5) Rule of construction.--For purposes of this\nsubsection--\n(A) the existence or termination of coordinated\ncontrol shall be determined independently of whether\nentrepreneurial or managerial efforts described in\nsection 4B of the Securities Act of 1933, as added by\nthis Act, have been completed; and\n(B) the elimination of coordinated control shall be\na prerequisite to the completion of efforts described\nin subparagraph (A).\n(c) Special Restrictions on Disposition.--The Commission shall\nadopt rules that provide that, with respect to transactions involving\nan ancillary asset for which disclosures are required pursuant to\nsection 4B(d) of the Securities Act of 1933, as added by this Act, when\na sale of that ancillary asset is made by a related person, the\nfollowing restrictions on that sale shall apply:\n(1) Sales prior to certification.--If the covered token was\nacquired after the effective date of this Act and principally\nrelies on a distributed ledger system, the covered token may be\nsold by a related person before that distributed ledger system\nis certified as not subject to coordinated control, pursuant to\nsubsection (d), if--\n(A) with respect to that distributed ledger system,\nthe disclosures required pursuant to section 4B(d) of\nthe Securities Act of 1933, as added by this Act, have\nbeen furnished;\n(B) the holder of the covered token has held the\nunits for not less than 12 months; and\n(C) the amount of covered tokens sold in any 12-\nmonth period by the related person is--\n(i) not greater than an amount to be\ndetermined by the Commission pursuant to notice\nand comment rulemaking not later than 360 days\nafter the date of enactment of this Act, which\nrulemaking shall consider what is necessary or\nappropriate in the public interest, including,\namong other things, the protection of\ninvestors, whether the action will promote\nefficiency, competition, and capital formation,\nand how to foster the development of\ndistributed ledger systems that are not subject\nto coordinated control; and\n(ii) in no case equal to or greater than\nthe amount determined by the Commission\npursuant to the rulemaking described in\nparagraph (2)(C).\n(2) Sales after certification.--If the covered token was\nacquired after the effective date of this Act and principally\nrelies on a distributed ledger system that is certified as not\nsubject to coordinated control pursuant to subsection (d), the\ncovered token may be sold by a related person, if--\n(A) with respect to that distributed ledger system,\nthe disclosures required pursuant to section 4B(d) of\nthe Securities Act of 1933, as added by this Act, have\nbeen furnished;\n(B) the holder of the covered token has held the\nunits for not less than 6 months; and\n(C) the amount of covered tokens sold in any 12-\nmonth period by the related person is not greater than\nan amount to be determined by the Commission pursuant\nto rulemaking that shall not be less than 10 percent of\nthe total amount of outstanding units of such ancillary\nassets.\n(3) Sales of pre-existing covered tokens.--If the covered\ntoken was acquired before the effective date of this Act and\nprincipally relies on a distributed ledger system, the covered\ntoken may be sold by a related person if--\n(A) in the case that the distributed ledger system\nhas not been certified as not subject to coordinated\ncontrol pursuant to subsection (d)--\n(i) the disclosures required pursuant to\nsection 4B(d) of the Securities Act of 1933, as\nadded by this Act, have been furnished; and\n(ii) the holder of the covered token has\nheld the units for not less than 12 months; and\n(B) in the case that the distributed ledger system\nhas been certified as not subject to coordinated\ncontrol pursuant to subsection (d), the holder of the\ncovered token has held the units for not less than 6\nmonths.\n(4) Limitations on transactions by distributed ledger\ncontrol persons.--If the holder of an ancillary asset that\nprincipally relies on a distributed ledger system that has been\ncertified as not subject to coordinated control is a\ndistributed ledger control person with respect to that\ndistributed ledger system, that control person may resell that\nancillary asset if--\n(A) that control person furnishes notice to the\nCommission, in a form and manner determined by the\nCommission, that the person has or intends to obtain an\nauthority described in subparagraph (B) with respect to\nthe distributed ledger system;\n(B) that distributed ledger control person\nfurnishes disclosures to the Commission, in a form and\nmanner determined by the Commission, describing the\nmaterial activities, as determined by the Commission,\nof the control person;\n(C) with respect to that distributed ledger system,\ndisclosures have been furnished pursuant to section\n4B(d) of the Securities Act of 1933, as added by this\nAct; and\n(D) that control person has satisfied such other\nrequirements applicable to that control person that may\nbe established by the Commission to prevent\nmanipulation or distortion of the value of the\nancillary asset, including resale restrictions\nconsistent with those applied to related persons that\nare not control persons.\n(d) Certification of Non-Control by Related Persons.--\n(1) Submission.--With respect to an ancillary asset, a\ncertification covered party may furnish to the Commission a\nwritten certification, in such form and manner as the\nCommission may specify by rule consistent with subsection (b),\nstating that the distributed ledger system is not under\ncoordinated control.\n(2) Automatic effectiveness.--A certification furnished\nunder paragraph (1) shall become effective, and the distributed\nledger system shall be deemed not to be under coordinated\ncontrol, on the date that is the earlier of--\n(A) the date on which the Commission notifies the\ncertification covered party in writing that the\nCommission does not object to the certification; or\n(B) if the Commission has not denied the\ncertification under paragraph (3), the date that is 90\ndays after the date on which the certification is\nfurnished, or such shorter period as the Commission may\ndetermine by rule.\n(3) Denial.--\n(A) In general.--The Commission may deny a\ncertification furnished under paragraph (1)--\n(i) only during the 90-day period beginning\non the date on which the certification is\nfurnished, or such shorter period as the\nCommission may determine by rule, or upon\ndetermining, based on reasonable evidence, that\na material change in circumstances has occurred\nafter the furnishing of the certification; and\n(ii) by providing to the certification\ncovered party 10 days notice of the intent of\nthe Commission to deny that certification.\n(B) Requirements after notice of intent.--After the\n10-day period described in subparagraph (A)(ii), the\nCommission shall--\n(i) conduct a hearing; and\n(ii) vote to deny the certification if\nthere is a finding that the applicable\nancillary asset does not meet the standard for\ncertification that the operations of the\ndistributed ledger system are not under such\ncoordinated control.\n(C) Final agency action.--Denial under this\nparagraph constitutes final agency action reviewable\nunder applicable law.\n(4) Verification.--The Commission may, by rule, require\nappropriate third-party verification of a certification\nfurnished under paragraph (1).\n(e) Disgorgement.--\n(1) In general.--Any profit realized by a related person\nfrom the sale of an ancillary asset in violation of the\nrestrictions under subsection (c) shall inure to, and be\nrecoverable by, the holders of the ancillary asset,\nirrespective of any intention of holding the asset.\n(2) Enforcement.--An action to recover profit described in\nparagraph (1)--\n(A) may be instituted at law or in equity in any\ncourt of competent jurisdiction of the United States\nby--\n(i) the applicable ancillary asset\noriginator;\n(ii) the owner of any units of the\napplicable ancillary asset; or\n(iii) the owner of any units of the\napplicable ancillary asset, in the name and on\nbehalf of the ancillary asset originator, if\nthe ancillary asset originator--\n(I) fails or refuses to bring the\naction within 60 days after a written\nrequest by any owner of not less than 5\npercent of the total amount of\noutstanding units of that ancillary\nasset; or\n(II) fails to diligently prosecute\nthe action; and\n(B) shall be brought not later than 2 years after\nthe date that profit was realized.\n(f) Exemption From Disposition Restrictions.--The Commission shall\nadopt rules that provide for the following exemptions from, or waivers\nto, disposition restrictions described in subsection (c):\n(1) Material hardship exemption.--\n(A) In general.--Subject to subparagraph (B), the\nCommission shall adopt rules and procedures to exempt\nparties from related person restrictions with respect\nto an ancillary asset where those restrictions conflict\nwith an obligation or requirement arising from one of\nthe following material hardships on a related person\nwith respect to the ancillary asset or the ancillary\nasset originator:\n(i) The death of the related person.\n(ii) The bankruptcy or insolvency of the\nrelated person.\n(iii) The dissolution, merger, or\nacquisition of a corporate person.\n(iv) Tax liability relating to the receipt\nof the applicable ancillary asset.\n(v) Such other material hardships as may be\ndesignated by the Commission.\n(B) Requirements.--The rules and procedures adopted\nunder subparagraph (A) shall be designed to mitigate\nthe risk that parties may seek to structure holdings to\nevade resale restrictions and exempt or waive the\napplication of resale restrictions only to the extent\nnecessary to address the identified material hardship.\n(2) Liquidity provision exemption.--The Commission shall\nadopt rules to exempt from disposition restrictions parties\nbuying or selling an ancillary asset through regular two-sided\nbidding and offering for the purposes of providing market\nliquidity, provided that such activities are not undertaken for\nthe purpose of evading the requirements of this section.\n(3) Agency exemption.--The Commission shall adopt rules\nthat exempt a party acting as a custodian, trading platform,\nbroker, dealer or other agent from being treated as the owner\nof customer or client assets or from being restricted in\nfacilitating sales on behalf of a customer or client if the\nagent is otherwise determined to be a related person.\n(4) Exchange-traded product and passive fund exemption.--\nThe Commission shall adopt rules to exempt from disposition\nrestrictions, as appropriate--\n(A) exchange-traded products, the shares of which\nare created and redeemed by authorized participants and\nregistered with the Commission; and\n(B) passive pooled investment vehicles, whether or\nnot the shares of which are registered with the\nCommission.\n(g) Related Person Disclosure Requirements.--The Commission shall\nadopt rules that provide for reporting to the Commission certain\ninformation with respect to ancillary asset holdings or transactions\nrelating to ancillary assets by related persons, subject to the\ndisposition restrictions provided in subsection (c):\n(1) Disclosure reports.--\n(A) Disclosure of related person status.--Any\nperson, or group of persons under common control,\ndirectly or indirectly, that acquire beneficial\nownership of 10 percent or more of the total amount of\noutstanding units of any such ancillary asset, measured\nas of the end of any calendar quarter, shall furnish\ninitial and continuing reports as determined by the\nCommission.\n(B) Sales of covered tokens by related person prior\nto certification of non-control.--Quarterly reports\nrelating to the number of ancillary assets sold by a\nrelated person in a form as required by the Commission.\n(C) Sales of covered tokens by related person after\ncertification of non-control.--Quarterly reports\nrelating to the number of ancillary assets sold by a\nrelated person that holds, at any point during the\napplicable calendar quarter, in excess of 5 percent of\nthe total amount of outstanding units of such ancillary\nasset in a form as required by the Commission.\n(D) Sales of pre-existing covered tokens by related\nperson.--Quarterly reports relating to the number of\nancillary assets sold by a related person that holds in\nexcess of 5 percent of the total amount of outstanding\nunits of such ancillary asset in a form as required by\nthe Commission.\n(2) Confidential treatment.--The Commission may provide for\nconfidential treatment of information provided under this\nsubsection, or may exempt certain related persons from the\nrequirement to furnish a report required under this subsection,\npursuant to procedures the Commission shall establish and that\nare modeled on or identical to section 230.406 of title 17,\nCode of Federal Regulations, or any successor regulation.\n(3) Good-faith furnishing standard.--\n(A) In general.--Any obligation to furnish\ninformation under this section applies only to the\nfurnisher acting on its own behalf and is limited to\ninformation that is material and known, or reasonably\nknowable after due inquiry, to that furnisher.\n(B) Reliance.--A furnisher described in\nsubparagraph (A) may reasonably rely on public sources\nand third-party attestations where appropriate.\n(C) Liability.--Furnishing in good faith pursuant\nto this section shall not create liability for\ninformation outside the furnisher's possession,\ncustody, or control, or for omissions of information\nthe furnisher could not reasonably obtain without\nbreaching legal privilege, contractual confidentiality,\nor other applicable law.\n(D) Other persons.--Any person other than the\nfurnisher may, in good faith and absent knowledge to\nthe contrary, presume that a report required under\nparagraph (1) has been timely furnished.\n(4) Life cycle event considerations.--The Commission shall\nadopt rules establishing streamlined processes for the\nfollowing life cycle events:\n(A) Successor disclosures in corporate\ntransactions.--The transfer of disclosure obligations\nunder this section to a successor entity in the event\nof a merger, acquisition, or sale of substantially all\nassets relating to the ancillary asset activities,\nincluding a notice of succession.\n(B) Cessation of work.--The cessation or suspension\nof ongoing disclosure obligations under this section\nwhere the ancillary asset originator or related person\nno longer engages, and does not reasonably expect to\nengage, in entrepreneurial or managerial efforts with\nrespect to the ancillary asset or its associated\ndistributed ledger system, including a notice of\ncessation of work.\n(C) Contractual termination.--The termination of\ndisclosure obligations under this section that attach\nsolely by virtue of a person's status as a related\nperson when a contractual arrangement with the\nancillary asset originator or distributed ledger system\nhas concluded, including a notice of cessation of\ncontractual relationship.\n(h) Rule of Construction.--Nothing in this section may be construed\nto--\n(1) limit or impair the anti-fraud or anti-manipulation\nauthorities of the Commission; or\n(2) preclude reliance on Regulation Crypto, as adopted\nunder section 103, or any other effective registration\nstatement or exemption from registration under the Securities\nAct of 1933 (15 U.S.C. 77a et seq.), as amended by this Act.\n\nSEC. 105. CHARACTERISTICS OF NETWORK TOKENS.\n\n(a) In General.--Not later than 1 year after the date of enactment\nof this Act, the Commission shall adopt rules that provide that--\n(1) a network token shall not be considered as providing a\ndisqualifying financial right under section 4B(a)(7)(B) of the\nSecurities Act of 1933, as added by this Act, if the market\nvalue of the network token is primarily derived, or is\nreasonably expected to be primarily derived, from a distributed\nledger system or from the broader adoption and use of such a\nsystem, including where--\n(A) the mechanisms of the distributed ledger system\ncollect, receive, accrue, or distribute consideration\nfrom the functioning of the distributed ledger system;\n(B) the network token provides governance\ncapabilities with respect to a distributed ledger\nsystem or a decentralized governance system;\n(C) the value of the network token appreciates or\ndepreciates due to the use of, or in response to the\nefforts, operations, or financial performance of, the\ndistributed ledger system to which the network token\nrelates or its decentralized governance system; or\n(D) for a network token that meets the definition\nof an ancillary asset, the value of the network token\nappreciates or depreciates due to the efforts of the\nancillary asset originator or related person; and\n(2) participants in offers or sales of network tokens\nproviding financial interests described in paragraph (1) shall\nnot be precluded from relying on the exemption from\nregistration under section 4B(b) of the Securities Act of 1933,\nas added by this Act.\n(b) Effect of Rulings and Actions Before Date of Enactment.--\n(1) In general.--If, before the date of enactment of this\nAct, a court of the United States, in a non-appealable final\njudgment, found that a digital asset transaction was not an\noffer, sale, or distribution of a security, a digital asset\ntransferred pursuant to that offer, sale, or distribution shall\nnot be considered to be a security under any provision of law\ndescribed in subsection (b)(2) of section 4B of the Securities\nAct of 1933, as added by this Act.\n(2) Network tokens.--A network token shall not be\nconsidered to be an ancillary asset, and shall not be\nconsidered to be a security under any provision of law\ndescribed in subsection (b)(2) of section 4B of the Securities\nAct of 1933, as added by this Act, if, on January 1, 2026, any\nunits of that network token were the principal asset of an\nexchange-traded product--\n(A) not registered under the Investment Company Act\nof 1940 (15 U.S.C. 80a-1 et seq.); and\n(B) the shares of which are listed and traded on a\nnational securities exchange registered under section 6\nof the Securities Exchange Act of 1934 (15 U.S.C. 78f).\n\nSEC. 106. EXEMPTIVE AUTHORITY.\n\n(a) Continued Applicability.--Nothing in this Act, or any amendment\nmade by this Act, may be construed to amend, limit, impair, or\notherwise affect the authority of the Commission to grant an exemption\npursuant to any provision of law that is in effect on the day before\nthe date of enactment of this Act, including pursuant to any of the\nfollowing:\n(1) Section 28 of the Securities Act of 1933 (15 U.S.C.\n77z-3).\n(2) Section 36 of the Securities Exchange Act of 1934 (15\nU.S.C. 78mm).\n(3) Section 6(c) of the Investment Company Act of 1940 (15\nU.S.C. 80a-6(c)).\n(4) Section 206A of the Investment Advisers Act of 1940 (15\nU.S.C. 80b-6a).\n(5) Section 304(d) of the Trust Indenture Act of 1939 (15\nU.S.C. 77ddd(d)).\n(6) Section 4(g) of the Securities Investor Protection Act\nof 1970 (15 U.S.C. 78ddd(g)).\n(b) General Exemptive Authority.--Section 28 of the Securities Act\nof 1933 (15 U.S.C. 77z-3) is amended, in the matter preceding the\nmatter relating to Schedule A--\n(1) by striking ``by rule or regulation'' and inserting\n``by rule, regulation, or order''; and\n(2) by adding at the end the following: ``The Commission\nshall, by rule or regulation, determine the procedures under\nwhich an exemptive order under this section shall be granted\nand may, in the sole discretion of the Commission, decline to\nentertain any application for an order of exemption under this\nsection.''.\n\nSEC. 107. MODERNIZATION OF RECORDKEEPING REQUIREMENTS.\n\nThe Commission shall adopt rules to modernize the recordkeeping\nrequirements under the Securities Exchange Act of 1934 (15 U.S.C. 78a\net seq.), the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et\nseq.), and the Investment Company Act of 1940 (15 U.S.C. 80a-1 et\nseq.), including to facilitate the utilization of distributed ledger\nrecords.\n\nSEC. 108. MODERNIZATION OF SECURITIES REGULATIONS FOR DIGITAL ASSET\nACTIVITIES.\n\n(a) Tailoring of Existing Requirements.--The Commission shall--\n(1) amend, rescind, replace, or supplement by rule, order,\nguidance, exemptive relief, or any other appropriate action\n(provided such action is consistent with chapter 5 of title 5,\nUnited States Code, and other applicable law) each regulation,\nform, interpretive statement, or other requirement within the\njurisdiction of the Commission that is not otherwise amended by\nthis Act (or required to be amended because of a provision of\nthis Act or an amendment made by this Act), to the extent that\nsuch provision applies to any digital asset activity, including\nany activity involving a security that is issued, recorded, or\ntransferred using distributed ledger technology, to the extent\nthat the provision is outdated, unnecessary, or unduly\nburdensome in light of the unique technological characteristics\nof digital assets or substantially similar technology, which\nmay include regulatory provisions governing--\n(A) customer protection, including custody of\ndigital assets or substantially similar technology;\n(B) transfer agent rules;\n(C) books and records, or recordkeeping\nrequirements;\n(D) clearance and settlement rules;\n(E) broker-dealer, alternative trading system, and\nexchange rules;\n(F) issuer disclosure and ongoing reporting\nrequirements tailored to digital asset securities or\nsubstantially similar technology involving securities;\nand\n(G) the use of vaults, digital asset receipts, or\nreceipts involving substantially similar technology,\nvault tokens, or liquidity provider tokens; and\n(2) in imposing future obligations as those obligations\nrelate to digital assets or substantially similar technology,\ndo so in a manner consistent with the requirements described in\nparagraph (1).\n(b) Rule of Construction.--Nothing in this section may be construed\nto limit the authority of the Commission to pursue fraud, manipulation,\nor deceptive practices involving digital assets or substantially\nsimilar technology.\n(c) Use of Existing Authority.--When considering, proposing,\nadopting, or engaging in any rule or program or developing new rules or\nprograms, including those mandated or authorized under this Act, or any\namendment made by this Act, the activities of the Commission (which may\ninclude the solicitation of data and other input from investors,\nregulated entities, and market participants or the representatives of\nany of those persons) shall be considered actions taken under\nsubsection (e) of section 19 of the Securities Act of 1933 (15 U.S.C.\n77s) and shall be subject to subsection (f) of that section.\n(d) Continued Applicability of State Consumer Protection Laws.--\nExcept as expressly provided by this Act, or an amendment made by this\nAct, nothing in this Act (or in any such amendment) shall preempt any\nState consumer protection law, including common law, or a remedy\navailable under any such law.\n(e) Preemption for Exemptions and Digital Asset Activities Under\nthe Securities Act.--Section 18 of the Securities Act of 1933 (15\nU.S.C. 77r) is amended--\n(1) in subsection (b)--\n(A) in paragraph (3)--\n(i) in the paragraph heading, by inserting\n``in qualified transactions or'' after\n``sales'';\n(ii) in the first sentence, by inserting\n``in a qualified transaction or'' after ``the\nsecurity''; and\n(iii) in the second sentence--\n(I) by striking ``term `qualified\npurchaser''' and inserting ``terms\n`qualified transaction' and `qualified\npurchaser''';\n(II) by inserting ``and categories\nof transactions, including secondary\ntransactions,'' after ``securities'';\nand\n(III) by inserting ``and with due\nregard to the facilitation of capital\nformation and the promotion of\ninnovation'' before the period at the\nend; and\n(B) in paragraph (4)--\n(i) in subparagraph (A), by inserting ``or,\nif the issuer is not required to file such\nreports, where the Commission otherwise\ndetermines, consistent with the public interest\nand the protection of investors and with due\nregard to the facilitation of capital formation\nand the promotion of innovation'' before the\nsemicolon at the end;\n(ii) in subparagraph (D)(ii), by inserting\n``in a qualified transaction or'' after\n``offered or sold'';\n(iii) in subparagraph (F), by striking\n``or'' at the end;\n(iv) in subparagraph (G), by striking the\nperiod at the end and inserting ``; or''; and\n(v) by adding at the end the following:\n``(H) Commission rules or regulations issued under\nsection 28, except that this subparagraph does not\napply to rules or regulations adopted before the date\nof enactment of this subparagraph.''.\n(f) Exempting Network Tokens From State Securities Laws.--\n(1) In general.--Section 18(b) of the Securities Act of\n1933 (15 U.S.C. 77r(b)) is amended by adding at the end the\nfollowing:\n``(5) Exemption in connection with network tokens.--A\nnetwork token, as defined in section 4B(a), shall be treated as\na covered security.''.\n(2) Rule of construction.--Nothing in this section, section\n4B of the Securities Act of 1933 (as added by this Act), or the\namendments made by this section may be construed to limit the\nauthority (as of the day before the date of enactment of this\nAct) described in section 18(c)(1) of the Securities Act of\n1933 (15 U.S.C. 77r(c)(1)) of a securities commission (or any\nagency or office performing like functions) of any State with\nrespect to a covered security or any security.\n(g) Preemption for Ancillary Asset Activities Under the Securities\nAct of 1933.--Section 18(b) of the Securities Act of 1933 (15 U.S.C.\n77r(b)), as amended by subsection (f) is amended by adding at the end\nthe following:\n``(6) Limitations on state law regarding ancillary\nassets.--\n``(A) Definitions.--In this paragraph, the term\n`ancillary asset' has the meaning given the term in\nsection 4B(a).\n``(B) Exemption in connection with ancillary\nassets.--An ancillary asset offered, sold, or\ndistributed in reliance on Regulation Crypto, as\nadopted under section 103 of the Lummis-Gillibrand\nResponsible Financial Innovation Act of 2026, shall be\ntreated as a covered security.''.\n(h) Preservation of Regulation Best Interest.--\n(1) In general.--Subject to paragraph (2), nothing in this\nAct, any amendment made by this Act, or any rule issued under\nthis Act or pursuant to any such amendment may be construed to\nlimit, preempt, or otherwise affect the obligations of a broker\nor dealer registered with the Commission under section 15 of\nthe Securities Exchange Act of 1934 (15 U.S.C. 78o) or section\n240.15l-1 of title 17, Code of Federal Regulations (commonly\nknown as ``Regulation Best Interest''), or any successor\nregulation.\n(2) Application.--Paragraph (1) shall not apply with\nrespect to any person registered with the Commodity Futures\nTrading Commission.\n(i) Preservation of Investment Adviser Fiduciary Duties.--Nothing\nin this Act, any amendment made by this Act, or any rule issued under\nthis Act or pursuant to any such amendment may be construed to limit,\npreempt, or otherwise affect the fiduciary duty that an investment\nadviser (as defined in section 202 of the Investment Advisers Act of\n1940 (15 U.S.C. 80b-2)) owes to a client under section 206 of the\nInvestment Advisers Act of 1940 (15 U.S.C. 80b-6) or any other\nprovision of Federal or State law, including in connection with\ninvestment advice regarding a digital commodity.\n\nSEC. 109. INSIDER TRADING WITH RESPECT TO ANCILLARY ASSET TRANSACTIONS.\n\n(a) Definition.--In this section, the term ``distributed ledger\ncontrol person'' has the meaning given the term in section 104(a).\n(b) Application of Securities Laws.--Any provision of the\nsecurities laws, or any regulation issued under the securities laws,\nincluding any duty that arises under the securities laws or under such\na regulation, that applies with respect to a person that purchases,\nsells, or offers to sell a security, security-based swap, or security-\nbased swap agreement while in possession of material nonpublic\ninformation, or communicates such information in connection with or in\nthe transaction, shall apply to any offer, sale, or purchase of a\nsecurity, security-based swap, or security-based swap agreement in\nwhich an ancillary asset is offered, sold, or purchased, including any\noffer, sale, or purchase conducted pursuant to Regulation Crypto, as\nadopted pursuant to section 103, whether conducted by an ancillary\nasset originator, a related person, or any other person.\n(c) Rulemaking.--\n(1) In general.--The Commission shall adopt rules to\nimplement subsection (b), which shall--\n(A) include rules providing an affirmative defense\nfor an offer, sale, or purchase of an ancillary asset\nmade pursuant to a written plan adopted before the\napplicable person became aware of material nonpublic\ninformation, which shall be consistent with section\n240.10b5-1 of title 17, Code of Federal Regulations, or\nany successor regulation; and\n(B) be interpreted and applied in a manner that is\nconsistent with, and may not be construed to expand or\ncontract, the principles of, and judicial precedent\ninterpreting (by the Supreme Court of the United\nStates), the securities laws and the regulations issued\nunder the securities laws, as those principles and that\njudicial precedent are in effect, as of the day before\nthe date of enactment of this Act.\n(2) Considerations.--In adopting rules under paragraph (1),\nthe Commission shall consider, subject to subsection (e),\nwhether, and under what circumstances, an offer, sale,\npurchase, or communication should be addressed by those rules,\nincluding by--\n(A) a distributed ledger control person, any person\nacting on behalf of, or in concert with, an ancillary\nasset originator, related person, or distributed ledger\ncontrol person, or a person that obtained material\nnonpublic information in the course of a relationship\nof trust and confidence with an ancillary asset\noriginator or related person, where material nonpublic\ninformation regarding an ancillary asset originator or\nan ancillary asset was--\n(i) obtained pursuant to or in breach of a\nduty of trust or confidence;\n(ii) deceptively obtained through theft,\nbribery, misrepresentation, or espionage or in\nviolation of any Federal law protecting\ncomputer data; or\n(iii) obtained from an ancillary asset\noriginator or related person, the conduct of\nwhich is described in subparagraph (B); or\n(B) an ancillary asset originator or related person\nthat purchases, sells, or otherwise distributes an\nancillary asset, or communicates material nonpublic\ninformation regarding an ancillary asset originator or\nancillary asset, while aware of material nonpublic\ninformation that is required to be disclosed in any\ndisclosure furnished, or required to be furnished,\nunder section 4B of the Securities Act of 1933, as\nadded by this Act, or Regulation Crypto, as adopted\npursuant to section 103.\n(d) Enforcement.--A violation of subsection (b), or any rule\nadopted under subsection (c), shall be treated as a violation of the\nsecurities laws and subject to the penalties under sections 21A and 32\nof the Securities Exchange Act of 1934 (15 U.S.C. 78u-1, 78ff) and to\nall other remedies available under the securities laws.\n(e) Rule of Construction.--Consistent with section 4B(b)(3) of the\nSecurities Act of 1933, as added by this Act, nothing in this section\nmay be construed to apply the securities laws, or any regulation issued\nunder the securities laws (including any rule adopted under subsection\n(c)), to any secondary market transaction in an ancillary asset that is\nnot otherwise a transaction in a security, security-based swap, or\nsecurity-based swap agreement.\n\nSEC. 110. SECURITIES INVESTOR PROTECTION CORPORATION APPLICABILITY.\n\nSection 16(14) of the Securities Investor Protection Act of 1970\n(15 U.S.C. 78lll(14)) is amended by inserting after the second sentence\nthe following: ``The term `security' does not include a digital\ncommodity.''.\n\nSEC. 111. INVESTOR AND CONSUMER PROTECTION ENFORCEMENT.\n\n(a) Preservation of Certain Rights, Authorities, Laws, and\nObligations.--Subject to subsection (b), nothing in this Act, any\namendment made by this Act, or any rule, requirement, or regulation\npromulgated pursuant to this Act may be construed to prohibit, limit,\nimpair, or otherwise affect--\n(1) any person from bringing a civil action to enforce any\nprivate right of action for fraud, deceit, manipulation, or\ndeceptive practices, to the extent that such private right of\naction is expressly provided for in this Act or an amendment\nmade by this Act, or is otherwise available under Federal law,\nincluding with respect to conduct involving an ancillary asset,\nnetwork token, digital commodity, or any transaction,\ndisclosure, certification, notice, report, statement,\ncommunication, or other document involving any such asset;\n(2) except as expressly provided in this Act or an\namendment made by this Act, any Federal or State regulator,\nacting within the scope of authority otherwise provided by law,\nfrom bringing an administrative or civil enforcement action\nunder--\n(A) the Commodity Exchange Act (7 U.S.C. 1 et\nseq.), including the provisions of that Act that are\nadded by this Act and relate to digital commodities and\nthe jurisdiction of the Commodity Futures Trading\nCommission;\n(B) the Securities Act of 1933 (15 U.S.C. 77a et\nseq.), as amended by this Act, the Securities Exchange\nAct of 1934 (15 U.S.C. 78a et seq.), as amended by this\nAct, or the Investment Advisers Act of 1940 (15 U.S.C.\n80b-1 et seq.);\n(C) State commodities laws, subject to the\nprovisions of this Act, and the amendments made by this\nAct, relating to the jurisdiction of the Commodity\nFutures Trading Commission; or\n(D) section 18(c)(1) of the Securities Act of 1933\n(15 U.S.C. 77r(c)(1)), or any functionally equivalent\nanti-fraud or anti-manipulation provision of State\nsecurities law (including any State securities law with\nrespect to a security or a transaction in a security to\nthe extent enforcement of that anti-fraud or anti-\nmanipulation provision of State securities law is not\npreempted by section 18 of the Securities Act of 1933\n(15 U.S.C. 77r)), with respect to an investment\ncontract involving an ancillary asset, or other\ntransaction involving any such asset, for which this\nAct or an amendment made by this Act expressly\npreserves or provides for the application of anti-fraud\nor anti-manipulation authority;\n(3) except as expressly provided in this Act or an\namendment made by this Act, any generally applicable State law,\nincluding a law relating to fraud, deceit, unfair or deceptive\nacts or practices, consumer protection, banking, payments,\nproperty, contracts, criminal law, or unlawful conduct or\npractices, or the remedies available under any such law, with\nrespect to conduct involving a digital asset, ancillary asset,\nnetwork token, or digital commodity, or any transaction,\nactivity, person, or service involving any such asset, provided\nthat such law does not impose any licensing, registration,\nqualification, or other requirement that is expressly\npreempted, or otherwise expressly limited, by this Act or an\namendment made by this Act;\n(4) the fiduciary obligations of an investment adviser, as\ndefined in section 202(a) of the Investment Advisers Act of\n1940 (15 U.S.C. 80b-2(a)), under section 206 of that Act (15\nU.S.C. 80b-6), any rule or regulation issued under such section\n206, or any other provision of Federal or State law, including\nin connection with investment advice regarding a digital asset,\nancillary asset, network token, digital commodity, or\nsubstantially similar technology; or\n(5) any right or remedy under Federal consumer financial\nlaw, including under section 1011 of the Consumer Financial\nProtection Act of 2010 (12 U.S.C. 5491) or the Federal Trade\nCommission Act (15 U.S.C. 41 et seq.), or authority under\nFederal consumer financial law with respect to any person,\nsubject to the limitations under section 1027 of the Consumer\nFinancial Protection Act of 2010 (12 U.S.C. 5517), including\nsubsections (i) and (j) of such section 1027.\n(b) Limitations and Rules of Construction.--Nothing in subsection\n(a) may be construed to--\n(1) preserve, create, or authorize any Federal or State\nregistration, licensing, qualification, or merit-review\nrequirement under State law with respect to an ancillary asset,\nnetwork token, digital commodity, transaction, person, or\nactivity, to the extent that such requirement is preempted or\notherwise limited by this Act or an amendment made by this Act;\n(2) create, preserve, or authorize any private right of\naction under Federal or State law with respect to an ancillary\nasset, network token, digital commodity, or transaction\ninvolving any such asset;\n(3) permit any claim, action, proceeding, requirement,\nliability, obligation, or remedy to be brought, maintained,\nimposed, or enforced under Federal or State securities or\ncommodities law to the extent that such claim, action,\nproceeding, requirement, liability, obligation, or remedy\ndepends upon, is predicated on, or would require a\ndetermination that an ancillary asset, network token, digital\ncommodity, or any transaction, activity, person, or service\ninvolving any such asset has a status or characterization under\nFederal or State securities or commodities law that is contrary\nto an express classification or treatment provided by this Act\nor an amendment made by this Act;\n(4) expand, contract, or otherwise alter the jurisdiction,\nexclusive or otherwise, of the Commission, the Commodity\nFutures Trading Commission, or any State regulator;\n(5) limit, impair, or otherwise affect the treatment of any\nasset, transaction, or interest as a covered security for\npurposes of section 18 of the Securities Act of 1933 (15 U.S.C.\n77r); or\n(6) create any new private right of action under Federal or\nState law, except that nothing in this paragraph may be\nconstrued to limit, impair, or otherwise affect any private\nright of action preserved under subsection (a)(1), expressly\nprovided in this Act or an amendment made by this Act, or\notherwise available under Federal law.\n\nTITLE II--PROTECTING AGAINST ILLICIT FINANCE\n\nSEC. 201. TREATMENT UNDER THE BANK SECRECY ACT AND SANCTIONS LAWS.\n\n(a) Amendment.--Section 5312(c)(1)(A) of title 31, United States\nCode, is amended--\n(1) by inserting ``digital commodity broker, digital\ncommodity dealer,'' after ``futures commission merchant,''; and\n(2) by inserting before the period the following: ``and any\ndigital commodity exchange registered, or required to register,\nunder that Act that permits direct customer access''.\n(b) Bank Secrecy Act Requirements.--\n(1) Regulations.--The Secretary of the Treasury, acting\nthrough the Director of the Financial Crimes Enforcement\nNetwork, and in consultation with the Commodity Futures Trading\nCommission, shall issue requirements consistent with the\nrequirements of futures commission merchants to apply the Bank\nSecrecy Act to digital commodity brokers, digital commodity\ndealers, and digital commodity exchanges that are tailored to\nthe size and complexity of such entities, including by\nrequiring each such entity to--\n(A) establish and maintain an anti-money laundering\nand countering the financing of terrorism program,\nwhich shall include--\n(i) an appropriate risk assessment;\n(ii) the development of internal policies,\nprocedures, and controls;\n(iii) the designation of a compliance\nofficer;\n(iv) an ongoing employee training program;\nand\n(v) an independent audit function to test\nsuch program;\n(B) retain appropriate records of transactions;\n(C) monitor and report suspicious activity, which\nmay include use of appropriate distributed ledger\nanalytics; and\n(D) maintain an effective customer identification\nprogram to identify and verify account holders and\ncarry out appropriate customer due diligence.\n(2) Compliance with sanctions.--A digital commodity broker,\ndigital commodity dealer, or digital commodity exchange shall\ncomply with all laws and regulations related to United States\nsanctions administered by the Office of Foreign Assets Control.\n(c) Sense of Congress.--It is the sense of Congress that nothing in\nthis section shall limit the applicability of any law imposing or\nauthorizing the imposition of economic sanctions by the United States.\n\nSEC. 202. DIGITAL ASSET EXAMINATION STANDARDS.\n\n(a) Definitions.--In this section:\n(1) Federal functional regulator.--The term ``Federal\nfunctional regulator'' has the meaning given the term in\nsection 509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6809).\n(2) Financial institution.--The term ``financial\ninstitution'' has the meaning given the term in section\n5312(a)(2) of title 31, United States Code.\n(b) Examination and Review.--The Secretary of the Treasury, in\nconsultation with Federal functional regulators, shall establish,\ncoordinated to the extent feasible, risk-based examination standards to\nassess financial institutions involved in the digital asset sector for\ncompliance with anti-money laundering and countering the financing of\nterrorism requirements under the Bank Secrecy Act.\n\nSEC. 203. PREVENTING ILLICIT FINANCE THROUGH PARTNERSHIP ACT.\n\n(a) Short Title.--This section may be cited as the ``Preventing\nIllicit Finance Through Partnership Act''.\n(b) Definitions.--In this section:\n(1) Bank.--The term ``bank'' has the meaning given the term\nin section 1010.100 of title 31, Code of Federal Regulations\n(or any corresponding similar regulation).\n(2) Certified or recognized information-sharing or\ninterdiction network.--The term ``certified or recognized\ninformation-sharing or interdiction network'' means a real-\ntime, secure, public-private mechanism that--\n(A) facilitates the detection, interdiction, and\nprevention of illicit finance violations through rapid\ninformation exchange between government and regulated\nentities; and\n(B) is--\n(i) certified by the Secretary of the\nTreasury for the purpose of supporting\ninterdiction and investigative actions\nconsistent with law enforcement or regulatory\nauthorities; or\n(ii) recognized by the Secretary of the\nTreasury as an existing (as of the day before\nthe date of enactment of this Act), effective\npublic-private partnership network that meets\nstandards for security, accountability, and\nparticipation that are equivalent to the\nstandards that would be required by the\nSecretary of the Treasury for certification\nunder clause (i).\n(3) Covered agency.--The term ``covered agency'' means--\n(A) the Department of Justice, including the\nFederal Bureau of Investigation and the Drug\nEnforcement Administration;\n(B) the Department of the Treasury, including the\nFinancial Crimes Enforcement Network, the Internal\nRevenue Service, and the Office of Foreign Assets\nControl; and\n(C) the Department of Homeland Security.\n(4) Designated private sector entity.--The term\n``designated private sector entity'' means a private sector\nentity designated under subsection (d).\n(5) Director.--The term ``Director'' means the Director of\nthe Financial Crimes Enforcement Network.\n(6) Illicit finance violation.--The term ``illicit finance\nviolation'' means the illicit use of digital assets.\n(7) Illicit use.--The term ``illicit use'' includes fraud,\nmoney laundering, terrorist financing, the purchase and sale of\nillicit goods, trafficking of fentanyl (including fentanyl\nprecursors and trade in other illicit drugs), sanctions\nevasion, theft of funds, funding of illegal activities,\ntransactions relating to child sexual abuse material or elder\nfraud abuse, and any other financial transaction involving the\nproceeds of specified unlawful activity, as defined in section\n1956(c) of title 18, United States Code.\n(8) Money services business.--The term ``money services\nbusiness'' has the meaning given the term in section 1010.100\nof title 31, Code of Federal Regulations (or any corresponding\nsimilar regulation).\n(c) Establishment of Program.--The Secretary of the Treasury shall\nestablish a pilot program under which covered agencies and designated\nprivate sector entities securely share information focused on potential\nillicit finance violations and threats and emerging risks relating to\nillicit finance violations.\n(d) Designation of Private Sector Entities.--\n(1) Required action.--\n(A) Initial companies.--Not later than 90 days\nafter the date of enactment of this Act, the Director\nand the Secretary shall designate 10 private sector\nentities that are money services businesses, 10 private\nsector entities that are digital commodity brokers,\ndigital commodity dealers, or digital commodity\nexchanges, and 10 private sector entities that are\nbanks to participate in the pilot program established\nunder subsection (c), if such entities agree and\nvolunteer to participate in the program.\n(B) Biannual review.--Not less frequently than once\nevery 6 months, the Director shall review and, as\nappropriate, replace the private sector entities\ndesignated under this paragraph.\n(C) Rule of construction.--Nothing in this section\nmay be construed as--\n(i) requiring an entity to participate in\nthe pilot program established under this\nsection; or\n(ii) enabling the Director to select an\nentity to participate in the pilot program\nwithout the consent of such entity.\n(2) Optional designation.--In addition to the 30 private\nsector entities designated under paragraph (1), the Director\nmay designate--\n(A) 1 or more information sharing and analysis\ncenters to participate in the pilot program;\n(B) 1 or more participants in a certified or\nrecognized information sharing or interdiction network;\nor\n(C) 1 or more private sector entities, as\nappropriate, relating to a particular type of illicit\nactivity.\n(e) Information Sharing With Private Sector Entities.--A covered\nagency that initiates an investigation into a potential illicit finance\nviolation, or identifies a threat or emerging risk relating to an\nillicit finance violation, may share with any designated private sector\nentity such information about the investigation, threat, or emerging\nrisk as the covered agency determines is appropriate.\n(f) Use of Information by Private Sector Entities.--Information\nreceived by a designated private sector entity under this section may\nnot be used for any purpose other than identifying and reporting on\nactivities that may involve illicit finance violations or threats and\nemerging risks relating to illicit finance violations, unless otherwise\nprescribed by regulation or permitted by the covered agency sharing the\ninformation.\n(g) Means of Sharing Information.--The covered agencies and\ndesignated private sector entities may share information about\npotential illicit finance violations, or threats and emerging risks\nrelating to illicit finance violations, with each other--\n(1) through a portal established by the Secretary of the\nTreasury or a similar mechanism determined appropriate by the\nSecretary of the Treasury;\n(2) through secure email;\n(3) at monthly meetings, which shall be facilitated by the\nSecretary of the Treasury; or\n(4) through a certified or recognized information-sharing\nor interdiction network.\n(h) Limitation on Liability.--A designated private sector entity\nthat transmits, receives, or shares information for the purposes of\nidentifying and reporting activities that may constitute illicit\nfinance violations, or threats and emerging risks relating to illicit\nfinance violations, shall not be liable to any person for such\ndisclosure or for any failure to provide notice of such disclosure to\nthe person who is the subject of such disclosure or any other person\nidentified in such disclosure.\n(i) Sunset.--The pilot program established under subsection (c)\nshall terminate on the date that is 5 years after the date of enactment\nof this Act, unless made permanent through notice and comment\nrulemaking by the Department of the Treasury.\n\nSEC. 204. FINANCIAL TECHNOLOGY PROTECTION ACT.\n\n(a) Short Title.--This section may be cited as the ``Financial\nTechnology Protection Act''.\n(b) Definitions.--In this section:\n(1) Appropriate congressional committees.--The term\n``appropriate congressional committees'' means--\n(A) the Committee on Banking, Housing, and Urban\nAffairs of the Senate;\n(B) the Committee on Agriculture, Nutrition, and\nForestry of the Senate;\n(C) the Committee on Financial Services of the\nHouse of Representatives; and\n(D) the Committee on Agriculture of the House of\nRepresentatives.\n(2) Distributed ledger analytics company.--The term\n``distributed ledger analytics company'' means any business\nproviding software, research, or other services (such as\ntracing tools, geofencing, transaction screening, the\ncollection of business data, and sanctions screening) that--\n(A) support private and public sector\ninvestigations and risk management activities; and\n(B) involve cryptographically secured distributed\nledgers or any similar technology or implementation.\n(3) Emerging technologies.--The term ``emerging\ntechnologies'' means the critical and emerging technology areas\nlisted in the Critical and Emerging Technologies List developed\nby the Fast Track Action Subcommittee on Critical and Emerging\nTechnologies of the National Science and Technology Council,\nincluding any updates to such list.\n(4) Foreign terrorist organization.--The term ``foreign\nterrorist organization'' means an organization that is\ndesignated as a foreign terrorist organization under section\n219 of the Immigration and Nationality Act (8 U.S.C. 1189).\n(5) Illicit use.--The term ``illicit use'' includes fraud,\nmoney laundering, terrorist financing, the purchase and sale of\nillicit goods, trafficking of fentanyl (including fentanyl\nprecursors and trade in other illicit drugs), sanctions\nevasion, theft of funds, funding of illegal activities,\ntransactions related to child sexual abuse material or elder\nfraud abuse, and any other financial transaction involving the\nproceeds of specified unlawful activity (as defined in section\n1956(c) of title 18, United States Code).\n(6) State sponsor of terrorism.--The term ``state sponsor\nof terrorism'' means a country determined by the Secretary of\nState to have repeatedly provided support for acts of\ninternational terrorism under section 40 of the Arms Export\nControl Act (22 U.S.C. 2780) or section 620A of the Foreign\nAssistance Act of 1961 (22 U.S.C. 2371).\n(7) Terrorist.--The term ``terrorist'' includes a person\ncarrying out domestic terrorism or international terrorism (as\nsuch terms are defined, respectively, under section 2331 of\ntitle 18, United States Code).\n(8) Transnational organized crime.--The term\n``transnational organized crime'' has the meaning given the\nterm in section 284 of title 10, United States Code.\n(c) Independent Financial Technology Working Group to Combat\nTerrorism, Narcotics Trafficking, and Illicit Financing.--\n(1) Establishment.--There is established the Independent\nFinancial Technology Working Group to Combat Terrorism,\nNarcotics Trafficking, and Illicit Financing (in this section\nreferred to as the ``Working Group'' ), which shall consist of\nthe following:\n(A) The Secretary of the Treasury or their\ndesignee, who shall serve as the chair of the Working\nGroup.\n(B) A senior-level representative from each of the\nfollowing:\n(i) The Department of the Treasury.\n(ii) The Office of Terrorism and Financial\nIntelligence.\n(iii) The Internal Revenue Service.\n(iv) The Department of Justice.\n(v) The Federal Bureau of Investigation.\n(vi) The Drug Enforcement Administration.\n(vii) The Department of Homeland Security.\n(viii) The United States Secret Service.\n(ix) The Department of State.\n(x) The Office of the Director of National\nIntelligence.\n(C) At least 5 individuals appointed by the\nSecretary of the Treasury to represent the following:\n(i) Digital asset companies.\n(ii) Distributed ledger analytics\ncompanies.\n(iii) Financial institutions.\n(iv) Institutions or organizations engaged\nin research.\n(v) Institutions or organizations focused\non individual privacy and civil liberties.\n(D) Such additional individuals as the Secretary of\nthe Treasury may appoint as necessary to accomplish the\nduties described in paragraph (2).\n(2) Duties.--The Working Group shall--\n(A) conduct research on the illicit use of digital\nassets and other related emerging technologies,\nincluding by terrorists, foreign terrorist\norganizations, state sponsors of terrorism, and\ntransnational organized crime groups; and\n(B) develop legislative and regulatory proposals to\nimprove anti-money laundering, counter-terrorist, and\nother counter-illicit financing efforts in the United\nStates.\n(3) Reports.--\n(A) In general.--Not later than 1 year after the\ndate of enactment of this Act, and annually for the 3\nyears thereafter, the Working Group shall submit to the\nSecretary of the Treasury, the heads of each agency\nrepresented in the Working Group pursuant to paragraph\n(1)(B), and the appropriate congressional committees a\nreport containing the findings and determinations made\nby the Working Group in the previous year and any\nlegislative and regulatory proposals developed by the\nWorking Group.\n(B) Final report.--Before the date on which the\nWorking Group terminates under paragraph (4)(A), the\nWorking Group shall submit to the appropriate\ncongressional committees a final report detailing the\nfindings, recommendations, and activities of the\nWorking Group, including any final results from the\nresearch conducted by the Working Group.\n(4) Sunset.--\n(A) In general.--The Working Group shall terminate\non the later of--\n(i) the date that is 4 years after the date\nof enactment of this Act; or\n(ii) the date on which the Working Group\ncompletes any wind-up activities described in\nsubparagraph (B).\n(B) Authority to wind up activities.--If there are\nresearch, proposals, or other related activities of the\nWorking Group ongoing as of the date that is 4 years\nafter the date of enactment of this Act, the Working\nGroup may temporarily continue working in order to wind\nup such activities.\n(C) Return of appropriated funds.--On the date on\nwhich the Working Group terminates under subparagraph\n(A), any unobligated funds appropriated to carry out\nthis subsection shall be transferred to the Treasury.\n\nSEC. 205. DIGITAL ASSET KIOSKS.\n\n(a) Registration.--Section 5330 of title 31, United States Code, is\namended--\n(1) in subsection (d)--\n(A) in paragraph (1)(A), by inserting ``, any\nperson who owns, operates, or manages a digital asset\nkiosk in the United States or its territories,'' after\n``similar instruments''; and\n(B) by adding at the end the following:\n``(3) Digital asset; digital asset address; digital asset\nkiosk; digital asset kiosk operator.--The terms `digital\nasset', `digital asset address', `digital asset kiosk', and\n`digital asset kiosk operator' have the meanings given those\nterms, respectively, in section 5337.''; and\n(2) by adding at the end the following:\n``(f) Registration of Digital Asset Kiosk Locations.--\n``(1) In general.--Not later than 90 days after the\neffective date of this subsection, and not less than once every\n90 days thereafter, the Secretary of the Treasury shall require\ndigital asset kiosk operators to submit an updated list\ncontaining the physical address of each digital asset kiosk\nowned or operated by the digital asset kiosk operator.\n``(2) Form and manner of registration.--Each submission by\na digital asset kiosk operator pursuant to paragraph (1) shall\ninclude--\n``(A) the legal name of the digital asset kiosk\noperator;\n``(B) any fictitious or trade name of the digital\nasset kiosk operator;\n``(C) the physical address of each digital asset\nkiosk owned, operated, or managed by the digital asset\nkiosk operator that is located in the United States or\nthe territories of the United States;\n``(D) the start date of operation of each digital\nasset kiosk;\n``(E) the end date of operation of each digital\nasset kiosk, if applicable; and\n``(F) each digital asset address used by the\ndigital asset kiosk operator.\n``(3) False and incomplete information.--The filing of\nfalse or materially incomplete information in a submission\nrequired under paragraph (1) shall be deemed a failure to\ncomply with the requirements of this subsection.''.\n(b) Preventing Fraudulent Transactions at Digital Asset Kiosks.--\n(1) In general.--Subchapter II of chapter 53 of title 31,\nUnited States Code, is amended by adding at the end the\nfollowing:\n``Sec. 5337. Digital asset kiosk fraud prevention\n``(a) Definitions.--In this section:\n``(1) Customer.--The term `customer' means any person that\npurchases or sells digital assets through a digital asset\nkiosk.\n``(2) Distributed ledger analytics.--The term `distributed\nledger analytics' means the analysis of data from public\ndistributed ledgers, and associated transaction information, to\nprovide risk-specific information about digital asset\ntransactions and digital asset addresses.\n``(3) Digital asset.--The term `digital asset' has the\nmeaning given the term in section 2 of the GENIUS Act (12\nU.S.C. 5901).\n``(4) Digital asset address.--The term `digital asset\naddress' means an alphanumeric identifier associated with a\ndigital asset wallet identifying the location to which a\ndigital asset purchased through a digital asset kiosk can be\nsent or from which a digital asset sold through a digital asset\nkiosk can be accessed.\n``(5) Digital asset kiosk.--The term `digital asset kiosk'\nmeans a stand-alone machine that is capable of accepting or\ndispensing legal tender in exchange for digital assets.\n``(6) Digital asset kiosk operator.--The term `digital\nasset kiosk operator' means a person who owns, operates, or\nmanages a digital asset kiosk located in the United States or\nits territories.\n``(7) Digital asset kiosk transaction.--The term `digital\nasset kiosk transaction' means the purchase or sale of digital\nassets via a digital asset kiosk.\n``(8) Digital asset wallet.--The term `digital asset\nwallet' means a software application or other mechanism\nproviding a means for holding, storing, and transferring\ndigital assets.\n``(9) FinCEN.--The term `FinCEN' means the Financial Crimes\nEnforcement Network of the Department of the Treasury.\n``(10) New customer.--The term `new customer,' with respect\nto a digital asset kiosk operator, means a customer during the\n14-day period beginning on the date of the first digital asset\nkiosk transaction of the customer with the digital asset kiosk\noperator.\n``(11) Transaction hash.--The term `transaction hash' means\na unique identifier made up of a string of characters that act\nas a record of and provide proof that a transaction was\nverified and added to the distributed ledger.\n``(b) Disclosures.--\n``(1) In general.--Before entering into a digital asset\ntransaction with a customer, a digital asset kiosk operator\nshall disclose in a clear, conspicuous, and easily readable\nmanner--\n``(A) all relevant terms and conditions of the\ndigital asset kiosk transaction, including--\n``(i) the amount of the digital asset kiosk\ntransaction;\n``(ii) the type and nature of the digital\nasset kiosk transaction;\n``(iii) a warning that the digital asset\nkiosk transaction is final, is not refundable,\nand may not be reversed; and\n``(iv) the type and amount of any fees or\nother expenses paid by the customer;\n``(B) a warning relating to consumer fraud\nincluding--\n``(i) that consumer fraud often starts with\ncontact from a stranger, and that the customer\nshould never send money to someone the customer\ndoes not know;\n``(ii) the most common types of fraudulent\nschemes involving digital asset kiosks, such\nas--\n``(I) impersonation of a government\nofficial or a bank representative;\n``(II) threats of jail time or\nfinancial penalties;\n``(III) offers of a job or reward\nin exchange for payment, or offers of\ndeals that seem too good to be true;\n``(IV) claims of a frozen bank\naccount or credit card;\n``(V) requests for donations to\ncharity or disaster relief; or\n``(VI) payment to an individual the\ncustomer has never met; and\n``(iii) a statement that the customer\nshould contact law enforcement if they suspect\nfraudulent activity, such as scams, including\ncontact information for a relevant law\nenforcement or government agency.\n``(2) Additional disclosures.--FinCEN may adopt rules\nrelating to additional disclosures required to be made to\ncustomers prior to engaging in a transaction.\n``(c) Acknowledgment of Disclosures.--Each time a customer uses a\ndigital asset kiosk, the digital asset kiosk operator shall ensure\nacknowledgment of all disclosures required under subsection (b) via\nconfirmation of consent of the customer at the digital asset kiosk.\n``(d) Receipts.--Upon completion of each digital asset kiosk\ntransaction, the digital asset kiosk operator shall provide the\ncustomer with a receipt, which shall include the following information:\n``(1) The name and contact information of the digital asset\nkiosk operator, including a telephone number for a customer\nservice helpline.\n``(2) The name of the customer.\n``(3) The type, value, date, and precise time of the\ndigital asset kiosk transaction, transaction hash, and each\napplicable digital asset address.\n``(4) The amount of the digital asset kiosk transaction\nexpressed in United States dollars.\n``(5) All fees charged.\n``(6) A statement that the customer should contact law\nenforcement if they suspect fraudulent activity, such as scams,\nincluding contact information for a relevant law enforcement or\ngovernment agency.\n``(7) The exchange rate applied.\n``(8) Any additional information the digital asset kiosk\noperator determines appropriate.\n``(e) Physical Receipts Available.--A physical version of the\nreceipt required under subsection (d) shall be issued to the customer\nat the time of the digital asset kiosk transaction, if the customer\nopts for such a physical version of the receipt.\n``(f) Anti-Fraud Policy.--\n``(1) In general.--Each digital asset kiosk operator shall\nestablish, maintain, and implement a written anti-fraud policy\nif required by, and consistent with, applicable State law in\nthose States where the digital asset kiosk operator is\nlicensed.\n``(2) Federal standard.--A digital asset kiosk operator\noperating in any State that does not require an anti-fraud\npolicy under paragraph (1) shall establish, maintain, and\nimplement an anti-fraud policy that, at a minimum, includes--\n``(A) the identification and assessment of fraud-\nrelated areas;\n``(B) procedures and controls to protect against\nrisks identified under subparagraph (A);\n``(C) allocation of responsibility for monitoring\nthe risks identified under subparagraph (A); and\n``(D) procedures for the periodic evaluation and\nrevision of the anti fraud procedures, controls, and\nmonitoring mechanisms under subparagraphs (B) and (C).\n``(g) Appointment of Compliance Officer.--Each digital asset kiosk\noperator shall designate and employ a compliance officer who--\n``(1) is qualified to coordinate and monitor compliance\nwith this section and all other applicable Federal and State\nlaws, rules, and regulations;\n``(2) is employed full-time by the digital asset kiosk\noperator;\n``(3) is not the chief executive officer of the digital\nasset kiosk operator; and\n``(4) does not own or control more than 10 percent of any\ninterest in the digital asset kiosk operator.\n``(h) Use of Distributed Ledger Analytics and Wallet Pinning.--\n``(1) In general.--Each digital asset kiosk operator shall\nuse distributed ledger analytics to prevent sending a digital\nasset to a digital asset wallet known to be affiliated with\nfraudulent activity at the time of a digital asset kiosk\ntransaction and to detect transaction patterns indicative of\nfraud or other illicit activities.\n``(2) Wallet pinning.--Each digital asset kiosk operator\nshall maintain restrictions that prevent more than 1 customer\nof the digital asset kiosk operator from using the same digital\nwallet address.\n``(3) Compliance.--The Director of FinCEN may request\nevidence from any digital asset kiosk operator to confirm\ncompliance with this subsection.\n``(i) Confirmation Required Before New Customer Transactions.--\nBefore entering into a digital asset kiosk transaction valued at $500\nor more with a new customer, the digital asset kiosk operator shall\nobtain confirmation from the new customer that--\n``(1) the new customer wishes to proceed with the digital\nasset kiosk transaction; and\n``(2) the new customer is not being fraudulently induced\ninto engaging in the transaction.\n``(j) Holding Period.--No digital asset kiosk operator shall\nexecute a transaction on behalf of a new customer that sends digital\nassets to a specific wallet address unless at least 72 hours have\nelapsed since the initiation of the transaction by the new customer.\n``(k) Transaction Limits With Respect to New Customers.--The\nSecretary of the Treasury shall prescribe by regulation the threshold\namounts for reporting or limiting digital asset kiosk transactions,\nincluding aggregate or single-day deposit and withdrawal limits, as the\nSecretary determines are reasonably necessary to deter fraud and\nillicit finance. Such regulations shall consider the unique risks and\nfunctionalities of digital asset kiosks and may provide for exceptions,\nadjustments, or exclusions as deemed appropriate by the Secretary.\n``(l) Interim Transaction Limits.--Until the effective date of\nregulations prescribed under subsection (k), a digital asset kiosk\noperator shall not permit a new customer to conduct transactions\nexceeding $3,500 in the aggregate within any 24-hour period.\n``(m) Refunds.--A digital asset kiosk operator shall issue a refund\nfor a customer's transaction fees within 30 days if--\n``(1) the customer was fraudulently induced into engaging\nin the digital asset kiosk transaction; and\n``(2) the customer files a complaint to the digital asset\nkiosk operator, which includes--\n``(A) the name, address, and phone number of the\ncustomer;\n``(B) the transaction hash of the digital asset\nkiosk transaction or information sufficient to\nestablish the type, value, date, and time of the\ndigital asset kiosk transaction; and\n``(C) a copy of a report to a State or local law\nenforcement or government agency made not later than 30\ndays after the digital asset kiosk transaction.\n``(n) Customer Service Helpline.--Each digital asset kiosk operator\nshall provide live customer service during business hours, the phone\nnumber for which is regularly monitored and displayed in a clear,\nconspicuous, and easily readable manner upon each digital asset kiosk.\nDuring non-business hours, the digital asset kiosk operator shall\nmaintain an alternative customer service system that may include an\nautomated chatbot, an online complaint reporting portal, or other\ncustomer service mechanism.\n``(o) Communications With Law Enforcement.--Each digital asset\nkiosk operator performing business in the United States shall have a\ndedicated method of contact, such as a phone number, email address, or\nother contact method, for law enforcement and regulatory agencies to\ncontact the digital asset kiosk operator. This contact method shall be\ndisplayed and available on the digital asset kiosk operator's website.\n``(p) Civil Penalties and State Enforcement.--Any State regulator\nmay bring a civil action or other appropriate proceeding to enforce the\nprovisions of this section and may assess or collect civil penalties or\nother remedies for violations of this section, as provided under\napplicable State law.\n``(q) Rule of Construction.--Nothing in this section may be\nconstrued to prohibit a State from enacting a law, rule, or regulation\nthat provides greater protection to customers.''.\n(2) Technical and conforming amendment.--The table of\nsections for subchapter II of chapter 53 of title 31, United\nStates Code, is amended by adding at the end the following:\n\n``5337. Digital asset kiosk fraud prevention.''.\n\nSEC. 206. STUDY ON ILLICIT USE OF DIGITAL ASSETS.\n\n(a) Definitions.--In this section:\n(1) Foreign terrorist organization.--The term ``foreign\nterrorist organization'' means an organization that is\ndesignated as a foreign terrorist organization under section\n219 of the Immigration and Nationality Act (8 U.S.C. 1189).\n(2) Transnational organized criminal.--The term\n``transnational organized criminal'' means an individual who\nparticipates in transnational organized crime, as defined in\nsection 284(i) of title 10, United States Code.\n(b) Review.--Not later than 1 year after the date of enactment of\nthis Act, the Secretary of the Treasury, in consultation with the\nAttorney General, shall conduct a comprehensive review of how foreign\nterrorist organizations and transnational organized criminals utilize\ndigital assets in connection with illicit activities.\n(c) Report.--Not later than 180 days after completing the review\nunder subsection (b), the Secretary of the Treasury shall submit to the\nCommittee on Agriculture, Nutrition, and Forestry and the Committee on\nBanking, Housing, and Urban Affairs of the Senate and the Committee on\nAgriculture and the Committee on Financial Services of the House of\nRepresentatives a report on the findings of the Secretary, including--\n(1) an assessment of how foreign terrorist organizations\nand transnational organized criminals utilize digital assets in\nconnection with illicit activities; and\n(2) recommendations to assist the Commission and the\nCommodity Futures Trading Commission in strengthening\ncompliance and enforcement of digital assets-related entities\nregistered with their respective agencies.\n(d) Additional Agencies.--The Secretary of the Treasury may, in the\nsole discretion of the Secretary of the Treasury, solicit input for the\nreport required under subsection (c) from any or all of the Federal\nfunctional regulators, as defined in section 509 of the Gramm-Leach-\nBliley Act (15 U.S.C. 6809), and the Commodity Futures Trading\nCommission.\n(e) Classified Annex.--The report required under subsection (c) may\ninclude a classified annex, as appropriate.\n\nTITLE III--RESPONSIBLE INNOVATION IN DECENTRALIZED FINANCE\n\nSEC. 301. RULEMAKING ON APPLICATION OF EXISTING SECURITIES INTERMEDIARY\nREQUIREMENTS AND EXISTING BANK SECRECY ACT REQUIREMENTS\nTO NON-DECENTRALIZED FINANCE TRADING PROTOCOLS.\n\n(a) Definitions.--In this section:\n(1) Decentralized finance trading protocol.--The term\n``decentralized finance trading protocol'' means a distributed\nledger system through which multiple participants can execute a\nfinancial transaction--\n(A) in accordance with an automated rule or\nalgorithm that is predetermined and non-discretionary;\nand\n(B) without reliance on a person other than the\nuser to maintain custody or control of any digital\nassets subject to the financial transaction.\n(2) Non-decentralized finance trading protocol.--\n(A) In general.--The term ``non-decentralized\nfinance trading protocol'' means a decentralized\nfinance trading protocol that meets 1 or more of the\nfollowing:\n(i) A person or group of persons under\ncommon control, or acting pursuant to an\nagreement, arrangement, or understanding to act\nin concert, has the authority, directly or\nindirectly, through any contract, arrangement,\nunderstanding, relationship, or otherwise, to\ncontrol or materially alter the functionality,\noperation, or rules of consensus or agreement\nof the decentralized finance trading protocol.\n(ii) The decentralized finance trading\nprotocol does not operate, execute, and enforce\nits operations and transactions based solely on\npre-established, transparent rules encoded\ndirectly within the source code of the\ndistributed ledger system.\n(iii) A person or group of persons under\ncommon control, or acting pursuant to an\nagreement, arrangement, or understanding to act\nin concert, has the authority, via operation of\nthe decentralized finance trading protocol, to\nrestrict, censor, or prohibit the use of the\ndecentralized finance trading protocol,\nincluding any applicable system-based user\nactivity.\n(B) Special rule.--For purposes of subparagraph\n(A), a decentralized governance system, solely by\nvirtue of the operation of the decentralized governance\nsystem, shall not be considered to be a person or a\ngroup of persons under common control or acting\npursuant to an agreement, arrangement, or understanding\nto act in concert.\n(C) Exclusions.--For purposes of this section,\nparticipation in an incident-response or security\ncouncil, as described in subsection (f), shall not, by\nitself, be deemed to constitute control of a non-\ndecentralized finance trading protocol.\n(D) Scoping.--In implementing this section, the\nCommission and the Department of the Treasury shall\nconstrue the term ``non-decentralized finance trading\nprotocol'' in a manner consistent with section 15H of\nthe Securities Exchange Act of 1934, as added by\nsection 601.\n(b) Rules.--\n(1) In general.--The Commission, in consultation with the\nDepartment of the Treasury, shall adopt tailored, clear, and\nspecific rules, after notice and comment, that clarify how a\nperson, or group of persons under common control, or acting\npursuant to an agreement, arrangement, or understanding to act\nin concert, that controls a non-decentralized finance trading\nprotocol and is subject to the Securities Exchange Act of 1934\n(15 U.S.C. 78a et seq.), as amended by this Act, shall comply\nwith applicable requirements under that Act, including with\nrespect to registration, conduct, disclosure, recordkeeping,\nsupervision, and other requirements under the securities laws.\n(2) Requirements.--The rulemaking required under paragraph\n(1) shall--\n(A) ensure that the rules adopted pursuant to that\nrulemaking are consistent with the purposes of the\nsecurities laws, including the public interest, the\nprotection of investors, and the maintenance of fair\nand orderly markets;\n(B) protect the rights of software developers,\npublishers, and users to create, publish, and use code\nand software in a manner consistent with the First\nAmendment to the Constitution of the United States;\n(C) provide legal clarity for the development,\npublication, and operation of distributed ledger\nsystems and the components therein in a manner\nconsistent with the purposes of this section; and\n(D) result in, by operation of law, the application\nand enforcement by the Department of the Treasury,\nwhere applicable and pursuant to existing law, as in\neffect on the day before the date of enactment of this\nAct, of anti-money laundering and countering the\nfinancing of terrorism requirements under the Bank\nSecrecy Act and other Federal law with respect to any\nperson or group of persons that the Commission\ndetermines, through that rulemaking, is required to\nregister, or comply as a registrant, under the\nSecurities Exchange Act of 1934 (15 U.S.C. 78a et\nseq.).\n(3) Application.--\n(A) In general.--Any person or group of persons\ndetermined under this subsection to be required to\nregister, or comply as a registrant, under the\nSecurities Exchange Act of 1934 (15 U.S.C. 78a et seq.)\n(referred to in this paragraph as the ``Exchange Act'')\nshall be subject to that Act and the Bank Secrecy Act\nto the extent applicable under existing law, as in\neffect on the day before the date of enactment of this\nAct, consistent with the treatment of similarly\nsituated participants under the Exchange Act.\n(B) Rulemaking.--The Secretary of the Treasury, in\nconsultation with the Commission, shall adopt tailored,\nclear, and specific rules, after providing notice and\nthe opportunity to comment, that define compliance with\nobligations under the Bank Secrecy Act and other\nFederal laws relating to anti-money laundering and\ncountering the financing of terrorism with respect to\nany person, or group of persons under common control\n(or acting pursuant to an agreement, arrangement, or\nunderstanding to act in concert), that--\n(i) controls the operation of a non-\ndecentralized finance trading protocol\nidentified in the rulemaking conducted under\nparagraph (1);\n(ii) is required to register, or comply as\na registrant, under the Exchange Act, as\ndetermined in the rulemaking conducted under\nparagraph (1); and\n(iii) is caused to be treated as a\nfinancial institution under the Bank Secrecy\nAct pursuant to existing law, as in effect on\nthe day before the date of enactment of this\nAct, as a result of registration or compliance\ndescribed in clause (ii).\n(c) Activity-Based Application.--Rules adopted under subsection\n(b)(1) shall require the Commission to determine the applicable\nrequirements only with respect to securities-related activities, based\non the functions performed by the controlling person or group of\npersons, including brokerage, dealing, trading, execution, clearing, or\ncustody of securities, without regard to technological form,\ndistributed architecture, or purportedly decentralized\ncharacterization.\n(d) Rules of Construction.--\n(1) Registration not required.--Nothing in this section,\nnor any rule adopted under this section, may be construed to--\n(A) require a distributed ledger system or any\nsoftware code to register with the Commission in its\nown capacity; or\n(B) prohibit the launch, deployment, or operation\nof a distributed ledger system.\n(2) No expansion of statutory authority.--Notwithstanding\nany rulemaking required under subsection (b), and\nnotwithstanding any action the Commission or the Secretary of\nthe Treasury may take under that subsection, nothing in this\nsection, including any such rulemaking, may be construed to--\n(A) expand or contract the statutory authority of\nthe Commission or the Department of the Treasury, as in\neffect on the day before the date of enactment of this\nAct, under the Bank Secrecy Act; or\n(B) limit the use of the authority described in\nsubparagraph (A) to determine, pursuant to that\nrulemaking, the applicability of existing statutory\nrequirements, as in effect on the day before the date\nof enactment of this Act, to persons or activities\ndescribed in this section.\n(3) No presumption of applicability.--Nothing in this\nsection may be construed to create a presumption that any\nperson or activity described in this section is or is not\nsubject to the Securities Exchange Act of 1934 (15 U.S.C. 78a\net seq.) or the Bank Secrecy Act absent a determination made\npursuant to a rulemaking required under this section.\n(e) Preservation of Existing Authorities.--Nothing in this section\nmay be construed to--\n(1) limit the authority of the Commission under the\nsecurities laws to investigate violations, bring actions, or\nissue subpoenas with respect to persons determined, pursuant to\nrulemaking, to be subject to the securities laws under this\nsection; or\n(2) limit the authority of the Secretary of the Treasury\nunder the Bank Secrecy Act, including to investigate violations\nor bring actions with respect to persons determined, pursuant\nto rulemaking, to be subject to the Bank Secrecy Act.\n(f) Non-Decentralized Finance Trading Protocols.--\n(1) In general.--In adopting rules under subsection (b),\nthe Commission shall treat a decentralized governance system\nand any person participating in the decentralized governance\nsystem as separate persons unless such persons are under common\ncontrol or acting pursuant to an agreement, arrangement, or\nunderstanding to act in concert.\n(2) Emergency measures.--\n(A) In general.--Pre-defined, temporary rules-based\ncybersecurity emergency measures exercised by an\nincident-response or security council exclusively in\nresponse to a specific and documented cybersecurity\nincident or imminent threat and pursuant to publicly\ndisclosed, on-chain authorization mechanisms, strictly\nlimited in scope and duration solely to address such\nspecific and documented cybersecurity incident or\nimminent threat, and without unilateral control by any\nsingle person, shall not, by themselves, constitute\ncommon control or an agreement, arrangement, or\nunderstanding to act in concert, provided that such\nrules and authorities, including the procedures and\noperational limits governing such emergency measures,\nare disclosed in publicly available written\ndocumentation reasonably available to the applicable\nFederal regulator, by a decentralized governance system\nor similar legal entity sufficiently in advance of any\nexercise of such emergency powers.\n(B) Prohibition.--The emergency measures described\nin subparagraph (A) may not be used to implement\nprotocol upgrades, governance decisions, or economic\nchanges that are unrelated to the mitigation of the\napplicable cybersecurity incident or imminent threat,\nas described in that subparagraph.\n(3) Standards.--The standards criteria for temporary rules-\nbased cybersecurity emergency measures under paragraph (2)\nshall be established by rulemaking pursuant to subsection (b).\n\nSEC. 302. ILLICIT FINANCE OBLIGATIONS FOR DISTRIBUTED LEDGER MESSAGING\nSYSTEMS.\n\n(a) Definitions.--In this section:\n(1) Distributed ledger messaging system.--The term\n``distributed ledger messaging system''--\n(A) means a web-hosted software application that\nprovides a user with the ability to create or submit an\ninstruction, communication, or message to a distributed\nledger application or decentralized finance trading\nprotocol for the purpose of executing a transaction by\nthe user; and\n(B) does not include--\n(i) a distributed ledger application;\n(ii) a distributed ledger protocol;\n(iii) a distributed ledger system;\n(iv) a decentralized finance trading\nprotocol;\n(v) any client, node, validator, or other\nform of computational infrastructure with\nrespect to a distributed ledger system; or\n(vi) any software or hardware wallet that\nfacilitates the custody of an individual of\ntheir digital assets.\n(2) United States sanction law.--The term ``United States\nsanction law'' means any Federal law imposing, or authorizing\nthe imposition of, economic sanctions.\n(b) Guidance.--Not later than 360 days after the date of enactment\nof this Act, the Secretary of the Treasury shall issue guidance with\nrespect to the economic sanctions and anti-money laundering and\ncountering the financing of terrorism obligations, risk management\npractices, or compliance considerations, applicable to a distributed\nledger messaging system that is owned or operated by a United States\nperson, as defined in any law imposing or authorizing the imposition of\neconomic sanctions, which may include--\n(1) the use of commercially reasonable distributed ledger-\nanalytics screening measures, through industry-standard\ndistributed ledger-analytics tools, to identify wallet\naddresses that are owned by sanctioned persons, involve\njurisdictions or financial institutions subject to United\nStates sanctions, or activity prohibited by United States\nsanctions;\n(2) blocking, rejecting, preventing the routing of, or\notherwise restricting attempted transactions prohibited by\nUnited States sanction laws;\n(3) blocking or restricting transactions that exhibit\nindicators of ransomware activity, illicit finance typologies,\nor any other pattern that presents a significant and\nidentifiable illicit finance risk based on a commercially\nreasonable distributed ledger-analytics assessment to identify\ntransactions that involve ransomware activity and other illicit\nfinance activity; and\n(4) implementing and maintaining risk-based measures,\nconsistent with applicable law, to identify, mitigate, and\naddress anti-money laundering and countering the financing of\nterrorism risks, including--\n(A) monitoring for risk indicators and limiting\nexposure to illicit-finance risks, which may include\nrestricting, limiting, or otherwise mitigating exposure\nto high-risk transactions; and\n(B) complying, as applicable, with special measures\nimplemented by the Secretary of the Treasury under\nsection 5318A of title 31, United States Code.\n(c) Enforcement and Penalties.--The Secretary of the Treasury and\nany other Federal agency with relevant jurisdiction have the authority,\nas applicable, to enforce this section using their existing\nauthorities, as of the day before the date of enactment of this Act,\nunder applicable law.\n(d) Rules of Construction.--Nothing in this section may be\nconstrued to--\n(1) alter or amend any laws imposing or authorizing\nimposition of economic sanctions by the United States,\nincluding those that apply to United States persons that own or\noperate a distributed ledger messaging system;\n(2) expand or contract the applicability of--\n(A) economic sanctions, anti-money laundering, or\nany other illicit finance laws in effect as of the day\nbefore the date of enactment of this Act to any person,\nincluding any person that owns or operates a\ndistributed ledger messaging system; or\n(B) the definition of a ``financial institution''\nunder applicable laws, which shall not apply to non-\ncontrolling developers or providers as defined in\nsection 604(b)(3); or\n(3) restrict the authority of the Secretary of the Treasury\nto implement, administer, and enforce, including by imposing\ncivil money penalties, any law imposing or authorizing the\nimposition of economic sanctions or any law to prevent money\nlaundering or illicit finance otherwise provided by Federal law\nto the Secretary of the Treasury.\n\nSEC. 303. SPECIAL MEASURE RELATING TO CERTAIN TRANSMITTALS OF FUNDS.\n\nSection 5318A of title 31, United States Code, is amended--\n(1) in subsection (a)(2)(C), by striking ``subsection\n(b)(5)'' and inserting ``paragraph (5) or (6) of subsection\n(b)'' and\n(2) in subsection (b), by adding at the end the following:\n``(6) Special measure for certain transmittals of funds.--\nIf the Secretary of the Treasury finds that a jurisdiction\noutside of the United States, 1 or more financial institutions\noperating outside of the United States, or 1 or more classes of\ntransactions within, or involving, a jurisdiction outside of\nthe United States is of primary money laundering concern in\nconnection with illicit finance through the use of digital\nassets, as defined in section 2 of the GENIUS Act (12 U.S.C.\n5901), the Secretary may, by order, regulation, or otherwise as\npermitted by law, prohibit, or impose conditions upon, certain\ntransmittals of funds (to be defined by the Secretary by\nregulation) by any domestic financial institution or domestic\nfinancial agency, if such transmittal of funds involves any\nsuch institution, class of transaction, or type of account.''.\n\nSEC. 304. OFFSHORE STABLECOIN REPORT.\n\n(a) Definitions.--In this section:\n(1) Material volume of transactions.--The term ``material\nvolume of transactions'' means a sustained level of transaction\nactivity that is--\n(A) publicly observable;\n(B) exceeds de minimis usage over a 12-month\nperiod; and\n(C) is reasonably likely to affect the illicit\nfinance or national security risk exposure of the\nUnited States.\n(2) Payment stablecoin.--The term ``payment stablecoin''\nhas the meaning given the term in section 2 of the GENIUS Act\n(12 U.S.C. 5901).\n(3) United states-dependent offshore stablecoin.--The term\n``United States-dependent offshore stablecoin'' means a payment\nstablecoin--\n(A) that is not issued by a permitted payment\nstablecoin issuer or any foreign payment stablecoin\nissuer registered with the Comptroller (as those terms\nare defined in section 2 of the GENIUS Act (12 U.S.C.\n5901));\n(B) that is issued by a person operating outside of\nthe United States; and\n(C) the value of which is supported or backed by a\nreserve of assets that has a substantial nexus to the\nUnited States, which may include--\n(i) obligations of the United States,\nincluding United States Treasury securities and\nrepurchase agreements backed by United States\nTreasury securities and funds held as deposits\nat any bank subject to the jurisdiction of the\nUnited States;\n(ii) deposits maintained at a banking\nentity or insured depository institution\nlocated in the United States, including\ncorrespondent or payable-through accounts;\n(iii) securities issued or guaranteed by\nthe United States or any agency or\ninstrumentality thereof; or\n(iv) assets custodied, cleared, or settled\nthrough payment, clearing, or settlement\nsystems located in the United States.\n(b) Report.--Not later than June 30 of the second calendar year\nthat begins after the date of enactment of this Act, and every 4 years\nthereafter for not more than 3 reports, the Secretary of the Treasury\nshall submit to the Committee on Banking, Housing, and Urban Affairs of\nthe Senate and the Committee on Financial Services of the House of\nRepresentatives, and make available on the website of the Department of\nthe Treasury, a report assessing whether there is credible,\narticulable, and publicly supportable evidence of significant illicit\nfinance threats or vulnerabilities associated with any United States-\ndependent offshore stablecoin employed in a material volume of\ntransactions.\n(c) Contents.--Each report required under subsection (b) shall\ninclude--\n(1) an assessment of the illicit finance risk of each\nUnited States-dependent offshore stablecoin employed in a\nmaterial volume of transactions;\n(2) an assessment of the controls employed by the issuers\nof United States-dependent offshore stablecoins to address the\nuse of such stablecoins in illicit finance, as available;\n(3) data and information regarding the volume of United\nStates-dependent offshore stablecoins assessed to be employed\nin connection with illicit finance, as available;\n(4) a general description of the relationships between\nUnited States-dependent offshore stablecoins and the financial\nsystem of the United States, including principal channels of\ninteraction; and\n(5) such other information or analysis as the Secretary of\nthe Treasury deems relevant to assessing the illicit finance\nrisks of United States-dependent offshore stablecoins.\n(d) Classified Annex.--Each report required under subsection (b)\nshall be submitted in unclassified form, but may contain a classified\nannex.\n(e) National Strategy.--The reporting requirement under subsection\n(b) may be met as part of the national strategy for combating terrorist\nand other illicit financing required under sections 261 and 262 of the\nCountering America's Adversaries Through Sanctions Act (Public Law 115-\n44; 131 Stat. 934) for the reporting years.\n(f) Rule of Construction.--Nothing in this section may be construed\nto authorize--\n(1) the disclosure of any information that is protected\nfrom disclosure under Federal law; and\n(2) the collection or use of any information other than\npublicly available data or information lawfully obtained by the\nDepartment of the Treasury under existing authorities, as of\nthe day before the date of enactment of this Act.\n\nSEC. 305. TEMPORARY HOLD FOR CERTAIN DIGITAL ASSET TRANSACTIONS.\n\n(a) Definitions.--In this section:\n(1) Covered agency.--The term ``covered agency'' means any\nState or Federal law enforcement agency, including the\nDepartment of the Treasury.\n(2) Covered person.--The term ``covered person'' means a\nperson that is--\n(A) a permitted payment stablecoin issuer;\n(B) a foreign payment stablecoin issuer (as defined\nin section 2 of the GENIUS Act (12 U.S.C. 5901))\nregistered with the Office of the Comptroller of the\nCurrency pursuant to section 18(c) of that Act (12\nU.S.C. 5916(c)); or\n(C) a digital asset service provider, as that term\nis defined in section 2 of the GENIUS Act (12 U.S.C.\n5901).\n(3) Payment stablecoin; permitted payment stablecoin\nissuer.--The terms ``payment stablecoin'' and ``permitted\npayment stablecoin issuer'' have the meanings given those terms\nin section 2 of the GENIUS Act (12 U.S.C. 5901).\n(4) Qualified written request.--The term ``qualified\nwritten request'' means a written communication issued by an\nauthorized official of a covered agency that--\n(A) identifies a specific wallet, address, account,\nor transaction reasonably suspected of being linked to\nillicit activity;\n(B) requests a covered person initiate an action\nwith respect to the specified wallet, address, account,\nor transaction reasonably suspected of being linked to\nillicit activity, including delaying the execution of a\ntransaction, conversion, or withdrawal involving\ndigital assets; and\n(C) includes a designated agency contact.\n(5) Temporary hold.--The term ``temporary hold'' means a\nrestriction applied by a covered person that delays execution\nof a transaction, conversion, or withdrawal involving digital\nassets for a reasonable period of time, not to exceed 30\ncalendar days, which may be extended for an additional 150\ncalendar days pursuant to a qualified written request.\n(b) Protection From Private Causes of Action.--\n(1) In general.--Any covered person that, in good faith and\nin compliance with this section, or any person complying with a\ntemporary lawful order under subsection (c) that, voluntarily\nimplements a temporary hold shall not be held liable pursuant\nto any Federal or State private right of action for\nimplementing the temporary hold, provided that--\n(A) the covered person or other person, as\napplicable--\n(i) implements the temporary hold based on\na reasonable belief the transaction,\nconversion, or withdrawal relates to a\nviolation or attempted violation of State or\nFederal law; or\n(ii) implements the temporary hold after\nreceiving a qualified written request from a\ncovered agency;\n(B) the covered person--\n(i) makes reasonable efforts to notify the\naffected customer of the temporary hold;\n(ii) reasonably determines that\nnotification would impede actual or potential\nlaw enforcement efforts; or\n(iii) receives a qualified written request\nfrom a covered agency that requests\nnotification not be attempted; and\n(C) the covered person notifies as soon as\nreasonably practicable an appropriate State or Federal\nlaw enforcement agency or the Federal Trade Commission,\nprovided that such notification is not required when\nthe covered person has received a qualified written\nrequest from a covered agency.\n(2) Documentation.--A covered person shall--\n(A) maintain for the 3-year period following the\nimplementation of a temporary hold documentation of the\nbasis for applying a temporary hold; and\n(B) make available the documentation described in\nsubparagraph (A) upon the request of a covered agency\nor the Federal Trade Commission.\n(c) Compliance With Temporary Lawful Orders.--A permitted payment\nstablecoin issuer shall comply with any valid writ, process, order,\nrule, decree, command, or other requirement issued or promulgated under\nFederal law by a court of competent jurisdiction that--\n(1) requires a person to freeze or prevent the transfer of\npayment stablecoins;\n(2) specifies the payment stablecoins or accounts subject\nto blocking with reasonable particularity; and\n(3) is subject to judicial or administrative review or\nappeal, as provided by law.\n(d) Rules of Construction.--Nothing in this section may be\nconstrued to--\n(1) compel or require any covered person to take action to\nfreeze, seize, or block digital assets that is not otherwise\nrequired under existing Federal or State law, as in effect on\nthe day before the date of enactment of this Act;\n(2) limit or alter the authority of any government agency,\nincluding with respect to authority to pursue enforcement\nactions;\n(3) limit or affect the application of--\n(A) section 5318(g)(3) of title 31, United States\nCode, and any regulation requiring any financial\ninstitution to report suspicious activity; or\n(B) any lawful authority to seize or freeze assets\npursuant to a lawful order or sanctions designation; or\n(4) limit the ability of a covered person to apply a\ntemporary hold to any wallet, address, account, or transaction\nlocated outside the United States.\n(e) Reporting.--The Attorney General and the Federal Trade\nCommission may issue regulations or guidance relating to any\nnotification by covered persons pursuant to this section to the\nDepartment of Justice and the Federal Trade Commission, respectively.\n\nSEC. 306. VOLUNTARY CYBERSECURITY PROGRAM FOR DECENTRALIZED FINANCE\nTRADING PROTOCOLS.\n\n(a) Definitions.--In this section:\n(1) Covered activities.--The term ``covered activities''\nmeans the activities described in section 15H(b) of the\nSecurities Exchange Act of 1934, as added by section 601.\n(2) Decentralized finance trading protocol.--The term\n``decentralized finance trading protocol'' has the meaning\ngiven the term in section 15H(a) of the Securities Exchange Act\nof 1934, as added by section 601.\n(3) Director.--The term ``Director'' means the Director of\nNIST.\n(4) NIST.--The term ``NIST'' means the National Institute\nof Standards and Technology.\n(b) Establishment of Program.--The Director shall, in consultation\nwith the Commission and the Commodity Futures Trading Commission,\nestablish a voluntary program for the adoption by persons developing\ndecentralized finance trading protocols or engaging in covered\nactivities of applicable cybersecurity standards published by NIST.\n(c) Development of Program Criteria.--\n(1) Request for information.--The Director shall issue a\nrequest for information in the Federal Register to gather input\nfrom experts and industry stakeholders on--\n(A) cybersecurity threats, vulnerabilities, and\nrisks to decentralized finance trading protocols;\n(B) auditing and code security standards, including\nbest practices for code audits;\n(C) consumer protection and code transparency best\npractices on decentralized finance trading protocols;\nand\n(D) existing NIST standards, as of the day before\nthe date of enactment of this Act, and their\napplicability to decentralized finance trading\nprotocols.\n(2) Report.--The Director shall develop a report on the\nsoftware development of decentralized finance protocols to\nassess technical input from paragraph (1).\n(3) Publication of program criteria.--After evaluating\ninput provided under paragraph (1), the Director shall release\na special publication containing a detailed evaluation of\ncybersecurity best practices and existing applicable standards,\nas of the day before the date of enactment of this Act, for\ndecentralized finance trading protocols, to provide program\ncriteria to software developers and industry stakeholders under\nthe voluntary program, which shall include a summary of public\ncomments and responses as to how input was incorporated.\n(4) Requests for revision.--\n(A) In general.--After the Director publishes the\nprogram criteria under paragraph (3), the Director\nshall issue a request for comment in the Federal\nRegister to gather input on the workability of the\nprogram.\n(B) Petition.--The public may petition the Director\nto reevaluate certain aspects of the program criteria\npublished under paragraph (3).\n(5) Program updates.--As the technology underpinning\ndecentralized finance trading protocols evolves, the Director\nshall update the special publication under paragraph (3) in\ncompliance with subsection (d).\n(d) Program.--\n(1) Application.--A person seeking evaluation of a\ndecentralized finance trading protocol or a covered activity\nunder the program established under subsection (b) shall submit\nto the Director an application at such time and in such manner\nas the Director considers appropriate for purposes of the\nprogram.\n(2) Review.--In carrying out the program established under\nsubsection (b), the Director shall review each application\nsubmitted by a person under paragraph (1) of this subsection.\n(3) Determination.--In carrying out a review under\nparagraph (2) of an application regarding a decentralized\nfinance trading protocol or covered activity, the Director\nshall determine whether the protocol or activity is in\ncompliance with existing applicable standards, frameworks, and\nguidelines published by the Director under subsection (c).\n(4) Notice.--For each determination made under paragraph\n(3) pursuant to an application by a person of a decentralized\nfinance trading protocol or covered activity, the Director\nshall transmit to the person a notice of the determination.\n(e) Benefits of Program.--\n(1) Display.--A person that receives notice under\nsubsection (d)(4) that the Director has determined that a\ndecentralized finance trading protocol or a covered activity\nhas adopted the applicable cybersecurity standards published by\nNIST, the person may publicly display a designation, seal, or\nother identifier issued by the Director.\n(2) Treatment of adoption.--In adopting a regulation or\nguidance relating to this section, a Federal agency shall\nconsider adoption of cybersecurity standards under the program\nrequired by subsection (b) as evidence of good faith compliance\nwith the law.\n(f) Rule of Construction Relating to Preemption.--Nothing in this\nsection may be construed to preempt any otherwise applicable provision\nof law of a State.\n\nSEC. 307. AMENDMENTS TO MONETARY INSTRUMENT DEFINITION.\n\n(a) Definitions.--In this section:\n(1) Self-hosted wallet.--The term ``self-hosted wallet''\nmeans a digital interface--\n(A) that is used to secure and transfer digital\nassets; and\n(B) under which the owner of digital assets secured\nand transferred under subparagraph (A) retains\nindependent control over those digital assets.\n(2) United states sanction law.--The term ``United States\nsanction law'' has the meaning given the term in section\n302(a).\n(b) Monetary Instruments.--Section 5312(a)(3)(D) of title 31,\nUnited States Code, is amended by inserting ``, including digital\nassets (as defined in section 2 of the GENIUS Act (12 U.S.C. 5901)), as\nmay be applicable,'' after ``value''.\n(c) Treasury Risk Assessment.--As part of the national strategy for\ncombating terrorist and other illicit financing required under sections\n261 and 262 of the Countering America's Adversaries Through Sanctions\nAct (Public Law 115-44; 131 Stat. 934), the Secretary of the Treasury\nshall consider--\n(1) illicit activity, such as money laundering and\nsanctions evasion, involving self-hosted wallets;\n(2) the effectiveness of and gaps in existing (as of the\nday before the date of enactment of this Act) methods,\ntechniques, and strategies used by regulated financial\ninstitutions in detecting illicit activity, such as money\nlaundering, involving self-hosted wallets;\n(3) any illicit actors, including nation state actors, that\npose a high risk of facilitating illicit activity through the\nuse of self-hosted wallets;\n(4) the benefits of the use of self-hosted wallets to--\n(A) enhance user privacy and civil liberties\nthrough direct asset custody; and\n(B) expand financial inclusion and access for\ncommunities underserved by traditional financial\ninstitutions;\n(5) end user and counterparty risks associated with self-\nhosted wallets, including consumer fraud, cybersecurity, and\nidentity verification;\n(6) the use of hardware self-hosted wallets to smuggle\ndigital assets for financing cross-border illicit activity;\n(7) the use of hardware self-hosted wallets for tax evasion\nand asset concealment; and\n(8) other considerations the Secretary may determine\nappropriate.\n(d) Guidance.--The Secretary of the Treasury may issue guidance for\nfinancial institutions that transact with self-hosted wallets based on\nthe results of the research on benefits and risks required under\nsubsection (c), which shall not--\n(1) require a regulated entity to collect, with respect to\nany transaction, personally identifiable information about the\ncontroller of a self-hosted wallet when the controller is not\nboth the customer of the regulated entity and a party to such\ntransaction, except as required by Federal law, including\nUnited States sanctions laws and regulations or lawful process;\nor\n(2) be construed to hinder, restrict, or otherwise impair\nthe authority of any Federal agency to investigate, detect,\ncounteract, or prevent illegal activity.\n\nSEC. 308. RISK MANAGEMENT STANDARDS FOR DIGITAL ASSET INTERMEDIARIES.\n\n(a) In General.--Before conducting trading activity (including\nrouting orders and executing trades) through a decentralized finance\ntrading protocol, a digital asset intermediary shall implement risk\nmanagement standards as described in subsection (b) with respect to\ntrading using that decentralized finance trading protocol.\n(b) Requirements.--The risk management standards applicable to a\ndigital asset intermediary shall be comprised of the following:\n(1) Conducting an effective risk analysis with respect to\nthe decentralized finance trading protocol, including--\n(A) money laundering and sanctions evasion risks,\nincluding whether trading will involve activity\nrelating to a primary money laundering concern;\n(B) fraud and market manipulation;\n(C) operational and cybersecurity risk, including\nsettlement; and\n(D) implementing robust policies and procedures to\nmitigate the risks identified under this paragraph.\n(2) Disclosing the risks identified under paragraph (1)\nusing plain language to customers.\n(3) Maintaining robust, risk-based capability to detect\nmarket manipulation, fraud, money laundering, and sanctions\nevasion occurring on the decentralized finance trading\nprotocol, which may include the use of alternative tools that\nwill properly target such risks, including distributed ledger\nanalytics tools.\n(4) Implementing an effective risk-based procedure for\ndetermining whether to execute, reject, or suspend an incoming\nor outgoing transaction relating to the decentralized finance\ntrading protocol, as applicable, including a determination\nbased on suspected risk of money laundering, sanctions evasion,\nfraud, or market manipulation.\n(5) Consistent with this subsection, implementing other\nreasonable standards which may be required by rule.\n(c) Examinations.--\n(1) Compliance.--The Commission or the Commodity Futures\nTrading Commission, or other appropriate self-regulatory\norganization, shall verify compliance with the requirements of\nthis section as part of a regular examination of the digital\nasset intermediary at the frequency and under the conditions\notherwise provided by law or rule.\n(2) Rule of construction.--Nothing in this section may be\nconstrued to limit the authority of the Financial Crimes\nEnforcement Network or the Office of Foreign Assets Control\nfrom conducting examinations, investigations, or enforcement\nactions relating to this section as otherwise provided by law.\n(d) Rulemaking.--Rules shall be adopted to implement this section\nas follows:\n(1) The Department of the Treasury, in consultation with\nthe Commission and the Commodity Futures Trading Commission,\nshall adopt rules to implement the money laundering and\nsanctions evasion risk analysis standards of this section.\n(2) The Commission and the Commodity Futures Trading\nCommission shall adopt rules to implement this section other\nthan the provisions described in paragraph (1).\n(3) Rules adopted under this paragraph shall be reasonably\ntailored to the size of the applicable digital asset\nintermediary and risks of the digital asset intermediary that\nare reasonably knowable to the digital asset intermediary.\n\nSEC. 309. STUDY ON DIGITAL ASSET MIXERS AND TUMBLERS.\n\n(a) Digital Asset Mixer and Tumbler Defined.--In this section, the\nterm ``digital asset mixer and tumbler'' means a smart contract, or set\nof smart contracts, that obfuscate or eliminate the source or other\nforms of identification of the holder of a digital asset, including by\npooling assets from different holders and redistributing those assets\namong holders.\n(b) Report.--Not later than 1 year after the date of enactment of\nthis Act, the Secretary of the Treasury shall submit to the Committee\non Banking, Housing, and Urban Affairs of the Senate and the Committee\non Financial Services of the House of Representatives a report that\nanalyzes the following issues:\n(1) Current (as of the date on which the report is\nsubmitted) typologies of digital asset mixers and tumblers and\nhistorical transaction volume.\n(2) Estimates of the percentage of transactions relating to\ndigital asset mixers and tumblers that are used by actors\nengaged in illicit finance.\n(3) Estimates of the reliance, and financial exposure, of\ncentralized exchanges and traditional financial institutions to\ndigital asset mixers and tumblers, and the extent to which\ncentralized exchanges and traditional financial institutions\nare adequately implementing anti-money laundering and economic\nsanctions compliance with respect to digital asset mixers and\ntumblers.\n(4) An assessment of potential non-illicit uses of mixers\nand tumblers described in paragraph (1), including privacy\nbenefits.\n(5) An analysis of regulatory approaches employed by other\njurisdictions relating to digital asset mixers and tumblers.\n(6) Recommendations for legislation or regulation relating\nto digital asset mixers and tumblers.\n\nSEC. 310. GAO STUDY ON INTERMEDIARIES IN FOREIGN JURISDICTIONS.\n\n(a) In General.--The Comptroller General of the United States, in\nconsultation with the Secretary of the Treasury, shall conduct a study\nto--\n(1) assess the risks posed by digital asset intermediaries\nthat--\n(A) are primarily located in foreign jurisdictions\nthat lack regulatory requirements that are\nsubstantially similar to the requirements of the Bank\nSecrecy Act; and\n(B) provide services to United States persons; and\n(2) provide any regulatory or legislative recommendations\nto address the risks described in paragraph (1).\n(b) Report.--Not later than 1 year after the date of enactment of\nthis Act, the Comptroller General of the United States shall submit to\nCongress a report containing all findings and determinations made in\ncarrying out the study required under subsection (a).\n\nSEC. 311. STUDIES ON FOREIGN ADVERSARY ACTIVITIES.\n\n(a) Definitions.--In this section:\n(1) Foreign adversary.--The term ``foreign adversary''\nmeans a foreign government or foreign non-government person\ndetermined by the Secretary of Commerce to be a foreign\nadversary under section 791.4(a) of title 15, Code of Federal\nRegulations, or any successor regulation.\n(2) Relevant congressional committees.--The term ``relevant\ncongressional committees'' means--\n(A) the Committee on Banking, Housing, and Urban\nAffairs of the Senate;\n(B) the Committee on Agriculture, Nutrition, and\nForestry of the Senate;\n(C) the Select Committee on Intelligence of the\nSenate;\n(D) the Committee on Financial Services of the\nHouse of Representatives;\n(E) the Committee on Agriculture of the House of\nRepresentatives; and\n(F) the Permanent Select Committee on Intelligence\nof the House of Representatives.\n(b) Treasury Report.--Not later than 1 year after the date of\nenactment of this Act, the Secretary of the Treasury, in consultation\nwith the Commodity Futures Trading Commission and the Commission, shall\nconduct a study and submit a report to the relevant congressional\ncommittees, which may include a classified annex, that--\n(1) identifies any digital asset intermediary that is\ncontrolled by a government of a foreign adversary, or by\nindividuals or entities acting at the direction of a foreign\nadversary;\n(2) determines whether any government of a foreign\nadversary is collecting trading data about United States\npersons in digital asset markets; and\n(3) evaluates whether any proprietary intellectual property\nof digital asset intermediaries is being misused or stolen by\nany government of a foreign adversary.\n(c) GAO Study and Report.--Not later than 1 year after the date of\nenactment of this Act, the Comptroller General shall conduct a study\nand submit a report to the relevant congressional committees, which may\ninclude a classified annex, that--\n(1) identifies any digital asset intermediary that is owned\nby a government of a foreign adversary, or by individuals or\nentities acting at the direction of a foreign adversary;\n(2) determines whether any government of a foreign\nadversary is collecting trading data about United States\npersons in digital asset markets; and\n(3) evaluates whether any proprietary intellectual property\nof digital asset intermediaries is being misused or stolen by\nany government of a foreign adversary.\n\nSEC. 312. TREASURY STUDY ON CYBERSECURITY STANDARDS.\n\n(a) Study.--The Secretary of the Treasury, in consultation with the\nDirector of the Cybersecurity and Infrastructure Security Agency, the\nDirector of the National Security Agency, and the Director of the\nNational Institute of Standards and Technology, shall conduct a study\non cybersecurity standards applicable to digital asset smart contracts,\ncustody, key management, and smart contract deployment.\n(b) Report.--\n(1) In general.--Not later than 365 days after the date of\nenactment of this Act, the Secretary shall submit to the\nCommittee on Banking, Housing, and Urban Affairs of the Senate\nand the Committee on Financial Services of the House of\nRepresentatives a report containing--\n(A) the findings of the study under subsection (a);\nand\n(B) any legislative recommendations.\n(2) Classified annex.--The report under paragraph (1) may\ninclude a classified annex, as appropriate.\n\nSEC. 313. STUDIES ON FINANCIAL STABILITY RISKS OF DECENTRALIZED FINANCE\nTRADING AND CREDIT IN DIGITAL COMMODITY MARKETS.\n\nNot later than 1 year after the date of enactment of this Act, and\nevery 4 years thereafter until 4 consecutive reports have been issued,\nthe Secretary of the Treasury, the Board of Governors of the Federal\nReserve System, the Commission, and the Commodity Futures Trading\nCommission shall--\n(1) conduct a study examining--\n(A) the role of decentralized finance protocols in\nthe financial system, including--\n(i) the functions of such protocols;\n(ii) the use of such protocols to obtain\nleverage or financing;\n(iii) the effects of such protocols on the\npricing and trading of financial instruments,\nincluding descriptions of any linkages between\nsuch protocols and traditional financial\ninstrument; and\n(iv) the types and volumes of financial\nactivity conducted through such protocols;\n(B) the risks of decentralized finance protocols to\nfinancial stability, fair and orderly markets, and\notherwise to the financial system of the United States,\nwhich shall include a quantification of those risks, to\nthe extent possible;\n(C) the strategies and guardrails regulators and\nmarket participants have used and are using to mitigate\nrisks arising from the use of decentralized finance\nprotocols; and\n(D) an assessment of whether the regulatory\nframework adequately controls any risk with respect to\ndecentralized finance protocols;\n(2) conduct a separate study examining the risks to\nfinancial stability and orderly markets arising from the\nextension and maintenance of credit with respect to digital\nassets by digital asset service providers, including--\n(A) the effect of gaps in the regulatory framework\nfor credit extended on digital assets, such as risks\narising from the extension and maintenance of credit on\ndigital assets; and\n(B) the interconnections between leverage in the\nmarket for digital assets and the financial system; and\n(3) submit to the Committee on Banking, Housing, and Urban\nAffairs of the Senate, the Committee on Agriculture, Nutrition,\nand Forestry of the Senate, the Committee on Financial Services\nof the House of Representatives, and the Committee on\nAgriculture of the House of Representatives a report on the\nstudies conducted under paragraphs (1) and (2), which--\n(A) shall include legislative and regulatory\nrecommendations, as appropriate; and\n(B) may include a classified annex.\n\nTITLE IV--RESPONSIBLE BANKING INNOVATION\n\nSEC. 401. PERMISSIBILITY OF DIGITAL ASSET ACTIVITIES.\n\n(a) Definitions.--In this section:\n(1) Appropriate federal banking agency; state bank; state\nbank supervisor; state member bank.--The terms ``appropriate\nFederal banking agency'', ``State bank'', ``State bank\nsupervisor'', and ``State member bank'' have the meanings given\nthose terms in section 3 of the Federal Deposit Insurance Act\n(12 U.S.C. 1813).\n(2) Customer-driven transaction.--The term ``customer-\ndriven transaction''--\n(A) means a transaction that is entered into for a\nvalid and independent business purpose of a customer;\nand\n(B) does not include a transaction, the principal\npurpose of which is to deliver to a financial holding\ncompany, insured State bank, national bank, or Federal\ncredit union assets that the financial holding company,\ninsured State bank, national bank, or Federal credit\nunion, respectively, could not invest in directly.\n(3) Federal branch; state branch.--The terms ``Federal\nbranch'' and ``State branch'' have the meanings given those\nterms in section 1(b) of the International Banking Act of 1978\n(12 U.S.C. 3101).\n(4) Federal credit union; insured credit union.--The terms\n``Federal credit union'' and ``insured credit union'' have the\nmeanings given those terms in section 101 of the Federal Credit\nUnion Act (12 U.S.C. 1752).\n(5) Financial holding company.--The term ``financial\nholding company'' has the meaning given the term in section 2\nof the Bank Holding Company Act of 1956 (12 U.S.C. 1841).\n(6) Financial subsidiary.--The term ``financial\nsubsidiary'' has the meaning given the term in section\n5136A(g)(3) of the Revised Statutes (12 U.S.C. 24a).\n(7) Insured state bank.--The term ``insured State bank''\nmeans a State bank, the deposits of which are insured by the\nFederal Deposit Insurance Corporation.\n(8) National bank.--The term ``national bank'' means a\nnational banking association.\n(b) Authorized Activities for Financial Holding Companies and\nFinancial Subsidiaries.--\n(1) In general.--A financial holding company or financial\nsubsidiary may use a digital asset or distributed ledger system\nto perform, provide, or deliver any activity, function,\nproduct, or service that the financial holding company is\notherwise authorized by law to perform, provide, or deliver.\n(2) Financial in nature.--The activities described in\nsubsection (g) are financial in nature, or incidental to a\nfinancial activity, for purposes of section 4(k) of the Bank\nHolding Company Act of 1956 (12 U.S.C. 1843(k)) and section\n5136A(b) of the Revised Statutes (12 U.S.C. 24a(b)).\n(3) Rule of construction.--Nothing in this subsection may\nbe construed to exempt the performance, provision, or delivery\nby a financial holding company or financial subsidiary of an\nactivity, function, product, or service from a requirement that\nwould apply if the activity were not performed, provided, or\ndelivered using a digital asset or distributed ledger system.\n(c) Authorized Activities for National Banks.--\n(1) In general.--\n(A) Authorized activities.--A national bank may use\na digital asset or distributed ledger system to\nperform, provide, or deliver any activity, function,\nproduct, or service that the national bank is otherwise\nauthorized by law to perform, provide, or deliver.\n(B) Branches of foreign banks.--\n(i) Federal branches.--Consistent with\nsection 4(b) of the International Banking Act\nof 1978 (12 U.S.C. 3102(b)), the activities\nauthorized for a national bank under\nsubparagraph (A) and paragraph (2) shall be\npermissible for a Federal branch, subject to\nany limitations that would apply to those\nactivities pursuant to the International\nBanking Act of 1978 (12 U.S.C. 3101 et seq.) if\nthe activity were not performed, provided, or\ndelivered using a digital asset or distributed\nledger system.\n(ii) Rule of construction for state\nbranches.--For the purposes of activities\nengaged in by a State branch as principal under\nsection 7(h) of the International Banking Act\nof 1978 (12 U.S.C. 3105(h)), the activities\nauthorized under clause (i) are permissible\nactivities of a Federal branch.\n(2) Business of banking and other authorized activities.--\nThe activities described in subsection (g) are authorized as\npart of the business of banking under the paragraph designated\nas the ``Seventh'' of section 5136 of the Revised Statutes (12\nU.S.C. 24) or under other applicable law.\n(3) Rules of construction.--Nothing in this subsection may\nbe construed to--\n(A) exempt the performance, provision, or delivery\nby a national bank of an activity, function, product,\nor service from a prohibition, restriction,\nregistration, limitation, or other requirement that\nwould apply if the activity were not performed,\nprovided, or delivered using a digital asset or\ndistributed ledger system by a national bank; or\n(B) expand or contract the meaning of ``operations\nare or have been required by the Comptroller of the\nCurrency to be limited to those of a trust company and\nactivities related thereto'', as that term is used in\nsection 5169(a) of the Revised Statutes (12 U.S.C.\n27(a)).\n(d) State Banks.--The activities authorized under subsection (c)\nare permissible activities--\n(1) of a national bank for purposes of activities of an\ninsured State bank and any subsidiary of an insured State bank\nto engage in as principal under subsections (a) and (d) of\nsection 24 of the Federal Deposit Insurance Act (12 U.S.C.\n1831a); and\n(2) of a State member bank, and any subsidiary of a State\nmember bank, to engage in as principal.\n(e) Authorized Activities for Federal Credit Unions.--\n(1) In general.--A Federal credit union may use a digital\nasset or distributed ledger system to perform, provide, or\ndeliver any activity, function, product, or service that the\nFederal credit union is otherwise authorized by law to perform,\nprovide, or deliver.\n(2) Business of credit unions.--The activities described in\nsubsection (g) are authorized as part of, or incidental to, the\nauthority necessary or requisite to carry on effectively the\nbusiness for which Federal credit unions are incorporated under\nparagraph (17) of section 107 of the Federal Credit Union Act\n(12 U.S.C. 1757(17)).\n(3) Rule of construction.--Nothing in this subsection may\nbe construed to exempt the performance, provision, or delivery\nby a Federal credit union of an activity, function, product, or\nservice from a requirement that would apply if the activity\nwere not performed, provided, or delivered using a digital\nasset or distributed ledger system.\n(f) Insured Credit Unions.--The activities authorized for a Federal\ncredit union under subsection (e)(1) shall be permissible for an\ninsured credit union, subject to authorization by applicable State law.\n(g) Activities Described.--The activities described in this\nsubsection are--\n(1) providing custodial, fiduciary, or safekeeping services\nfor digital assets;\n(2) providing services related to custodial services for\ndigital assets, including staking, facilitating digital asset\nlending, distributed ledger governance services, and advancing\nfunds for the purchase of digital assets or in respect of\ndistributions on digital assets;\n(3) making loans collateralized by digital assets;\n(4) engaging in payment activities involving digital\nassets, including facilitating customer or principal payments\nin connection with otherwise permissible activities;\n(5) operating a node on a distributed ledger;\n(6) providing self-custodial wallet software;\n(7) engaging in derivatives transactions, including related\nhedging activities, in a manner consistent with section 7.1030\nof title 12, Code of Federal Regulations, as in effect as of\nthe date of enactment of this Act;\n(8) providing brokerage services with respect to any\ndigital asset, including clearing and execution services,\nwhether alone or in combination with other permissible\nactivities;\n(9) facilitating transactions in the secondary market for\nall types of digital assets on the order of customers as a\nriskless principal to the extent of engaging in a transaction\nin which a company, after receiving an order to buy or sell a\ndigital asset from a customer, purchases or sells the digital\nasset for its own account to offset a contemporaneous sale to\nor purchase from the customer;\n(10) holding as principal digital assets for which the\nbanking entity anticipates a reasonably foreseeable need to the\nextent incidental to an otherwise permissible activity, which\nshall include holding digital assets as principal in order to\npay fees arising from interactions with a distributed ledger\nsystem or for the purposes of risk management, treasury\nservices, liquidity management or trade or margin settlement or\nsimilar purposes, subject to the otherwise applicable\nlimitations on the activities of a banking entity pursuant to\nsection 13 of the Bank Holding Company Act of 1956 (12 U.S.C.\n1851) and only to the extent that the terms and prohibitions of\nthat section apply to a transaction; and\n(11) underwriting, dealing in, or making a market in\ndigital assets in customer-driven transactions, including\nrelated hedging activities in connection with those customer-\ndriven transactions, subject to the otherwise applicable\nlimitations on the activities of a banking entity pursuant to\nsection 13 of the Bank Holding Company Act of 1956 (12 U.S.C.\n1851) and only to the extent that the terms and prohibitions of\nthat section apply to a transaction.\n(h) Other Requirements.--There shall be no other prior notice or\napproval requirements to engage in the activities described in\nsubsections (b) through (g) of this section other than those required\nunder title LXII of the Revised Statutes, the Act entitled ``An Act to\nplace authority over the trust powers of national banks in the\nComptroller of the Currency'', approved September 28, 1962 (12 U.S.C.\n92a et seq.), the Federal Reserve Act (12 U.S.C. 221 et seq.), or the\nBank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) and the\nregulations promulgated under those Acts.\n(i) Rule of Construction.--Nothing in this section may be construed\nto--\n(1) exclude other possible permissible activities that are\nnot activities described in subsection (g);\n(2) imply that inclusion of an activity described in\nsubsection (g) means that the activity is otherwise\nimpermissible;\n(3) limit the authority of an appropriate Federal banking\nagency to determine that activities other than those activities\ndescribed in subsection (g) are permissible for a Federal\ncredit union or authorized as part of the business of banking,\nor financial in nature, or incidental or complementary thereto,\nor other applicable law, as applicable, through\ninterpretations, guidance, or rulemaking; or\n(4) limit the authority of an appropriate Federal banking\nagency, or a State bank supervisor, to supervise and take\nenforcement action with respect to an insured depository\ninstitution (or, to the extent applicable, a financial holding\ncompany) engaging in a digital asset activity authorized by\nthis section that the appropriate Federal banking agency or\nState bank supervisor, as applicable, determines, pursuant to\napplicable law, to be an unsafe or unsound practice or a\nviolation of a law, rule, or regulation, or any condition\nimposed in writing.\n(j) Application.--The authorities described in this section shall\nnot apply to nonfungible assets.\n\nSEC. 402. JOINT RULES FOR PORTFOLIO MARGINING DETERMINATIONS.\n\n(a) In General.--The Commodity Futures Trading Commission and the\nCommission shall jointly issue rules to facilitate portfolio margining\nof securities (including related extensions of credit), security-based\nswaps, futures contracts for future delivery, options on futures\ncontracts for future delivery, swaps, and digital commodities, or any\nsubset thereof, for persons registered with either such Commission,\nin--\n(1) a securities account carried by a registered broker or\ndealer or a security-based swap account carried by a registered\nsecurity-based swap dealer;\n(2) a futures or cleared swap account carried by a\nregistered futures commission merchant;\n(3) a swap account carried by a swap dealer; or\n(4) a digital commodity account carried by a registered\ndigital commodity broker or digital commodity dealer that is\nalso registered in such other capacity as is necessary to also\ncarry the other customer or counterparty positions being held\nin the account.\n(b) Process.--The rules required to be jointly issued under\nsubsection (a) shall--\n(1) describe the treatment of any account to which the\nrules relate, and any assets that may be held therein, in a\nproceeding under title 11, United States Code, the Securities\nInvestor Protection Act of 1970 (15 U.S.C. 78aaa et seq.),\ntitle II of the Dodd-Frank Wall Street Reform and Consumer\nProtection Act (12 U.S.C. 5381 et seq.), or any other\napplicable insolvency law with respect to the person carrying\nthe account;\n(2) be issued only if that issuance is in the public\ninterest and provides for the appropriate protection of\ncustomers, including appropriate disclosures to each current\nand potential customer concerning the treatment of any account\nto which the rules relate, and any assets that may be held\ntherein, in a proceeding under title 11, United States Code,\nthe Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa\net seq.), title II of the Dodd-Frank Wall Street Reform and\nConsumer Protection Act (12 U.S.C. 5381 et seq.), or any other\napplicable insolvency law with respect to the person carrying\nthe account;\n(3) require the Commission and the Commodity Futures\nTrading Commission to consider the public interest of, and the\nprotection of investors by, those rules through the\nsolicitation of public comments; and\n(4) require the Commission and the Commodity Futures\nTrading Commission to--\n(A) consult with other relevant foreign or domestic\nregulators, including the Board of Governors of the\nFederal Reserve System, the Federal Deposit Insurance\nCorporation, the Office of the Comptroller of the\nCurrency, and State bank supervisors, as appropriate;\nand\n(B) if the rules pertain to a securities account\ncarried by a registered broker or dealer that is a\nmember of the Securities Investor Protection\nCorporation, consult with the Securities Investor\nProtection Corporation.\n\nSEC. 403. CAPITAL REQUIREMENTS TO ADDRESS NETTING AGREEMENTS.\n\n(a) Definitions.--In this section, the terms ``depository\ninstitution holding company'' and ``insured depository institution''\nhave the meanings given those terms in section 3 of the Federal Deposit\nInsurance Act (12 U.S.C. 1813).\n(b) Capital Requirements.--Not later than 360 days after the date\nof enactment of this Act, the Board of Governors of the Federal Reserve\nSystem, the Comptroller of the Currency, and the Chair of the Federal\nDeposit Insurance Corporation shall develop risk-based and leverage\ncapital requirements for insured depository institutions, depository\ninstitution holding companies, and nonbank financial companies\nsupervised by the Board of Governors of the Federal Reserve System that\naddress netting agreements that provide for termination and close-out\nnetting across multiple types of financial transactions, consistent\nwith section 402, in the event of the default of a counterparty.\n\nSEC. 404. PROHIBITING INTEREST AND YIELD ON PAYMENT STABLECOINS.\n\n(a) Definitions.--In this section:\n(1) Affiliate.--The term ``affiliate'' means any entity\nthat controls, is controlled by, or is under common control\nwith another entity.\n(2) Commissions.--The term ``Commissions'' means the\nCommission and the Commodity Futures Trading Commission.\n(3) Comptroller; foreign payment stablecoin issuer; payment\nstablecoin; permitted payment stablecoin issuer.--The terms\n``Comptroller'', ``foreign payment stablecoin issuer'',\n``payment stablecoin'', and ``permitted payment stablecoin\nissuer'' have the meanings given those terms in section 2 of\nthe GENIUS Act (12 U.S.C. 5901).\n(4) Covered party.--The term ``covered party'' means any\ndigital asset service provider, together with all of its\naffiliates, but in each case excluding any permitted payment\nstablecoin issuer or foreign payment stablecoin issuer\nregistered with the Comptroller.\n(5) Deposit.--The term ``deposit'' has the meaning given\nthe term in section 3 of the Federal Deposit Insurance Act (12\nU.S.C. 1813).\n(6) Restricted recipient.--The term ``restricted\nrecipient'' means a United States person that is a customer or\nuser of a covered party.\n(7) United states person.--The term ``United States\nperson'' means a person that is a resident of the United States\nor is organized or incorporated under the laws of the United\nStates.\n(b) Sense of Congress.--It is the sense of Congress that--\n(1) depository institutions provide financial services that\nare integral to the strength of the economy of the United\nStates and that the payment of consideration by digital asset\nservice providers to United States customers or users based on\ntheir payment stablecoin balances in a manner that is\neconomically or functionally equivalent to the payment of\ninterest or yield on an interest-bearing bank deposit may\ninhibit the key functions of depository institutions in the\neconomy of the United States; and\n(2) payment stablecoins represent a significant innovation\nin financial infrastructure that can strengthen the United\nStates payments system and the primacy of the United States\ndollar and that activity-based rewards and incentives tied to\nthe use of payment stablecoins and participation in distributed\nledger systems are critical to enabling innovation,\ncompetition, and consumer adoption.\n(c) Prohibition on Interest and Yield.--\n(1) In general.--No covered party shall, directly or\nindirectly, pay any form of interest or yield (whether in cash,\ntokens, or other consideration) to a restricted recipient--\n(A) solely in connection with the holding of the\npayment stablecoins of that restricted recipient; or\n(B) on a payment stablecoin balance in a manner\nthat is economically or functionally equivalent to the\npayment of interest or yield on an interest-bearing\nbank deposit.\n(2) Activity-based or transaction-based rewards and\nincentives permitted.--\n(A) In general.--The prohibition under paragraph\n(1) shall not apply with respect to rewards or\nincentives based on bona fide activities or bona fide\ntransactions that are not economically or functionally\nequivalent to the payment of interest or yield on an\ninterest-bearing bank deposit pursuant to the\nregulations promulgated under paragraph (3).\n(B) Equivalence to bank deposits.--Except as\npermitted under subparagraph (A), the prohibition under\nparagraph (1) shall apply to the payment of interest or\nyield (whether in cash, tokens, or other consideration)\nby a covered party to a restricted recipient in\nconnection with a loyalty, promotional, subscription,\nor incentive program that is economically or\nfunctionally equivalent to the payment of interest or\nyield on an interest-bearing bank deposit.\n(3) Rulemaking.--\n(A) In general.--Not later than 1 year after the\ndate of enactment of this Act, the Commissions and the\nSecretary of the Treasury shall jointly promulgate\nregulations through notice and comment rulemaking to\nclarify the circumstances under which the prohibition\nand permissible rewards and incentives in paragraphs\n(1) and (2) shall apply. Such rulemaking shall include\na non-exhaustive list of permissible activity-based or\ntransaction-based rewards or incentives, including\npayments to restricted recipients in connection with or\nin compensation for any of the following, provided such\npayments are not economically or functionally\nequivalent to the payment of interest or yield on an\ninterest-bearing bank deposit:\n(i) A transaction, payment, transfer,\nconversion, remittance, or settlement activity,\nincluding a rebate or incentive provided in\nconnection with the acceptance or use of a\npayment stablecoin.\n(ii) Providing liquidity for market-marking\nactivity, posting of collateral in connection\nwith trading, or otherwise putting assets at\ncredit or investment risk.\n(iii) The use of any product or service,\nincluding participation in governance,\nvalidation, staking, or a loyalty, promotional,\nsubscription, or incentive program.\n(B) Calculation by reference.--Payments to\nrestricted recipients of consideration, rewards, or\nbenefits that are permissible pursuant to paragraph (2)\nand subparagraph (A) of this paragraph may be\ncalculated by reference to a balance, duration, tenure,\nor any combination of the foregoing.\n(4) Evasion.--It shall be unlawful for a covered party to\nviolate the prohibition under paragraph (1) or rules\npromulgated pursuant to paragraph (3). A covered party may not\ncircumvent or evade such prohibition or rules. The Commissions\nand the Secretary may jointly issue such rules as may be\nnecessary or appropriate to prevent circumvention or evasion of\nthe prohibition under paragraph (1) or the rules promulgated\npursuant to paragraph (3).\n(5) Good faith reliance.--A covered party that structures a\nprogram in good faith reliance on paragraphs (2) and (3) shall\nnot be subject to penalties if a subsequent rulemaking or\nadjudication determines the program falls outside paragraphs\n(2) and (3), provided--\n(A) the covered party comes into compliance within\n90 days of such determination; and\n(B) the violation is not substantially similar to a\npast violation by the covered party.\n(d) Prohibition on Specified Representations.--\n(1) Certain marketing practices.--No covered party shall\nrepresent that--\n(A) payment stablecoins are investment products,\ndeposits, backed by the full faith and credit of the\nUnited States, guaranteed by the United States\nGovernment, subject to deposit insurance by the Federal\nDeposit Insurance Corporation, or subject to share\ninsurance by the National Credit Union Administration;\nor\n(B) any compensation (whether in cash, tokens, or\nother consideration) paid to a restricted recipient in\nconnection with the holding, use, or retention of the\npayment stablecoins of that restricted recipient is--\n(i) paid or generated by the payment\nstablecoin itself, a permitted payment\nstablecoin issuer, or a foreign payment\nstablecoin issuer registered with the\nComptroller;\n(ii) risk-free or comparable to interest\npaid on a deposit; or\n(iii) offered, administered, or paid by a\nperson other than the covered party.\n(2) Misleading.--No covered party shall omit material\ninformation necessary to prevent any marketing, promotion, or\ndescription described in this subsection from being misleading.\n(e) Disclosures.--\n(1) In general.--Not later than 1 year after the date of\nenactment of this Act, the Commissions and the Secretary of the\nTreasury shall jointly promulgate rules requiring clear and\nconspicuous disclosure, in plain English, of any compensation\n(whether in cash, tokens, or other consideration) paid by a\ncovered party in connection with the holding, use, or retention\nof the payment stablecoins of a restricted recipient in a\nmanner that is consistent with subsection (d).\n(2) Requirements.--In promulgating rules under paragraph\n(1), the Commissions and the Secretary of the Treasury shall\nrequire that any required disclosure of compensation described\nin that paragraph, and any related term, representation, or\ndescription--\n(A) is presented in a clear, factual,\nnonpromotional, and non-misleading manner;\n(B) clearly identifies the circumstances under\nwhich such compensation can be paid;\n(C) clearly identifies the person or persons\nresponsible for offering, administering, and paying\nsuch compensation, including whether such persons are\naffiliated with the issuer of associated payment\nstablecoins;\n(D) outlines all material terms with respect to\nsuch compensation; and\n(E) includes a statement that payment stablecoins\nare not investment products, deposits, backed by the\nfull faith and credit of the United States, guaranteed\nby the United States Government, subject to deposit\ninsurance by the Federal Deposit Insurance Corporation,\nor subject to share insurance by the National Credit\nUnion Administration.\n(3) Prohibition.--After the date on which the rules\npromulgated under paragraph (1) become effective, no covered\nparty shall market the offering of compensation (whether in\ncash, tokens, or other consideration) paid by such covered\nparty in connection with the holding, use, or retention of the\npayment stablecoins of a restricted recipient unless the\ncovered party has provided the disclosures required under this\nsubsection.\n(4) Satisfaction of requirement.--A covered party that\nprovides the disclosures required under this subsection shall\nbe deemed not to have made a representation that is prohibited\nunder subsection (d), provided that--\n(A) any marketing, promotion, or description with\nrespect to the applicable compensation does not\ncontradict those disclosures; and\n(B) those disclosures are presented in plain\nEnglish and in a clear and conspicuous manner.\n(f) Penalty.--\n(1) Civil monetary penalty.--Whoever knowingly and\nwillfully participates in a violation of subsection (c)(1),\n(d)(1), (d)(2), or (e)(3), or rules issued under subsection\n(c)(4), shall be subject to a civil monetary penalty by the\nDepartment of the Treasury of not more than $5,000,000 for each\nsuch violation.\n(2) Determination of the number of violations.--For\npurposes of determining the number of violations for this\nsubsection, separate acts of noncompliance are a single\nviolation when the acts are a result of--\n(A) a common or substantially overlapping\noriginating cause; or\n(B) the same statement or publication.\n(g) Referral to Secretary of the Treasury.--If the Commission or\nthe Commodity Futures Trading Commission has reason to believe that any\ncovered party has knowingly and willfully violated subsection (c)(1),\n(d)(1), (d)(2), or (e)(3), or rules issued under subsection (c)(4), the\nCommission or the Commodity Futures Trading Commission, as applicable,\nshall refer the matter to the Secretary of the Treasury.\n(h) Report to Congress.--Not later than 2 years after the date of\nenactment of this Act, the Board of Governors of the Federal Reserve\nSystem, the Comptroller of the Currency, the Federal Deposit Insurance\nCorporation, the National Credit Union Administration, and the\nSecretary of the Treasury shall jointly submit to the Committee on\nBanking, Housing, and Urban Affairs of the Senate and the Committee on\nFinancial Services of the House of Representatives a report on payment\nstablecoin activity that--\n(1) analyzes and quantifies--\n(A) the adoption of United States dollar-\ndenominated payment stablecoins and of other payment\nstablecoins issued by permitted payment stablecoin\nissuers and foreign payment stablecoin issuers\nregistered with the Comptroller;\n(B) the effect of United States dollar-denominated\npayment stablecoins on the average yields of, and\ndemand for, United States Treasury securities of\nvarious durations;\n(C) the effect of United States dollar-denominated\npayment stablecoins on the use of the dollar in global\nforeign exchange transactions, global foreign exchange\nreserves, and global trade;\n(D) the effect of United States dollar-denominated\npayment stablecoins on increasing access to financial\nservices for unbanked and underbanked persons, both\ndomestically and globally;\n(E) the effect of United States dollar-denominated\npayment stablecoins on payment costs of consumers and\nmerchants; and\n(F) the adoption of non-United States dollar-\ndenominated stablecoins, including foreign central bank\ndigital currencies, and their effect on the use of the\ndollar in global foreign exchange transactions, global\nforeign exchange reserves, and global trade;\n(2) describes how compensation, if any, is paid by covered\nparties to restricted recipients with respect to the payment\nstablecoins of restricted recipients, including through\nrewards, incentives, or similar programs; and\n(3) analyzes and quantifies the effect of any compensation\ndescribed in paragraph (2) and the effect of prohibitions on\nthe payment of interest or yield by covered parties under this\nAct and by issuers of payment stablecoins under section\n4(a)(11) of the GENIUS Act (12 U.S.C. 5903(a)(11)) on--\n(A) the volume, stickiness, composition, and\nconcentration of deposits at depository institutions,\nincluding any deposit outflows from depository\ninstitutions and the extent to which community banks\nand credit unions are disproportionately affected\nthereby;\n(B) net interest margin accrued to depository\ninstitutions;\n(C) the average rate of interest paid to depositors\nat depository institutions;\n(D) consumer and business access to credit;\n(E) financial arrangements between depository\ninstitutions and digital asset service providers and\nissuers of payment stablecoins; and\n(F) the items described in paragraph (1).\n(i) No Deeming of Payment of Interest or Yield.--For purposes of\nthis section, a covered party shall not be deemed to violate the\nprohibition in subsection (c) solely because an unaffiliated third\nparty independently makes a payment with respect to a payment\nstablecoin, unless the covered party directs or maintains significant\ninfluence over the offering of such consideration and the offering of\nsuch consideration would otherwise violate the prohibition in\nsubsection (c).\n(j) Clarification of Scope and Regulatory Authority.--\n(1) Compensation.--The prohibitions under subsections (c),\n(d), and (e) shall only apply to compensation paid in\nconnection with a payment stablecoin or payment stablecoin\nbalance.\n(2) Other assets.--Nothing in this section shall be\nconstrued to authorize the Commissions or the Secretary of the\nTreasury to regulate, restrict, or prohibit the payment of any\ncompensation paid in connection with any asset other than a\npayment stablecoin.\n(k) Non-applicability.--Nothing in this section shall--\n(1) modify, alter, or extend prohibitions on the payment of\nyield, interest, or consideration applicable to permitted\npayment stablecoin issuers or foreign payment stablecoin\nissuers, including under section 4(a)(11) of the GENIUS Act (12\nU.S.C. 5903(a)(11)); or\n(2) prohibit the disclosure by covered parties of truthful,\nnon-misleading factual information or any information otherwise\nrequired by Federal law or regulation.\n\nSEC. 405. EXPANDED SECURITIES PORTFOLIO MARGIN ACCOUNTS UNDER THE\nSECURITIES INVESTOR PROTECTION ACT OF 1970.\n\n(a) Amendments.--The Securities Investor Protection Act of 1970 (15\nU.S.C. 78aaa et seq.) is amended--\n(1) in section 9(a) (15 U.S.C. 78fff-3(a))--\n(A) in paragraph (4), by striking ``and'' at the\nend;\n(B) in paragraph (5), by striking the period at the\nend and inserting ``; and''; and\n(C) by adding at the end the following:\n``(6) no advance shall be made by SIPC to the trustee to\npay or otherwise satisfy any net equity claim of any customer\nwith respect to any digital commodities or swaps held in an\nexpanded securities portfolio margin account.'';\n(2) in section 10(g) (15 U.S.C. 78fff-4(g)), by striking\n``16(12)'' and inserting ``16(13)''; and\n(3) in section 16 (15 U.S.C. 78lll)--\n(A) by redesignating paragraphs (7) through (14) as\nparagraphs (8) through (15), respectively;\n(B) by inserting after paragraph (6) the following:\n``(7) Expanded securities portfolio margin account.--The\nterm `expanded securities portfolio margin account' means a\ncustomer account--\n``(A) that is maintained by a broker or dealer\nregistered with the Commission;\n``(B) that includes positions in securities,\nsecurity-based swaps, futures contracts, options on\nfutures contracts, swaps, digital commodities, or other\nfinancial instruments, or any combination thereof, as\npermitted by rule jointly issued by the Commission and\nthe Commodity Futures Trading Commission;\n``(C) that is subject to portfolio margining\nrequirements approved pursuant to section 402 of the\nDigital Asset Market Clarity Act; and\n``(D) in which margin requirements are determined\non a risk-based, portfolio-wide basis, rather than on\nan instrument-by-instrument basis.''; and\n(C) in paragraph (10), as so redesignated, in the\nmatter following subparagraph (L), by striking ``a\ntransaction in the portfolio margining account'' and\ninserting ``the portfolio margining account or expanded\nsecurities portfolio margin account''.\n(b) Rules.--\n(1) Definitions.--In this subsection:\n(A) Expanded securities portfolio margin account.--\nThe term ``expanded securities portfolio margin\naccount'' has the meaning given the term in section 16\nof the Securities Investor Protection Act of 1970 (15\nU.S.C. 78lll), as amended by this section.\n(B) SIPC.--The term ``SIPC'' means the Securities\nInvestor Protection Corporation.\n(2) Issuance of rules.--Notwithstanding any provision of\nthe Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa\net seq.), in jointly issuing rules under section 402, the\nCommission and the Commodity Futures Trading Commission, in\nconsultation with the SIPC and the Secretary of the Treasury,\nshall issue rules relating to the treatment under that Act of\nsecurities (including related extensions of credit), security-\nbased swaps, contracts of sale of a commodity for future\ndelivery, options on contracts of sale of a commodity for\nfuture delivery, swaps, digital commodities, cash, or other\nproperty (to the extent that such instruments, cash, or other\nproperty effectively hedge or collateralize a securities\nposition) held in an account offering portfolio margining\ncarried as a securities account by a registered broker or\ndealer pursuant to an expanded securities portfolio margin\naccount to facilitate portfolio margining in a manner that\nprotects customers, including portfolio margin customers, which\nshall include rules relating to--\n(A) the transfer of accounts;\n(B) the allocation of customer property among\ncustomers;\n(C) the eligibility of products and positions to be\nheld in an expanded securities portfolio margin\naccount, including any disclosures to and any elections\nthat may need to be performed by customers;\n(D) the application of customer protection or\nsegregation requirements as between securities\ncustomers who are and are not maintaining positions in\nan expanded securities portfolio margin account;\n(E) further defining the terms, solely as relating\nto an expanded securities portfolio margin account,\n``customer'', ``customer property'', and ``net\nequity'', as necessary or appropriate to address non-\nsecurities and non-cash positions and assets held in an\nexpanded securities portfolio margin account, and in a\nmanner consistent with subparagraphs (A) through (D);\nand\n(F) any interaction between a securities account\nand an expanded securities portfolio margin account,\nincluding any funding of debits in one type of account\nby credits in the other type of account.\n(3) Process for issuance of rules.--The requirements of\nsection 402(b) shall apply with respect to the rules issued\nunder this subsection.\n(c) Effect of Rules.--An expanded securities portfolio margin\naccount may not be offered, maintained, or utilized until the final\nrules required under subsection (b) are issued.\n\nTITLE V--RESPONSIBLE REGULATORY INNOVATION\n\nSEC. 501. CFTC-SEC MICRO-INNOVATION SANDBOX.\n\n(a) Definitions.--In this section:\n(1) Commission.--The term ``Commission'' means either of\nthe Commissions, as the context requires.\n(2) Commissions.--The term ``Commissions'' means the\nSecurities and Exchange Commission and the Commodity Futures\nTrading Commission.\n(3) Eligible firm.--The term ``eligible firm'' means a\nperson that is eligible to participate in the Sandbox, in\naccordance with the requirements under this section.\n(4) Innovative.--The term ``innovative'' means new or\nemerging technology, or a novel application of technology,\nincluding artificial intelligence, that--\n(A) provides a financial product, service, business\nmodel, or delivery mechanism to the public; and\n(B) lacks--\n(i) a substantially comparable, widely\navailable analogue in common use in the United\nStates; and\n(ii) an analogous Federal regulatory\nregime.\n(5) Person.--The term ``person'' means a person, as defined\nin section 3(a) of the Securities Exchange Act of 1934 (15\nU.S.C. 78c(a)) or section 1a of the Commodity Exchange Act (7\nU.S.C. 1a).\n(6) Sandbox.--The term ``Sandbox'' means the CFTC-SEC\nMicro-Innovation Sandbox established under subsection (b).\n(7) Self-regulatory organization.--The term ``self-\nregulatory organization'' means a self-regulatory organization,\nas defined in--\n(A) section 3(a) of the Securities Exchange Act of\n1934 (15 U.S.C. 78c(a)); or\n(B) section 1.52(a)(2) of title 17, Code of Federal\nRegulations, or any successor regulation.\n(b) Establishment.--Not later than 360 days after the date of\nenactment of this Act, the Commissions shall, by joint notice and\ncomment rulemaking, establish a CFTC-SEC Micro-Innovation Sandbox to\nenable eligible firms to test innovative activities within the United\nStates, subject to--\n(1) applicable Federal and State securities and commodities\nlaws;\n(2) other State laws that are not specific to the\nregulation of securities or commodities; and\n(3) the limitations of this section.\n(c) Eligible Firm.--\n(1) In general.--A United States-based person shall be an\neligible firm, and shall be eligible to participate in the\nSandbox, if the person--\n(A) submits an application under subsection (e)\nthat is approved under that subsection;\n(B) seeks to conduct an eligible and lawful\ninnovative activity in the United States;\n(C) is not subject to--\n(i) a statutory disqualification, as\ndefined in section 3(a) of the Securities\nExchange Act of 1934 (15 U.S.C. 78c(a));\n(ii) a disqualification under section 8a(2)\nof the Commodity Exchange Act (7 U.S.C.\n12a(2)); or\n(iii) a disqualification under State law;\n(D) does not have a criminal conviction for fraud;\n(E) agrees to submit to the jurisdiction and\noversight of the Commissions, to the extent that the\nperson is not subject to that jurisdiction or\noversight, for purposes of, and while participating in,\nthe Sandbox;\n(F) designates to the Commissions an individual as\na point of contact with respect to activities that the\nperson undertakes as an applicant and participant with\nrespect to the Sandbox;\n(G) employs not more than 25 employees; and\n(H) has annual gross revenues of not more than\n$10,000,000 in any fiscal year.\n(2) Application of requirements.--The requirements under\nparagraph (1) shall be satisfied during the entire period in\nwhich an eligible firm participates in the Sandbox.\n(d) Eligible Activities and Activity Ceilings.--\n(1) List of eligible activities.--\n(A) In general.--After providing notice and an\nopportunity for public comment, the Commissions shall\nmaintain and publish a list of eligible innovative\nactivities, which shall be--\n(i) updated once every 2 years after\nproviding notice and an opportunity for public\ncomment;\n(ii) reasonably tailored to include\nactivities that--\n(I) further the purposes of this\nsection; and\n(II) are consistent with the\ninterests of the public and the\nprotection of investors;\n(iii) sufficiently flexible to accommodate\nevolving technological developments, including\ndistributed ledger-based products and services;\nand\n(iv) focused exclusively on activities for\nwhich specific provisions of the securities\nlaws and commodities laws may create a material\nimpediment to the proposed innovative activity.\n(B) Identification of requirements.--\n(i) In general.--For each eligible\ninnovative activity, the Commissions shall,\nconsistent with existing (as of the day before\nthe date of enactment of this Act) statutory\nand regulatory precedent concerning the\nrespective jurisdiction of each Commission,\nidentify the requirements that each Commission\nwill administer.\n(ii) Joint jurisdiction.--With respect to\nan eligible innovative activity that is subject\nto the jurisdiction of both Commissions, the\nrulemaking under subsection (b) shall specify\nwhich requirements each Commission will\nadminister and any coordinated conditions\nneeded to protect investors and market\nintegrity.\n(2) Activity ceilings.--For each eligible innovative\nactivity, the Commissions shall, after public input and\nconsultation, establish individual customer and monetary\nceilings, which shall provide that an eligible firm may not\nraise or commit more than $20,000,000 in aggregate customer,\ninvestor, or counterparty funds in connection with Sandbox\nactivities.\n(3) Annual participation cap.--Each of the Commissions may\napprove not more than 20 projects per year.\n(e) Application.--\n(1) In general.--An eligible firm seeking to participate in\nthe Sandbox shall submit to the Commission or Commissions, as\napplicable, an application that--\n(A) describes the proposed innovative activity and\nthe desired outcomes;\n(B) subject to approval of the applicable\nCommission, identifies the provisions of the securities\nlaws, or of the Commodity Exchange Act (7 U.S.C. 1 et\nseq.), from which the eligible firm proposes to be\nexempt during the period in which the eligible firm\nparticipates in the Sandbox, which--\n(i) shall not include any Federal or State\nanti-fraud law or any other law that is not\nspecific to the regulation of securities or\ncommodities; and\n(ii) shall be subject to the limitations of\nthis section;\n(C) sets forth how relief from the provisions of\nlaw identified under subparagraph (B) is reasonably\nnecessary to engage in the innovative activity;\n(D) identifies material risks to investors,\ncustomers, or market integrity and how the eligible\nfirm will mitigate those risks;\n(E) certifies that the eligible firm will comply\nwith applicable Federal and State anti-fraud laws;\n(F) states an exit objective of the eligible firm\ninvolving action from the applicable Commission, which\nmay include registration, an exemptive order,\ninterpretive guidance, a no-action letter, or a\nrulemaking petition, together with milestones and\nmetrics the eligible firm will use to demonstrate\nreadiness for that exit;\n(G) states the agreement of the eligible firm to\nsubmit to the jurisdiction and oversight of the\nCommissions, to the extent that the eligible firm is\nnot otherwise subject to that jurisdiction and\noversight, for purposes of, and while participating in,\nthe Sandbox;\n(H) designates to the Commissions an individual as\na point of contact with respect to activities that the\neligible firm undertakes as an applicant and\nparticipant with respect to the Sandbox; and\n(I) states the agreement of the eligible firm to\nabide by any condition that either of the Commissions\nmay impose for engaging in an eligible innovative\nactivity in the Sandbox.\n(2) Deadline for decision.--Not later than 180 business\ndays after the date on which an eligible firm submits an\napplication under this subsection, the Commission or\nCommissions, as applicable, shall make a decision with respect\nto the application, after which the eligible firm submitting\nthe application may commence eligible innovative activities in\nthe Sandbox unless the application is denied.\n(3) Updates and status reports.--Each eligible firm shall\nsubmit to the Commission or Commissions, as applicable, on a\nsemi-annual basis while participating in the Sandbox, an\nupdated application that--\n(A) describes any material changes to the\ninformation originally provided under paragraph (1);\nand\n(B) reports the progress of the eligible firm\ntoward the stated exit objective described in paragraph\n(1)(F), including milestones achieved, remaining\nimpediments, and any pending requests for official\naction before the applicable Commission or the\nCommissions.\n(4) Unredacted and redacted versions.--\n(A) In general.--An eligible firm that submits an\ninitial or updated application under this subsection\nmay submit to the applicable Commission or the\nCommissions an unredacted version, together with a\nrequest for confidential treatment, pursuant to\nprocedures the applicable Commission shall establish\nthat are modeled on the rules of that Commission\nrelating to the confidential treatment of information,\nwhich shall include--\n(i) for the Securities and Exchange\nCommission, sections 200.83, 230.406, and\n240.24b-2 of title 17, Code of Federal\nRegulations, or any successor regulations; and\n(ii) for the Commodity Futures Trading\nCommission, section 145.9 of title 17, Code of\nFederal Regulations, or any successor\nregulations.\n(B) Omitted information.--An eligible firm may omit\ninformation granted confidential treatment under\nsubparagraph (A) from any public posting under\nsubsection (h) in accordance with the procedures\nestablished under subparagraph (A).\n(C) Indication of confidential information.--Any\nomission in a public posting under subsection (h) shall\nbe clearly indicated by brackets with a prominent\nlegend stating that--\n(i) confidential information has been\nomitted; and\n(ii) an unredacted version has been filed\nwith the applicable Commission or the\nCommissions.\n(f) Duration of Participation.--\n(1) Duration.--Except as provided in paragraph (2), an\neligible firm may participate in the Sandbox for a period of\nnot more than 2 years, provided that the eligible firm does not\nexceed the ceilings established under subsection (d)(2).\n(2) Extension.--\n(A) Sole jurisdiction.--If an eligible innovative\nactivity is subject only to the jurisdiction of 1\nCommission, that Commission may extend participation by\nan eligible firm in the Sandbox by not more than 1\nadditional year, if that Commission determines that the\neligible firm--\n(i) is actively pursuing the exit objective\ndescribed in subsection (e)(1)(F) in good\nfaith;\n(ii) is making demonstrable progress toward\nachieving such an exit; and\n(iii) establishes that such an extension is\nnecessary to achieve such an exit.\n(B) Joint jurisdiction.--Where an eligible\ninnovative activity is subject to the jurisdiction of\nboth Commissions, an extension of participation by an\neligible firm in the Sandbox by not more than 1\nadditional year shall be by joint order of the\nCommissions after making the findings described in\nclauses (i) through (iii) of subparagraph (A).\n(g) Conditions and Enforcement.--\n(1) Conditions.--An eligible firm shall comply with\napplicable regulatory conditions approved by the applicable\nCommission or the Commissions under subsection (e)(1)(B), which\nshall be consistent with applicable Federal and State anti-\nfraud laws.\n(2) Monitoring.--The Commissions shall monitor Sandbox\nactivities and enforce compliance with applicable regulatory\nconditions and Federal anti-fraud laws.\n(3) Coordination.--\n(A) In general.--The Commissions shall coordinate\nsupervision, information requests, and examinations to\navoid duplication while each Commission retains full\nauthority under the provisions of law that such\nCommission administers.\n(B) Cooperation with states.--The Commissions may\ncooperate with any State in enforcing compliance with\napplicable regulatory conditions and Federal and State\nanti-fraud laws with respect to the operation of the\nSandbox.\n(4) Self-regulatory organizations.--Each self-regulatory\norganization shall recognize and respect Sandbox conditions\nthat are applicable to a participant in the Sandbox.\n(5) Cessation of activities.--The Commissions may, at any\ntime during the participation of an eligible firm in the\nSandbox, disqualify the eligible firm from continued\nparticipation in the Sandbox, order the eligible firm to cease\nengaging in a permitted activity in the Sandbox, revoke a grant\nof exemptive relief, or impose additional or more stringent\nconditions on continuing participation or engagement in a\npermitted activity in the Sandbox, if the Commissions find that\nthe eligible firm has failed to comply with--\n(A) the requirements of this section;\n(B) the terms or conditions of participation\nestablished by the Commissions; or\n(C) other applicable law.\n(h) Public Disclosure.--\n(1) Initial posting.--Each eligible firm shall post, in a\nprominent location on a public website of the eligible firm,\nthe information required under subsection (e)(1), subject to\nconfidential treatment under subsection (e)(4), not later than\nthe date on which the notice becomes effective under subsection\n(e)(3).\n(2) Updates.--Each eligible firm shall post, in the same\nmanner as under paragraph (1), the information required under\nsubsection (e)(3), subject to confidential treatment under\nsubsection (e)(4), concurrently with submission to the\napplicable Commission or the Commissions.\n(3) Disclosure requirements.--Each post under this\nsubsection shall satisfy the disclosure requirements of both\nCommissions where the jurisdictions of both Commissions are\nimplicated.\n(i) Use of Data by Commissions.--Each Commission may collect and\nshare data from Sandbox activities with the other Commission to inform\npermanent, principles-based regulatory frameworks that advance the\nmissions of the Commissions.\n(j) Publication by Commissions.--Not less frequently than annually,\neach Commission shall publish on the public website of the Commission a\nreport summarizing the activities conducted under this section,\nincluding--\n(1) the number and general nature of eligible firms\nparticipating in the Sandbox;\n(2) the categories of innovative activities tested;\n(3) the impact of Sandbox participation on innovation,\ninvestor protection, market integrity, and the public interest;\n(4) the disclosures posted by eligible firms under\nsubsection (h)(1); and\n(5) exit outcomes, including the types of relief requested\nand actions taken by the Commissions.\n(k) Relationship of Sandbox Participation to State Law.--\n(1) Limited preemption for sandbox participants.--This\nsection, including participation in the Sandbox, and any\nexemption or relief granted under this section, shall supersede\nany State securities or commodities law requiring registration,\nqualification, or licensing as a condition of engaging in an\napproved activity or otherwise regulating that activity as a\nsecurity or commodity.\n(2) State enforcement preserved.--Nothing in this section\nmay be construed to prohibit or limit any State securities or\ncommodities regulator, any State bank regulator, or any State\nlaw enforcement agency from conducting an investigation or\nbringing an administrative, civil, or criminal enforcement\naction under--\n(A) a State law prohibiting fraud or deceit, or\nfraudulent, deceptive, manipulative, unethical,\ndishonest, or other unlawful conduct or practices, in\nconnection with securities or securities transactions;\n(B) the anti-fraud provisions of the Commodity\nExchange Act (7 U.S.C. 1 et seq.) or State commodities\nlaws; or\n(C) any State law of general applicability,\nincluding such a law relating to banking, consumer\nprotection, contracts, property, or criminal conduct.\n(3) Notice filings.--A State may require notice of any\ndocument filed with either of the Commissions in connection\nwith participation in the Sandbox, together with consent to\nservice of process and reasonable fees, consistent with section\n18(c) of the Securities Act of 1933 (15 U.S.C. 77r(c)).\n\nSEC. 502. INTERNATIONAL COOPERATION.\n\n(a) Definition.--In this section, the term ``Commissions'' means\nthe Commission and the Commodity Futures Trading Commission.\n(b) Cooperation.--In order to promote United States leadership in\neffective, reciprocal, and innovative global regulation of digital\nassets, and to advance the strategic economic and policy interests of\nthe United States, the Commissions, as appropriate--\n(1) shall consult and coordinate with foreign regulatory\nauthorities or other relevant international organizations on\nthe application of consistent international standards with\nrespect to the regulation of digital assets;\n(2) may enter into such information sharing arrangements as\nmay be determined to be necessary or appropriate in the public\ninterest or for the protection of investors, customers, and\nusers of digital assets;\n(3) shall pursue reciprocal arrangements with foreign\nregulatory authorities that ensure United States-based digital\nasset firms, exchanges, and infrastructure providers receive\ntreatment equivalent to that granted to foreign counterparts\noperating within the United States;\n(4) shall advocate in international fora for the\ndevelopment and adoption of technology-neutral, open standards\nthat preserve lawful access to public distributed ledger\ninfrastructure, support dollar-denominated digital asset usage,\nand safeguard individual rights, including self-custody and\nprivacy; and\n(5) may, as appropriate, engage in, at the least,\ncooperative enforcement, supervisory coordination, and joint\ntechnical assistance, in a manner that promotes responsible\ninnovation in digital financial markets.\n(c) Cross-border Sandbox.--The Commissions may leverage the\nactivities described in paragraphs (1) through (5) of subsection (b) to\nestablish or participate in cross-border regulatory sandboxes that\nbuild upon the CFTC-SEC Micro-Innovation Sandbox established pursuant\nto section 501.\n\nSEC. 503. AUTOMATED REGULATORY COMPLIANCE STUDY.\n\n(a) Definitions.--In this section:\n(1) Automated regulatory compliance.--The term ``automated\nregulatory compliance'' means the use of technology, including\ndata standards, automation, and distributed ledger or smart\ncontract functionality, to automate, tag, or otherwise\nstreamline regulatory reporting, disclosure, supervisory, or\nother compliance obligations.\n(2) Innovative.--The term ``innovative'' has the meaning\ngiven the term in section 501(a).\n(b) Study Required.--The Comptroller General of the United States\nshall, in consultation with the Department of the Treasury (including\nthe Financial Crimes Enforcement Network, the Office of Foreign Assets\nControl, and the Office of Financial Research), the Office of the\nComptroller of the Currency, the Federal Deposit Insurance Corporation,\nthe National Credit Union Administration, the Commission, the Commodity\nFutures Trading Commission, the Bureau of Consumer Financial\nProtection, and the Federal Housing Finance Agency, carry out a study\nof distributed ledger-based compliance tools that--\n(1) to the extent feasible, identifies and evaluates--\n(A) the landscape of existing (as of the day before\nthe date of enactment of this Act) distributed ledger-\nbased compliance tools for--\n(i) statutory and regulatory disclosures;\n(ii) real-time reporting and audit-trail\nlogging; and\n(iii) anti-money-laundering practices,\nsanctions screening, and customer-\nidentification checks;\n(B) the feasibility, benefits, and risks of\nallowing regulated entities to satisfy applicable\nregulatory obligations through on-chain, code-based, or\nother automated mechanisms;\n(C) the potential for interoperability with\nautomated regulatory compliance mechanisms across and\namong each of those agencies;\n(D) the data collection systems of each of those\nagencies; and\n(E) standards or taxonomies, or other common data\nelements, if any, that those agencies could publish or\nadopt to support the interoperability described in\nsubparagraph (C) in order to ensure consistency and\nregulatory access;\n(2) recommends pilot programs, guidance, rule changes, or\namendments to statutes that would be needed to implement\neffective automated regulatory compliance approaches and any\nother related approaches addressed in the study;\n(3) identifies the costs and benefits to issuers of\ndifferent sizes, secondary market intermediaries, regulators,\ninvestors, and other applicable parties, including differential\nimpacts on smaller entities and options to reduce those\nburdens;\n(4) benchmarks international efforts with respect to\nautomated regulatory compliance mechanisms and consults with\nany appropriate State, Federal, or foreign regulators; and\n(5) evaluates whether existing (as of the day before the\ndate of enactment of this Act) oversight, enforcement, and\nliability frameworks are sufficient to--\n(A) ensure accountability, transparency, fairness,\nand consumer protection; and\n(B) prevent misuse of distributed ledger-based\ncompliance tools.\n(c) Report.--Not later than 1 year after the date of enactment of\nthis Act, the Comptroller General of the United States shall make\npublicly available a report that includes the results of the study\nconducted under subsection (b).\n\nSEC. 504. REPORT ON LEGISLATIVE RECOMMENDATIONS.\n\n(a) Definitions.--In this section:\n(1) Appropriate committees of congress.--The term\n``appropriate committees of Congress'' means--\n(A) the Committee on Banking, Housing, and Urban\nAffairs of the Senate;\n(B) the Committee on Agriculture, Nutrition, and\nForestry of the Senate;\n(C) the Committee on Financial Services of the\nHouse of Representatives; and\n(D) the Committee on Agriculture of the House of\nRepresentatives.\n(2) Federal financial regulator.--The term ``Federal\nfinancial regulator'' means--\n(A) the Board of Governors of the Federal Reserve\nSystem;\n(B) the Commodity Futures Trading Commission;\n(C) the Department of the Treasury;\n(D) the Federal Deposit Insurance Corporation;\n(E) the Federal Housing Finance Agency;\n(F) the National Credit Union Administration;\n(G) the Office of the Comptroller of the Currency;\n(H) the Bureau of Consumer Financial Protection;\nand\n(I) the Commission.\n(b) Requirement.--Not later than 1 year after the date of enactment\nof this Act, and every 3 years thereafter for a total of not fewer than\n12 years after the date of enactment of this Act, each Federal\nfinancial regulator shall submit to the appropriate committees of\nCongress a report that includes--\n(1) a description of the implementation of this Act and the\namendments made by this Act (including the adoption of rules\nand guidance, and the approval or rejection of applications\nsubmitted, under this Act and the amendments made by this Act),\nwhere applicable to the Federal financial regulator; and\n(2) any legislative recommendations for the further\neffective implementation of this Act and the amendments made by\nthis Act.\n\nSEC. 505. TOKENIZATION OF SECURITIES.\n\n(a) Definitions.--In this section:\n(1) Tokenization.--The term ``tokenization'' means the\nprocess of creating a digital representation of all rights,\nobligations, or interests in a tangible or intangible asset on\na distributed ledger or comparable technology.\n(2) Tokenized.--The term ``tokenized'', with respect to an\nasset, means that the asset has undergone tokenization.\n(b) Sense of Congress.--It is the sense of Congress that States\nshould promptly consider and adopt commercial law frameworks under the\nUniform Commercial Code that provide clear and uniform rules for the\nownership, control, and enforceability of rights relating to digital\nassets.\n(c) Study.--Not later than 360 days after the date of enactment of\nthis Act, the Commission shall conduct a comprehensive study of the\nregulatory treatment of tokenized securities, including custody\nstandards, interagency coordination, cross-border coordination, and\nconsumer protection.\n(d) Parity in Regulatory Treatment.--\n(1) In general.--Subject to paragraph (2), a tokenized\nsecurity shall be treated, for all regulatory purposes, as the\nsecurity that the tokenized security represents, except as\notherwise provided by--\n(A) section 106(a); or\n(B) a rule, regulation, or order issued by the\nCommission.\n(2) Requirement.--A rule, regulation, or order described in\nparagraph (1)(B) may only be issued by the Commission to adapt\nthe manner in which the applicable regulatory requirements are\nsatisfied, to the extent necessary or appropriate--\n(A) in light of the unique technological or other\ncharacteristics of digital assets or substantially\nsimilar technology; and\n(B) consistent with--\n(i) what is necessary or appropriate in the\npublic interest; and\n(ii) protecting investors, maintaining\nfair, orderly, and efficient markets, and\nfacilitating capital formation.\n(e) Prohibition on Misrepresentation.--Any statement or omission\nwith respect to any material fact that is made by a person in\nconnection with the offer, sale, or other representation regarding a\ntokenized security shall be subject to the securities laws, including\napplicable anti-fraud or anti-manipulation provisions under the\nsecurities laws.\n(f) Agency Action for Tokenized Securities.--\n(1) In general.--The Commission may issue rules governing\ntokenized securities pursuant to the requirements of this\nsection.\n(2) Requirements.--Rules issued under this subsection may\naddress, consistent with sections 106 and 107, how requirements\napplicable to an underlying security apply to custody, books\nand records, reconciliation with transfer agents or other\nrecordkeepers, auditability, settlement finality, treatment of\nchain reorganizations, and other operational risks arising from\nthe use of distributed ledger technology or comparable\ntechnology.\n(g) Rule of Construction Regarding Enforcement.--Nothing in this\nsection may be construed to prevent the Commission from enforcing the\nanti-fraud and anti-manipulation provisions of the securities laws, and\nthe rules issued under the securities laws, with respect to tokenized\nsecurities, provided that the elements of those provisions are\nsatisfied.\n(h) Savings Clauses.--\n(1) Tokenized security.--Any asset that is a security under\nthe securities laws shall not cease to be a security solely\nbecause the asset is issued, recorded, represented, or\ntransferred using distributed ledger technology or comparable\ntechnology.\n(2) Effect on state law.--Nothing in this section may be\nconstrued, interpreted, or applied in a manner that preempts,\nsupersedes, invalidates, or otherwise affects any State\nproperty transfer rules, laws, regulations, or common law\nprinciples relating to the transfer or recording of real\ntangible or intangible assets or interests therein.\n(3) Rulemakings, orders, and other actions.--\nNotwithstanding any other provision of this section, section\n106 shall apply to any rulemaking, order, or other action of\nthe Commission under this section.\n(4) No limit of ability to offer or sell.--Nothing in this\nsection, or any rule, regulation, or order promulgated under\nthis section, may be construed to limit the ability of any\nperson to offer or sell any tokenized security, consistent with\nthe securities laws.\n\nSEC. 506. VOLUNTARY ADOPTION OF NATIONAL INSTITUTE OF STANDARDS AND\nTECHNOLOGY POST-QUANTUM CRYPTOGRAPHY STANDARDS.\n\n(a) Definitions.--In this section:\n(1) Appropriate congressional committees.--The term\n``appropriate congressional committees'' means--\n(A) the Committee on Banking, Housing, and Urban\nAffairs of the Senate;\n(B) the Committee on Agriculture, Nutrition, and\nForestry of the Senate;\n(C) the Committee on Commerce, Science, and\nTransportation of the Senate;\n(D) the Committee on Financial Services of the\nHouse of Representatives;\n(E) the Committee on Agriculture of the House of\nRepresentatives; and\n(F) the Committee on Energy and Commerce of the\nHouse of Representatives.\n(2) Director.--The term ``Director'' means the Under\nSecretary of Commerce for Standards and Technology.\n(b) Findings.--Congress finds the following:\n(1) Technical standards with respect to digital assets\nensure quality, interoperability, and reliability in products,\nprocesses, and services and facilitate innovation.\n(2) The digital asset ecosystem should harness standards to\nsolve coordination problems and foster innovation, not through\nregulation, but through voluntary, market-driven measures.\n(3) Advances in quantum computing threaten existing (as of\nthe day before the date of enactment of this Act) cryptographic\nstandards and the security of digital assets.\n(c) Voluntary Adoption.--The Director, in consultation with the\nSecretary of Homeland Security and the heads of sector risk management\nagencies, as appropriate, shall promote the voluntary adoption and\ndeployment of post-quantum cryptography standards, including by--\n(1) disseminating and making publicly available guidance\nand resources to help organizations adopt and deploy those\nstandards;\n(2) providing technical assistance, as practicable, to\nentities that are at high risk of quantum cryptography analytic\nattacks, such as entities determined to be critical\ninfrastructure or digital infrastructure providers; and\n(3) conducting such other activities determined necessary\nby the Director to promote the adoption and deployment of those\nstandards across the United States.\n(d) Industry Consultation.--In implementing subsection (c), the\nDirector shall, at a minimum--\n(1) solicit regular input from a broad range of industry\nstakeholders regarding the feasibility and practical challenges\nof adopting the standards described in that subsection;\n(2) facilitate ongoing dialogue between the National\nInstitute of Standards and Technology and industry participants\nto identify, assess, and address barriers to the adoption of\nthe standards described in that subsection;\n(3) not later than 2 years after the date of enactment of\nthis Act, and biennially thereafter until 2035, submit to the\nappropriate congressional committees a report on the\nimplementation of that subsection, including stakeholder\nengagement with respect to those actions and continued\nchallenges in adopting the standards described in that\nsubsection; and\n(4) not later than 5 years after the date of enactment of\nthis Act, make available to the public a report on stakeholder\nengagement and lessons learned in implementing that subsection.\n\nSEC. 507. INTERNATIONAL COORDINATION TO COMBAT DIGITAL ASSET ILLICIT\nFINANCE.\n\n(a) Definition.--In this section, the term ``Strategy'' means the\nNational Strategy to Combat International Digital Asset Illicit Finance\nsubmitted under subsection (d).\n(b) Interagency Initiative.--The Secretary of the Treasury, in\ncoordination with the Secretary of State, the Attorney General, the\nSecretary of Homeland Security, and the heads of such other Federal\ndepartments and agencies as the President may designate, shall lead an\ninteragency initiative to strengthen international cooperation to\nprevent the misuse of digital assets for illicit finance, sanctions\nevasion, terrorist financing, or other national-security threats.\n(c) Objectives.--The initiative established under subsection (b)\nshall--\n(1) engage foreign counterparts, including finance\nministries, central banks, and financial intelligence units, to\npromote anti-money-laundering, sanctions evasion, and counter-\nterrorist financing standards applicable to digital asset\nactivities, consistent with United States standards and the\nframework established under the Strategy;\n(2) encourage the adoption and enforcement of effective\nregulatory and supervisory frameworks for digital asset service\nproviders to ensure transparency and prevent illicit use;\n(3) identify and prioritize jurisdictions of concern that\npresent significant risk of facilitating illicit digital asset\nactivity and develop coordinated diplomatic, economic, and law\nenforcement strategies to address those risks;\n(4) support technical assistance and capacity-building\nprograms for partner jurisdictions to enhance anti-money\nlaundering, sanctions evasion, and counter-terrorist financing\nsupervision, enforcement, and information sharing relating to\ndigital assets; and\n(5) report annually to Congress on progress made toward the\nobjectives described in paragraphs (1) through (4), including a\nlist of cooperative and non-cooperative jurisdictions and any\nrecommendations for additional actions or sanctions.\n(d) National Strategy to Combat International Digital Asset Illicit\nFinance.--Not later than 270 days after the date of enactment of this\nAct, the Secretary of the Treasury, in coordination with the Secretary\nof State, the Attorney General, and the Director of National\nIntelligence, shall submit to the Committee on Banking, Housing, and\nUrban Affairs, the Committee on Foreign Relations, and the Committee on\nHomeland Security and Governmental Affairs of the Senate, and the\nCommittee on Financial Services, the Committee on Foreign Affairs, and\nthe Committee on Homeland Security of the House of Representatives a\nNational Strategy to Combat International Digital Asset Illicit\nFinance, which shall--\n(1) assess global vulnerabilities with respect to the\ndigital assets framework set out in the Strategy;\n(2) set measurable goals and timelines for multilateral\nengagement with respect to digital assets;\n(3) recommend resource and staffing requirements for\nTreasury attaches, financial intelligence liaisons, and other\npersonnel necessary to implement the Strategy; and\n(4) identify standards for combating money laundering,\nsanctions evasion, and terrorist financing with respect to\ndigital asset activities applicable to foreign jurisdictions,\nwhich shall be informed by United States law, regulation, and\nsupervisory standards, including standards relating to--\n(A) anti-money laundering and countering the\nfinancing of terrorism laws and regulations that\nidentify, prioritize, and mitigate illicit finance\nthreats, including preventive measures for financial\ninstitutions and other entities covered by those laws\nand regulations, including measures relating to\ncustomer due diligence, recordkeeping, internal\ncontrols, and the reporting of suspicious transactions;\n(B) money laundering offenses, asset seizure, and\nconfiscation to recover proceeds of crime;\n(C) terrorist financing and proliferation-financing\noffenses and related targeted financial sanctions; and\n(D) regulation, supervision, and enforcement by\ncompetent authorities, including financial\nintelligence, law enforcement, and sanctions measures.\n\nSEC. 508. ANNUAL REPORT ON FOREIGN DIGITAL ASSET TRADING VOLUME,\nCOMPLIANCE WITH UNITED STATES STANDARDS AND REMEDIATION\nACTIONS.\n\n(a) In General.--Not later than 1 year after the date of enactment\nof this Act, and annually thereafter for a period of 4 years, the\nSecretary of the Treasury shall submit to the Committee on Banking,\nHousing, and Urban Affairs of the Senate and the Committee on Financial\nServices of the House of Representatives a report that--\n(1) lists the top 20 foreign jurisdictions by volume of\ndigital asset trading activity on foreign digital asset service\nproviders during the calendar year immediately preceding the\nyear of the report;\n(2) assesses the degree to which each foreign jurisdiction\nlisted under paragraph (1) has implemented anti-money\nlaundering, sanctions evasion, and counter-terrorist financing\nlaws, regulations, or standards applicable to digital asset\nactivities consistent with the standards and framework\nidentified under the National Strategy to Combat International\nDigital Asset Illicit Finance submitted under section 507; and\n(3) identifies foreign jurisdictions with--\n(A) material deficiencies in the implementation or\nenforcement of the standards described in paragraph\n(2); and\n(B) trading volumes that present systemic illicit\nfinance risk to the United States.\n(b) Form.--Each report required under subsection (a) shall be\nsubmitted in unclassified form, but may include a classified annex, as\nappropriate.\n(c) Remediation and Engagement Report.--For each foreign\njurisdiction identified pursuant to subsection (a)(3), the Secretary of\nthe Treasury shall include in the applicable report--\n(1) a description of bilateral diplomatic, regulatory, or\nlaw enforcement engagements undertaken during the calendar year\nimmediately preceding the year in which the report is submitted\nto remedy the deficiencies of the foreign jurisdiction;\n(2) a summary of actions taken by the United States\nindividually, or in conjunction with any applicable\ninternational body, to identify high-risk or non-cooperative\njurisdictions with respect to digital asset illicit finance,\nincluding public statements identifying those jurisdictions and\nmeasures to support their remediation;\n(3) any commitments obtained from the foreign jurisdiction\nto address identified deficiencies, including timeliness and\nbenchmarks; and\n(4) an assessment of progress made toward full\nimplementation of the standards identified under the National\nStrategy to Combat International Digital Asset Illicit Finance\nsubmitted under section 507.\n\nSEC. 509. AI INNOVATION LABS.\n\n(a) Definitions.--\n(1) AI test project.--The term ``AI test project'' means a\nfinancial product, service, or activity--\n(A) that makes substantial use of artificial\nintelligence;\n(B) that is, or may be, subject to a Federal\nregulation or Federal statute; and\n(C) for which a regulated entity submits an\napplication for the waiver or modification of an\napplicable regulation subject to an alternative\ncompliance strategy.\n(2) Appropriate financial regulatory agency.--The term\n``appropriate financial regulatory agency'' means--\n(A) the appropriate Federal banking agency, as\ndefined in section 3 of the Federal Deposit Insurance\nAct (12 U.S.C. 1813), with respect to an institution\ndescribed in subsection (q) of that section;\n(B) the Bureau of Consumer Financial Protection,\nwith respect to a covered person, as defined in section\n1002 of the Consumer Financial Protection Act of 2010\n(12 U.S.C. 5481), that does not have an appropriate\nfinancial regulatory agency under subparagraph (A),\n(C), or (D) of this paragraph;\n(C) the National Credit Union Administration, with\nrespect to an insured credit union, as defined in\nsection 101 of the Federal Credit Union Act (12 U.S.C.\n1752); and\n(D) the Federal Housing Finance Agency, with\nrespect to--\n(i) a Federal Home Loan Bank;\n(ii) the Federal Home Loan Bank System;\n(iii) the Federal National Mortgage\nAssociation; and\n(iv) the Federal Home Loan Mortgage\nCorporation.\n(3) Artificial intelligence; ai.--The terms ``artificial\nintelligence'' and ``AI'' have the meaning given the term\n``artificial intelligence'' in section 5002 of the National\nArtificial Intelligence Initiative Act of 2020 (15 U.S.C.\n9401).\n(4) Financial product or service.--The term ``financial\nproduct or service''--\n(A) has the meaning given the term in section 1002\nof the Consumer Financial Protection Act of 2010 (12\nU.S.C. 5481);\n(B) includes--\n(i) activities that are financial in\nnature, as defined in section 4(k)(4) of the\nBank Holding Company Act of 1956 (12 U.S.C.\n1843(k)(4)); and\n(ii) any financial product or service\nprovided by a person regulated by the\nCommission, as defined in section 1002 of the\nConsumer Financial Protection Act of 2010 (12\nU.S.C. 5481); and\n(C) does not include the business of insurance.\n(5) Financial regulatory agency.--The term ``financial\nregulatory agency'' means--\n(A) the Board of Governors of the Federal Reserve\nSystem;\n(B) the Federal Deposit Insurance Corporation;\n(C) the Office of the Comptroller of the Currency;\n(D) the Bureau of Consumer Financial Protection;\n(E) the National Credit Union Administration; and\n(F) the Federal Housing Finance Agency.\n(6) Regulated entity.--The term ``regulated entity'' means\nan entity regulated by any financial regulatory agency.\n(b) Use of Artificial Intelligence by Regulated Financial\nEntities.--\n(1) AI innovation labs.--\n(A) Establishment.--Each financial regulatory\nagency shall establish, or identify an office,\ndivision, or department of the agency that shall serve\nas, an AI Innovation Lab to enable regulated entities\nto experiment with AI test projects without unnecessary\nor unduly burdensome regulation or expectation of\nenforcement actions, pursuant to the approval of an\napplication under subparagraph (B).\n(B) Applications.--\n(i) Submission.--\n(I) In general.--On and after the\ndate that is 1 year after the date of\nenactment of this Act, a regulated\nentity may submit to the appropriate\nfinancial regulatory agency an\napplication, on a form determined by\nthe appropriate financial regulatory\nagency, to engage in an AI test project\nthrough the AI Innovation Lab\nestablished or identified under\nsubparagraph (A).\n(II) Contents.--An application\nsubmitted under subclause (I) shall\ninclude--\n(aa) a description of the\nAI test project proposed to be\ncarried out by the regulated\nentity;\n(bb) an alternative\ncompliance strategy that--\n\n(AA) identifies a\nregulation issued by\nthe appropriate\nfinancial regulatory\nagency that the\nregulated entity\nrequests be waived or\nmodified; and\n\n(BB) proposes an\nalternative method for\nthe regulated entity to\ncomply with the\nregulation, including\nan explanation as to\nwhy the alternative\nmethod is essential to\nthe operation of the\nentity and how the\nregulated entity would\neffectively manage\nrisks associated with\nthe AI test project;\n\n(cc) an explanation of how\nunder the strategy described in\nitem (aa), the AI test\nproject--\n\n(AA) would serve\nthe public interest,\nimprove consumer or\ninvestor access to a\nfinancial product or\nservice, or promote\nconsumer or investor\nprotection;\n\n(BB) would enhance\nefficiency or\noperations, foster\ninnovation or\ncompetitiveness,\nimprove risk management\nand security, or\nenhance regulatory\ncompliance;\n\n(CC) would not\npresent a systemic risk\nto the financial system\nof the United States;\n\n(DD) is consistent\nwith the purposes of\nthe anti-money\nlaundering and\ncountering the\nfinancing of terrorism\nobligations under\nsubchapter II of\nchapter 53 of title 31,\nUnited States Code; and\n\n(EE) would not\npresent a national\nsecurity risk to the\nUnited States;\n\n(dd) a proposed date on\nwhich the AI test project would\nterminate and an explanation as\nto why such termination date\nwould be appropriate;\n(ee) proposed limitations\non the size, scope, and growth\nof the AI test project;\n(ff) a detailed business\nplan; and\n(gg) an estimate of the\neconomic impact of the AI test\nproject if approved.\n(III) Joint applications.--Two or\nmore regulated entities may submit a\njoint application to the same financial\nregulatory agency under subclause (I).\n(IV) Regulations of other\nagencies.--\n(aa) In general.--A\nregulated entity may submit an\napplication under this\nsubparagraph that includes an\nalternative compliance strategy\nfor a regulation issued or\nenforced by a financial\nregulatory agency that is not\nthe appropriate financial\nregulatory agency for the\nregulated entity.\n(bb) Requirements.--An\napplication described in item\n(aa) shall be subject to the\nsame requirements as an\napplication described in\nsubclause (II), except that--\n\n(AA) the regulated\nentity shall submit the\napplication to the\nappropriate financial\nregulatory agency and\nthe financial\nregulatory agency that\nissued or enforces the\nregulation that is the\nsubject of the\nalternative compliance\nstrategy; and\n\n(BB) the AI test\nproject may not take\neffect unless the\nappropriate financial\nregulatory agency and\nany other financial\nregulatory agency that\nissued or enforces the\nregulation that is the\nsubject of the\nalternative compliance\nstrategy jointly\napprove the application\nusing the process\ndescribed in clause\n(ii).\n\n(V) Notice.--A regulated entity\nthat is regulated or supervised by more\nthan 1 financial regulatory agency\nshall provide notice of any application\nsubmitted to the appropriate financial\nregulatory agency under this section to\neach financial regulatory agency by\nwhich it is regulated or supervised not\nlater than 5 business days after the\nentity submits the application to the\nappropriate financial regulatory\nagency.\n(ii) Agency review.--\n(I) In general.--Except as provided\nin subclause (IV), not later than 120\ndays after the date on which an\napplication is submitted to the\nappropriate financial regulatory agency\nunder clause (i), the appropriate\nfinancial regulatory agency shall--\n(aa) review the\napplication; and\n(bb) submit to the\napplicant in writing a\ndetermination of the agency.\n(II) Approval.--\n(aa) In general.--If the\napplicant shows that it is more\nlikely than not that the\napplication meets the\nrequirements for establishing\nan alternative compliance\nstrategy and satisfies the\nstandards described in items\n(bb) and (cc) of clause\n(i)(II), the agency shall\napprove the application and\nnotify the applicant in writing\nof--\n\n(AA) the regulation\nthat is the subject of\nthe alternative\ncompliance strategy;\n\n(BB) the terms of\nthe alternative\ncompliance strategy for\nthe AI test project;\n\n(CC) the date on\nwhich the AI test\nproject will terminate;\n\n(DD) any\nlimitations on the\nsize, scope, or growth\nof the AI test project;\nand\n\n(EE) any additional\nlimitations or\nconditions on the AI\ntest project, as\ndetermined by the\nappropriate financial\nregulatory agency.\n\n(bb) Effect of approval.--\nWith respect to an AI test\nproject, except as provided in\nitem (cc), beginning on the\ndate on which an application\nsubmitted under clause (i) is\napproved and ending on the date\ndescribed in item (aa)(CC)--\n\n(AA) the\nappropriate financial\nregulatory agency may\nenforce a regulation\ndescribed in item\n(aa)(AA) only in the\nmanner set out in the\nalternative compliance\nstrategy described in\nitem (aa)(BB); and\n\n(BB) except as\nprovided in subclause\n(III), a financial\nregulatory agency that\nis not the appropriate\nfinancial regulatory\nagency may not enforce\na regulation described\nin item (aa)(AA).\n\n(cc) Enforcement by another\nfinancial regulatory agency.--\nWith respect to an AI test\nproject, a financial regulatory\nagency other than the\nappropriate financial\nregulatory agency that approves\nan application under clause\n(i)(IV) may enforce a\nregulation described in item\n(aa)(AA) if the alternative\ncompliance strategy described\nin item (aa)(BB) provides for\nenforcement by such financial\nregulatory agency.\n(dd) Rule of\nconstruction.--Nothing in this\nclause may be construed to\nlimit the authority of a\nfinancial regulatory agency to\ntake an enforcement action\nagainst a regulated entity with\nrespect to fraud or market\nmanipulation or for engaging in\nan unsafe or unsound practice\nrelating to an AI test project.\n(III) Denial.--\n(aa) In general.--If an\nagency denies an application\nsubmitted under clause (i), the\nagency--\n\n(AA) shall submit\nto the applicant a\nwritten notice\nexplaining the reason\nfor denial; and\n\n(BB) may not take\nan enforcement action\nrelated to the proposed\nAI test project against\nthe applicant earlier\nthan the date that is\n30 days after the date\non which the agency\nsubmits the written\nnotice described in\nsubitem (AA).\n\n(bb) Resubmittals.--Each\ntime an application submitted\nunder clause (i) is denied, the\nregulated entity--\n\n(AA) may submit an\namended application\nafter receiving\nfeedback from the\nagency making such\ndenial; and\n\n(BB) may not\nresubmit more than 2\napplications that are\nsubstantially similar\nto the denied\napplication.\n\n(cc) Injunctive relief.--\nNotwithstanding item (aa)(BB),\na financial regulatory agency,\nby and through its own\nattorneys, may file a civil\naction in an appropriate United\nStates district court to enjoin\nan active AI test project if\nthe agency determines that the\nAI test project presents an\nimmediate danger to consumers\nor investors or presents a\nrisk--\n\n(AA) to financial\nmarkets;\n\n(BB) in the case of\nan AI test project\nengaged in by an\ninsured depository\ninstitution or an\ninsured credit union,\nof loss to a Federal\ndeposit or share\ninsurance fund;\n\n(CC) of a violation\nof anti-money\nlaundering and\ncountering the\nfinancing of terrorism\nobligations under\nsubchapter II of\nchapter 53 of title 31,\nUnited States Code; or\n\n(DD) to the\nnational security of\nthe United States.\n\n(IV) Extension.--If the financial\nregulatory agency needs additional\ntime, the agency may extend the\napproval deadline by 120 days. After\nthe expiration of the 120-day extension\nperiod, if the agency has not made a\ndetermination on the application, the\napplication will automatically be\ndeemed approved and effective.\n(V) Additional information.--Not\nlater than the initial or extended\napproval deadline, as applicable, a\nfinancial regulatory agency may request\nadditional information from the\napplicant.\n(iii) Data security.--All data supplied by\nsponsors of AI test projects to a financial\nregulatory agency submitted under this section\nshall be stored and maintained in a secure\nmanner by the financial regulatory agency,\nconsistent with applicable data security\nstandards.\n(iv) Regulations.--Not later than 180 days\nafter the date of enactment of this Act, each\nfinancial regulatory agency shall promulgate\nregulations that--\n(I) shall be published in the\nFederal Register and provide a 60-day\nperiod for public notice and comment;\n(II) include--\n(aa) procedures for\nmodifying the AI test projects\nthat are approved by the\nagency;\n(bb) consequences for\nfailure to comply with the\nterms of an alternative\ncompliance strategy;\n(cc) a requirement that an\nAI test project will terminate\nnot earlier than 1 year after\nthe AI test project is\napproved;\n(dd) procedures to extend\nthe termination date described\nin item (cc);\n(ee) procedures for\nconfidentiality; and\n(ff) procedures for\ncoordinating decisions relating\nto applications submitted\njointly by multiple regulated\nentities or applications\nsubmitted to more than one\nfinancial regulatory agency.\n(2) Report.--Not later than 2 years after the date of\nenactment of this Act, and each year for 7 years thereafter,\neach financial regulatory agency shall submit to the Committee\non Banking, Housing, and Urban Affairs of the Senate and the\nCommittee on Financial Services of the House of Representatives\nan annual report on the outcomes of AI test projects. A report\nunder this subsection may not include the names of\nparticipating entities or any proprietary or confidential\nbusiness information. A report under this subsection shall\ninclude aggregated findings, trends, and lessons learned from\nthe AI test projects.\n(3) Rule of construction.--Nothing in this section may be\nconstrued to limit the authority of a financial regulatory\nagency to take an enforcement action against a regulated entity\nwith respect to fraud or market manipulation relating to an AI\ntest project.\n\nTITLE VI--PROTECTING SOFTWARE DEVELOPERS AND SOFTWARE INNOVATION\n\nSEC. 601. PROTECTING SOFTWARE DEVELOPERS.\n\n(a) Amendment to the Securities Act of 1933.--The Securities Act of\n1933 (15 U.S.C. 77a et seq.) is amended by inserting after section 27B\n(15 U.S.C. 77z-2a) the following:\n\n``SEC. 27C. APPLICATION TO SOFTWARE DEVELOPERS.\n\n``(a) Distributed Ledger System Defined.--In this section, the term\n`distributed ledger system' has the meaning given the term in section 2\nof the Digital Asset Market Clarity Act.\n``(b) Application to Software Developers.--Notwithstanding any\nother provision of this Act, a person shall not be subject to this Act\nand the regulations promulgated under this Act solely based on the\nperson engaging in any of the following activities, whether singly or\nin combination, in relation to the operation of a distributed ledger\nsystem or any component thereof:\n``(1) Compiling network transactions or relaying,\nsearching, sequencing, validating, or acting in a similar\ncapacity.\n``(2) Providing computational work, operating a node or\noracle service, or procuring, offering, or utilizing network\nbandwidth, or providing other similar incidental services.''.\n(b) Amendment to the Securities Exchange Act of 1934.--The\nSecurities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by\ninserting after section 15G (15 U.S.C. 78o-11) the following:\n\n``SEC. 15H. APPLICATION TO SOFTWARE DEVELOPERS.\n\n``(a) Definitions.--In this section:\n``(1) Constitute.--The term `constitute' means to compile,\nassemble, integrate, or otherwise combine software components\ninto a complete software system.\n``(2) Decentralized finance trading protocol.--\n``(A) In general.--The term `decentralized finance\ntrading protocol' means a distributed ledger system\nthrough which multiple participants can execute a\nfinancial transaction--\n``(i) in accordance with an automated rule\nor algorithm that is predetermined and non-\ndiscretionary; and\n``(ii) without reliance on a person other\nthan the user to maintain custody or control of\nthe digital assets subject to the financial\ntransaction.\n``(B) Exclusions.--\n``(i) In general.--The term `decentralized\nfinance trading protocol' does not include a\ndistributed ledger system if--\n``(I) a person or group of persons\nunder common control or acting pursuant\nto an agreement to act in concert has\nthe authority, directly or indirectly,\nthrough any contract, arrangement,\nunderstanding, relationship, or\notherwise, to control or materially\nalter the functionality, operation, or\nrules of consensus or agreement of the\ndistributed ledger system;\n``(II) the distributed ledger\nsystem does not operate, execute, and\nenforce its operations and transactions\nbased solely on pre-established,\ntransparent rules encoded directly\nwithin the source code of the\ndistributed ledger system; or\n``(III) a person or group of\npersons under common control has the\nunilateral authority, via operation of\nthe distributed ledger system, to\nrestrict, censor, or prohibit the use\nof the distributed ledger system,\nincluding any applicable system-based\nuser activity.\n``(ii) Special rule.--For purposes of\nclause (i), a decentralized governance system\nshall not be considered to be a person or a\ngroup of persons under common control or acting\npursuant to an agreement to act in concert.\n``(3) Deploy.--The term `deploy' means to bring software or\nhardware onto a distributed ledger system for active use.\n``(4) Digital asset; distributed ledger application;\ndistributed ledger system; distributed ledger protocol;\ndecentralized governance system; smart contract.--The terms\n`digital asset', `distributed ledger application', `distributed\nledger system', `distributed ledger protocol', `decentralized\ngovernance system', and `smart contract' have the meanings\ngiven those terms in section 2 of the Digital Asset Market\nClarity Act.\n``(5) Decentralized finance messaging system.--\n``(A) In general.--The term `decentralized finance\nmessaging system' means a software application that\nprovides a user with the ability to create or submit an\ninstruction, communication, or message to a\ndecentralized finance trading protocol.\n``(B) Additional requirements.--The term\n`decentralized finance messaging system' does not\ninclude any system that provides any person other than\nthe user with--\n``(i) control over the funds of the user;\nor\n``(ii) the authority to execute any of the\ntransaction of the user.\n``(b) Application to Software Developers.--Notwithstanding any\nother provision of this Act, a person shall not be subject to this Act\nand the regulations promulgated under this Act solely based on the\nperson engaging in any of the following activities, whether singly or\nin combination, in relation to the operation of a distributed ledger\nsystem or any component thereof:\n``(1) Compiling network transactions or relaying,\nsearching, sequencing, validating, or acting in a similar\ncapacity.\n``(2) Providing computational work, operating a node or\noracle service, or procuring, offering, or utilizing network\nbandwidth, or providing other similar incidental services.\n``(3) Developing, publishing, or constituting--\n``(A) a distributed ledger system; or\n``(B) software or systems that create or utilize\nhardware or software, including wallets or other\nsystems, that facilitate the ability of a user to keep,\nsafeguard, or have custody of the digital assets or\nprivate keys of the user.\n``(c) Rule of Construction.--Subsection (b)(3) does not extend to\nany activity covered in any of the activities described in\nsubparagraphs (A) through (D) of subsection (d)(1), including activity\ntaken following deployment of such software or hardware.\n``(d) Clarification.--\n``(1) In general.--The Commission shall, pursuant to notice\nand comment rulemaking, clarify the circumstances under which a\nperson shall not be subject to this Act by reason of engaging\nsolely in 1 or more of the following activities in relation to\nthe operation of a decentralized finance trading protocol or\nany component thereof:\n``(A) Providing a user interface that enables a\nuser to read and access data.\n``(B) Administering, maintaining, or otherwise\ndistributing a decentralized governance system relating\nto a decentralized finance trading protocol, or a\ndecentralized finance trading protocol.\n``(C) Administering, maintaining, or otherwise\ndistributing a decentralized finance messaging system\nor operating or participating in a smart contract-based\nliquidity pool in a decentralized finance trading\nprotocol.\n``(D) Administering, maintaining, or otherwise\ndistributing software or systems that create or deploy\nhardware or software, including wallets or other\nsystems, that facilitate the ability of a user to keep,\nsafeguard, or maintain custody of the digital assets or\nrelated private keys of the user.\n``(2) Considerations.--In providing the clarification under\nparagraph (1) the Commission shall--\n``(A) ensure that the rules are consistent with the\npurposes of the securities laws, including the public\ninterest, the protection of investors, and the\nmaintenance of fair and orderly markets;\n``(B) provide that section 108(a) of the Lummis-\nGillibrand Responsible Financial Innovation Act of 2026\nshall apply to such rules;\n``(C) protect the rights of software developers,\npublishers, and users to create, publish, and use code\nand software in a manner consistent with the First\nAmendment to the Constitution of the United States; and\n``(D) provide legal clarity for the development,\npublication, and operation of distributed ledger\nsystems and the components therein in a manner\nconsistent with the purposes of this section.\n``(3) Rule of construction.--Nothing in this subsection may\nbe construed to grant the Commission authority over persons,\nsystems, software, or activities that do not otherwise fall\nwithin the jurisdiction of the Commission under this Act, or to\ncreate a presumption that any such activity is subject to this\nAct.\n``(e) Anti-Fraud, Anti-Manipulation, and False Reporting.--The\ndetermination that a person is not subject to this Act under\nsubsections (b) and (d) shall not apply to the anti-fraud, anti-\nmanipulation, or false reporting enforcement authorities of the\nCommission.\n``(f) Rule of Construction.--Nothing in this Act or the rules and\nregulations promulgated under this Act may be construed to apply any\nrequirement of the securities laws to a digital commodity, as defined\nin section 2 of the Digital Asset Market Clarity Act, or expand the\nauthority of the Commission beyond that which the Commission had before\nthe date of enactment of the Digital Asset Market Clarity Act to\nregulate the activities described in subsection (d)(1).\n``(g) Federal Preemption.--\n``(1) In general.--Notwithstanding any other provision of\nlaw, no securities, commodities, or digital assets law of any\nState (or of any political subdivision of a State) shall apply\nto an activity described in subsection (b).\n``(2) Rule of construction.--Nothing in paragraph (1) may\nbe construed to apply to the anti-money laundering, anti-fraud,\nor anti-manipulation authorities of a State (or of any\npolitical subdivision of a State).''.\n(c) Applicability.--This section, and the amendments made by this\nsection, shall apply to conduct occurring before, on, or after the date\nof enactment of this Act.\n\nSEC. 602. SAFE HARBOR FOR NONFUNGIBLE TOKENS.\n\n(a) Definitions.--In this section:\n(1) Nonfungible token.--The term ``nonfungible token''\nmeans a digital asset recorded on a distributed ledger that--\n(A) is individually identifiable and\ndistinguishable from any other digital asset;\n(B) represents ownership of, or rights in, a work\nof authorship, art, a collectible, a membership, an\naccess credential, a certificate of authenticity, an\nin-game or in-application item, or another similar\nspecific item or discrete digital or physical good,\nservice, or benefit;\n(C) is not interchangeable on a 1-to-1 basis with\nany other token or digital asset; and\n(D) may be bought, sold, or transferred for\nconsideration.\n(2) Promoter.--The term ``promoter'' means a person or\ngroup that manages, controls, or operates an enterprise in\nwhich capital is invested, or any person or group acting on\nbehalf of such a person or group with respect to such an\nenterprise, including an affiliate, agent, or coordinated actor\nthat contributes to the capital raising efforts of the\nenterprise.\n(b) Safe Harbor.--\n(1) In general.--Except as provided in paragraph (3), the\noffer, sale, resale, transfer, or conveyance of a nonfungible\ntoken shall not be deemed to constitute an offer, sale, or\ndistribution of a security or investment contract under the\nSecurities Act of 1933 (15 U.S.C. 77a et seq.), the Securities\nExchange Act of 1934 (15 U.S.C. 78a et seq.), or any equivalent\nState law, unless the transaction, in substance, involves all\nof the elements of an investment contract.\n(2) Rules of construction.--Neither of the following shall\nbe considered to be a security under the Securities Act of 1933\n(15 U.S.C. 77a et seq.) or the Securities Exchange Act of 1934\n(15 U.S.C. 78a et seq.):\n(A) The resale or secondary market transfer of a\nnonfungible token, where the payment for that resale or\ntransfer does not flow to a promoter or is not used to\nraise new capital for an enterprise.\n(B) A nonfungible token that serves as a\ncollectible, membership right, event ticket, access\ncredential, or other non-investment-based use case\nsolely because the nonfungible token may appreciate in\nvalue or depend in part on the continued efforts or the\nreputation of the creator or issuer of the nonfungible\ntoken.\n(3) Exceptions.--The safe harbor under paragraph (1) shall\nnot apply to--\n(A) a mass-minted series of items with\nsubstantially similar or nearly identical traits that\nare marketed or sold interchangeably;\n(B) a fractionalized interest in a nonfungible\ntoken; or\n(C) an interest representing a beneficial or\neconomic claim on a nonfungible token or an asset that\na nonfungible token represents.\n(4) Reliance; prospective effect.--\n(A) Reliance.--A person, other than an originator\nor related person, that reasonably and in good faith\nrelies on the safe harbor under this subsection shall\nnot be subject to any civil or administrative\npenalties.\n(B) Prospective effect.--Any determination by the\nCommission that the safe harbor under this subsection\ndoes not apply to a particular circumstance shall--\n(i) be prospective only; and\n(ii) take effect not earlier than 60 days\nafter the date on which the Commission publicly\nposts that determination.\n\nSEC. 603. STUDY ON NONFUNGIBLE TOKENS.\n\n(a) Definition.--In this section, the term ``nonfungible token''\nhas the meaning given the term in section 602.\n(b) Study.--The Comptroller General of the United States shall\ncarry out a study of nonfungible tokens that analyzes--\n(1) the nature, size, role, purpose, and use of nonfungible\ntokens;\n(2) the similarities and differences between nonfungible\ntokens and other digital commodities, including digital\ncommodities and payment stablecoins, and how the markets for\nthose digital commodities intersect;\n(3) how nonfungible tokens are minted by issuers and\nsubsequently distributed to purchasers;\n(4) how nonfungible tokens are stored after being purchased\nby a consumer;\n(5) the interoperability of nonfungible tokens between\ndifferent distributed ledger systems;\n(6) the scalability of different nonfungible token\nmarketplaces;\n(7) the benefits of nonfungible tokens, including\nverifiable digital ownership;\n(8) the risks of nonfungible tokens, including--\n(A) the infringement of intellectual property\nrights;\n(B) cybersecurity risks; and\n(C) market risks;\n(9) whether and how nonfungible tokens have been, or could\nbe, integrated with traditional marketplaces, including\nmarketplaces for music, real estate, gaming, events, and\ntravel;\n(10) whether and how nonfungible tokens have been, or could\nbe, used to facilitate commerce or other activities through the\nrepresentation of documents, identification, contracts,\nlicenses, and other commercial, governmental, or personal\nrecords;\n(11) any risks to traditional markets from the integration\ndescribed in paragraph (9); and\n(12) the levels and types of illicit activity in\nnonfungible token markets.\n(c) Report.--Not later than 1 year after the date of enactment of\nthis Act, the Comptroller General of the United States shall make\npublicly available a report that includes the results of the study\nrequired under subsection (b).\n\nSEC. 604. BLOCKCHAIN REGULATORY CERTAINTY ACT.\n\n(a) Short Title.--This section may be cited as the ``Blockchain\nRegulatory Certainty Act''.\n(b) Definitions.--In this section:\n(1) Developer or provider.--The term ``developer or\nprovider'' means any person or business that creates or\npublishes software to facilitate the creation of, or provide\nmaintenance to, a distributed ledger, or a service associated\nwith a distributed ledger.\n(2) Distributed ledger service.--The term ``distributed\nledger service'' means any information, transaction, or\ncomputing service or system that provides or enables access to\na distributed ledger system by multiple users, including a\nservice or system that enables users to send, receive,\nexchange, or store digital assets described by distributed\nledger systems.\n(3) Non-controlling developer or provider.--The term ``non-\ncontrolling developer or provider'' means a developer or\nprovider of a distributed ledger service that, in the regular\ncourse of operations, does not have the legal right or the\nunilateral and independent ability to control, initiate upon\ndemand, or effectuate transactions involving digital assets to\nwhich users are entitled, without the approval, consent, or\ndirection of any third party.\n(c) Treatment.--Notwithstanding any other provision of law, a non-\ncontrolling developer or provider--\n(1) shall not be treated as--\n(A) a money transmitting business, as defined in\nsection 5330 of title 31, United States Code, and the\nregulations promulgated under that section; or\n(B) engaged in money transmitting, as defined in\nsection 1960 of title 18, United States Code; and\n(2) on or after the date of enactment of this Act, shall\nnot be otherwise subject to any registration requirement that\nis substantially similar to a requirement (as in effect on the\nday before the date of enactment of this Act) that applies to\nan entity described in subparagraph (A) or (B) of paragraph\n(1), solely on the basis of--\n(A) creating or publishing software to facilitate\nthe creation of, or providing maintenance services to,\na distributed ledger or a service associated with a\ndistributed ledger;\n(B) providing hardware or software to facilitate a\ncustomer's own custody or safekeeping of the digital\nassets of the customer; or\n(C) providing infrastructure support to maintain a\ndistributed ledger service.\n(d) Clarification of Treatment.--Subsection (c) shall not modify\nthe application of section 1960(b)(1)(C) of title 18, United States\nCode, to any person (referred to in this subsection as the ``initial\nperson'') that acts with the specific intent to transfer, on behalf of\nanother person, funds that are known by the initial person to be--\n(1) derived from a criminal offense; or\n(2) intended to be used to promote or support unlawful\nactivity.\n(e) Rules of Construction.--Nothing in this section may be\nconstrued--\n(1) to affect whether a developer or provider of a\ndistributed ledger service is otherwise subject to\nclassification or treatment as a money transmitter, or as\nengaged in money transmitting, under applicable Federal or\nState law, including laws relating to anti-money laundering or\ncountering the financing of terrorism, based on conduct outside\nthe scope of subsection (c);\n(2) to affect whether a developer or provider is otherwise\nsubject to classification or treatment as a financial\ninstitution under subchapter II of chapter 53 of title 31,\nUnited States Code, this Act, any amendment made by this Act,\nor any Act enacted after the date of enactment of this Act,\nbased on conduct outside the scope of subsection (c);\n(3) to limit or expand any law pertaining to intellectual\nproperty;\n(4) to prevent any State from enforcing any State law that\nis consistent with this section; or\n(5) to create a cause of action or impose liability under\nany State or local law that is inconsistent with this section.\n\nSEC. 605. KEEP YOUR COINS ACT.\n\n(a) Short Title.--This section may be cited as the ``Keep Your\nCoins Act''.\n(b) Definitions.--In this section:\n(1) Covered user.--The term ``covered user'' means a United\nStates individual who obtains digital assets to purchase goods\nor services on behalf of that individual, without regard to the\nmethod in which that individual obtained those digital assets.\n(2) Self-hosted wallet.--The term ``self-hosted wallet''\nmeans a digital interface--\n(A) that is used to secure and transfer digital\nassets; and\n(B) under which the owner of digital assets secured\nand transferred under subparagraph (A) retains\nindependent control over those digital assets.\n(c) Self-Custody.--A Federal agency may not prohibit, restrict, or\notherwise impair the ability of a covered user to self-custody digital\nassets using a self-hosted wallet or other means to conduct\ntransactions for any lawful purpose.\n(d) Rule of Construction.--Nothing in this section may be construed\nto limit the authority of the Secretary of the Treasury, the\nCommission, the Commodity Futures Trading Commission, the Board of\nGovernors of the Federal Reserve System, the Comptroller of the\nCurrency, the Federal Deposit Insurance Corporation, or the National\nCredit Union Administration to carry out any enforcement action or\nspecial measure authorized under applicable law, including--\n(1) the Bank Secrecy Act, section 9714 of the Combating\nRussian Money Laundering Act (31 U.S.C. 5318A note), and\nsection 7213A of the Fentanyl Sanctions Act (21 U.S.C. 2313a);\nor\n(2) any other law relating to illicit finance, money\nlaundering, terrorism financing, or United States sanctions.\n\nTITLE VII--PROTECTING CUSTOMER PROPERTY\n\nSEC. 701. CUSTOMER PROPERTY PROTECTIONS FOR ANCILLARY ASSETS AND\nDIGITAL COMMODITIES IN BANKRUPTCY.\n\n(a) Definitions for Stockbroker Liquidation.--\n(1) In general.--Section 741 of title 11, United States\nCode, is amended--\n(A) by redesignating paragraphs (5) through (9) as\nparagraphs (7) through (11), respectively;\n(B) by redesignating paragraphs (1) through (4) as\nparagraphs (2) through (5), respectively;\n(C) by inserting before paragraph (2), as so\nredesignated, the following:\n``(1) `ancillary asset' has the meaning given that term in\nsection 2 of the Digital Asset Market Clarity Act;'';\n(D) in paragraph (3), as so redesignated--\n(i) in subparagraph (A)(vi), by striking\n``and'' at the end;\n(ii) by redesignating subparagraph (B) as\nsubparagraph (C);\n(iii) by inserting after subparagraph (A)\nthe following:\n``(B) entity with whom a person deals as principal\nor agent and that has a claim against such person on\naccount of a digital commodity or an ancillary asset\nreceived, acquired, or held by such person from or for\nthe securities account or accounts of such entity for 1\nor more of the purposes identified in clauses (i)\nthrough (vi) of subparagraph (A) of this paragraph;\nand''; and\n(iv) in subparagraph (C), as so\nredesignated--\n(I) in clause (i)--\n(aa) by inserting ``,\nancillary asset, or digital\ncommodity'' after ``security'';\nand\n(bb) by inserting ``or\n(B)'' after ``subparagraph\n(A)''; and\n(II) in clause (ii), by inserting\n``an ancillary asset, a digital\ncommodity,'' after ``a security,'';\n(E) in paragraph (5), as so redesignated, in the\nmatter preceding subparagraph (A), by inserting\n``ancillary asset, digital commodity,'' after ``cash,\nsecurity,'' each place it appears;\n(F) by inserting after paragraph (5), as so\nredesignated, the following:\n``(6) `digital commodity' has the meaning given that term\nin section 2 of the Digital Asset Market Clarity Act;''; and\n(G) in paragraph (8), as so redesignated, in\nsubparagraph (A)(i), by inserting ``, ancillary asset\npositions, and digital commodities positions'' after\n``securities positions''.\n(b) Extent of Customer Claims.--Section 746(b) of title 11, United\nStates Code, is amended, in the matter preceding paragraph (1), by\nstriking ``cash or a security'' and inserting ``cash, a security, an\nancillary asset, or a digital commodity''.\n(c) Technical and Conforming Amendments.--\n(1) Section 546(e) of title 11, United States Code, is\namended--\n(A) by striking ``section 741(7)'' and inserting\n``section 741''; and\n(B) by striking ``section 761(4)'' and inserting\n``section 761''.\n(2) Section 561(a) of title 11, United States Code, is\namended--\n(A) in paragraph (1), by striking ``section\n741(7)'' and inserting ``section 741''; and\n(B) in paragraph (2), by striking ``section\n761(4)'' and inserting ``section 761''.\n(3) Section 752(c) of title 11, United States Code, is\namended by striking ``section 741(4)(B)'' and inserting\n``section 741(5)(B)''.\n(d) Clarifications.--For the avoidance of doubt--\n(1) nothing in this section or an amendment made by this\nsection may be construed to apply to securities or cash held by\na broker-dealer and such assets and related claims shall be\ngoverned exclusively by the Securities Investor Protection Act\nof 1970 (15 U.S.C. 78aaa et seq.);\n(2) nothing in this section or an amendment made by this\nsection may be construed to apply to deposits held by a bank or\ncommodity contracts, which shall be governed by the relevant\napplicable law; and\n(3) in any liquidation proceeding under subchapter III or\nIV of chapter 7 of title 11, United States Code, those\nprovisions shall be construed to treat ancillary assets and\ndigital commodities held for customers as customer property\ngoverned by title 11, United States Code, and required to be\ndistributed according to such title.\n\nSEC. 702. INSOLVENCY SAFE HARBOR.\n\n(a) Definitions.--In this section:\n(1) Commodity broker; financial institution; financial\nparticipant; securities clearing agency; stockbroker.--The\nterms ``commodity broker'', ``financial institution'',\n``financial participant'', ``securities clearing agency'', and\n``stockbroker'' have the meanings given those terms in section\n101 of title 11, United States Code.\n(2) Commodity contract.--The term ``commodity contract''\nmeans a commodity contract described in paragraph (4)(A) of\nsection 761 of title 11, United States Code.\n(b) Safe Harbor.--A purchase, sale, or loan of, a margin loan or\nother extension of credit on, or a repurchase, reverse repurchase, or\nother transaction involving, a unit of a digital commodity occurring\nwith a commodity broker, stockbroker, financial institution, financial\nparticipant, or securities clearing agency shall be deemed to be--\n(1) a commodity contract for purposes of--\n(A) sections 362(b)(6), 362(o), 546(e), 553, 556,\n561, and 562 of title 11, United States Code;\n(B) section 11 of the Federal Deposit Insurance Act\n(12 U.S.C. 1821);\n(C) section 210 of the Dodd-Frank Wall Street\nReform and Consumer Protection Act (12 U.S.C. 5390);\nand\n(D) section 5(b)(2)(C) of the Securities Investor\nProtection Act of 1970 (15 U.S.C. 78eee(b)(2)(C)); and\n(2) a margin payment for purposes of section 548(d)(2)(B)\nof title 11, United States Code.\n\nTITLE VIII--CUSTOMER PROTECTION\n\nSEC. 801. EDUCATIONAL MATERIALS.\n\nThe Commission and the Commodity Futures Trading Commission shall\nrequire digital asset intermediaries to provide clear and accessible\neducational materials to the public, including--\n(1) an overview of how distributed ledger systems function;\n(2) a description of common risks associated with digital\nassets;\n(3) a description of the differences between digital asset\nmarkets and traditional financial markets;\n(4) information on reporting and disclosure requirements\nrelated to digital asset transactions and securities which may\nbe accompanied by network tokens or ancillary assets; and\n(5) guidance on recognizing fraudulent schemes and\ninstructions for reporting suspected fraud.\n\nSEC. 802. SAVINGS CLAUSES.\n\n(a) Definitions.--In this section:\n(1) Digital consumer token.--The term ``digital consumer\ntoken'' means a digital asset that is primarily acquired for a\nconsumptive purpose, including redemption for a specified good\nor service at the time of sale or within a reasonable time\nafter sale, as defined by the Federal Trade Commission pursuant\nto rule.\n(2) Nonfungible token.--The term ``nonfungible token''\nmeans a digital asset recorded on a distributed ledger that--\n(A) is individually identifiable and\ndistinguishable from any other digital asset;\n(B) represents ownership of, or rights in, a work\nof authorship, art, a collectible, a membership, an\naccess credential, a certificate of authenticity, an\nin-game or in-application item, or another similar\nspecific item or discrete digital or physical good,\nservice, or benefit;\n(C) is not interchangeable on a 1-to-1 basis with\nany other token or digital asset; and\n(D) may be bought, sold, or transferred for\nconsideration.\n(b) Federal Trade Commission.--Nothing in this Act, or any\namendment made by this Act, may be construed as limiting or abridging\nthe jurisdiction of the Federal Trade Commission with respect to--\n(1) investigations or enforcement actions under the Federal\nTrade Commission Act (15 U.S.C. 41 et seq.) relating to unfair\nor deceptive acts or practices by persons relating to commerce\nin nonfungible tokens or digital consumer tokens, including\ndeceptive acts with respect to advertising and endorsements\nrelating to nonfungible tokens and digital consumer tokens;\n(2) highlighting best practices relating to commerce in\nnonfungible tokens or digital consumer tokens;\n(3) promoting responsible innovation;\n(4) consumer education relating to fraudulent digital asset\nactivity; or\n(5) investigating unlawful restraints of trade in the\ndigital asset industry.\n(c) Rule of Construction.--Nothing in this Act, or any amendment\nmade by this Act, may be construed to expand, contract, or otherwise\naffect the jurisdiction or authority with respect to the Federal\nconsumer financial laws under the Consumer Financial Protection Act of\n2010 (12 U.S.C. 5481 et seq.), as in effect on the day before the date\nof enactment of this Act, including with respect to subsection (i) or\n(j) of section 1027 of the Consumer Financial Protection Act of 2010\n(12 U.S.C. 5517).\n\nSEC. 803. STUDY ON EXPANDING FINANCIAL LITERACY.\n\n(a) Study.--The Commission and the Commodity Futures Trading\nCommission shall jointly conduct a study to identify--\n(1) the existing (as of the day before the date of\nenactment of this Act) level of financial literacy among retail\ndigital asset customers;\n(2) methods to improve the timing, content, and format of\nfinancial literacy materials regarding digital assets provided\nby the respective commissions;\n(3) methods to improve coordination between the Commission\nand the Commodity Futures Trading Commission with other\nagencies, including the Financial Literacy and Education\nCommission, nonprofit organizations, and State and local\njurisdictions, to better disseminate financial literacy\nmaterials;\n(4) the efficacy of current financial literacy efforts with\na focus on rural communities and communities with majority-\nminority populations;\n(5) the most useful and understandable relevant\ninformation, including clear disclosures, that retail digital\nasset customers need to make informed financial decisions\nbefore engaging with or purchasing a digital asset;\n(6) the most effective public-private partnerships in\nproviding financial literacy regarding digital assets;\n(7) the most relevant metrics to measure successful\nimprovement of the financial literacy of an individual after\nengaging with financial literacy efforts; and\n(8) in consultation with the Financial Literacy and\nEducation Commission, a strategy (including, to the extent\npracticable, measurable goals and objectives) to increase\nfinancial literacy of investors regarding digital assets.\n(b) Report.--Not later than 1 year after the date of enactment of\nthis Act, the Commission and the Commodity Futures Trading Commission\nshall jointly submit to the Committee on Banking, Housing, and Urban\nAffairs and the Committee on Agriculture, Nutrition, and Forestry of\nthe Senate and the Committee on Financial Services and the Committee on\nAgriculture of the House of Representatives a written report on the\nstudy required under subsection (a).\n\nSEC. 804. CONSULTATION WITH SIPC REGARDING MANDATORY BROKER-DEALER\nDISCLOSURES TO INVESTORS CONCERNING THE STATUS OF PAYMENT\nSTABLECOINS AND DIGITAL COMMODITIES.\n\n(a) Definition.--In this section, the term ``payment stablecoin''\nhas the meaning given the term in section 2 of the GENIUS Act (12\nU.S.C. 5901).\n(b) Rules.--Not later than 270 days after the date of enactment of\nthis Act, the Commission, after consultation with the Commodity Futures\nTrading Commission and the Securities Investor Protection Corporation,\nshall issue rules requiring written disclosures regarding the treatment\nof customer assets in the event of an insolvency, resolution, or\nliquidation proceeding to be provided by a registered broker or dealer\nto an investor--\n(1) before a digital commodity, a payment stablecoin, or a\nsecurity involving a unit of a digital commodity is received,\nacquired, or held by the broker or dealer for the account of\nthe investor; and\n(2) after the provision of the disclosures under paragraph\n(1), at such frequency as the Commission may prescribe.\n(c) Contents.--The rules issued under subsection (b) shall include,\nas necessary or appropriate for the protection of investors--\n(1) a description of the manner in which any digital\ncommodity, payment stablecoin, or security involving a unit of\na digital commodity received, acquired, or held by a broker or\ndealer for the account of an investor would be treated in an\ninsolvency, resolution, or liquidation proceeding with respect\nto the broker or dealer under--\n(A) title II of the Dodd-Frank Wall Street Reform\nand Consumer Protection Act (12 U.S.C. 5381 et seq.);\n(B) the Securities Investor Protection Act of 1970\n(15 U.S.C. 78aaa et seq.); or\n(C) as applicable, chapter 7 or 11 of title 11,\nUnited States Code; and\n(2) how the treatment described in paragraph (1) differs\nfrom the treatment of securities and cash received, acquired,\nor held by the broker or dealer for the account of the\napplicable investor in the event of an insolvency, resolution,\nor liquidation proceeding with respect to the broker or dealer\nunder each provision of law described in subparagraph (A), (B),\nand (C) of paragraph (1).\n\nTITLE IX--OTHER MATTERS\n\nSEC. 901. JOINT ADVISORY COMMITTEE ON DIGITAL ASSETS.\n\n(a) Establishment.--The Commodity Futures Trading Commission and\nthe Commission (referred to collectively in this section as the\n``Commissions'') shall jointly establish the Joint Advisory Committee\non Digital Assets (referred to in this section as the ``Committee'').\n(b) Purpose.--\n(1) In general.--The Committee shall--\n(A) provide the Commissions with official findings\nand nonbinding recommendations on--\n(i) the rules, regulations, oversight, and\nother matters of the Commissions relating to\ndigital assets, including with respect to\nregulatory harmonization between the\nCommissions;\n(ii) how to further the regulatory\nharmonization of digital asset policy between\nthe Commissions or areas in which that\nharmonization should occur; and\n(iii) the implementation by the Commissions\nof this Act, and the amendments made by this\nAct, including with respect to regulatory\nharmonization between the Commissions,\nmemoranda of understanding, and the CFTC-SEC\nMicro-Innovation Sandbox established pursuant\nto section 501;\n(B) develop and share objective methods and best\npractices for evaluating digital asset networks and\nactivities, including, as appropriate, technical\nfeatures, economic design, and implications for market\nintegrity, investor protection, and operational\nresilience; and\n(C) issue nonbinding recommendations to assist in\nresolving disputes between the Commissions.\n(c) Review by the Commissions.--Each of the Commissions shall--\n(1) review the findings and nonbinding recommendations\nprovided under subsection (b)(1)(A);\n(2) promptly publish a public statement each time the\nCommittee submits a finding or nonbinding recommendation to the\napplicable Commission under subsection (b)(1)(A) that--\n(A) assesses the finding or recommendation; and\n(B) if applicable, discloses the action or decision\nnot to take action; and\n(3) provide the Committee with a formal written response\nnot later than 90 days after the date of submission of a\nfinding or nonbinding recommendation under subsection\n(b)(1)(A).\n(d) Membership and Leadership.--\n(1) Non-federal members; size and composition.--\n(A) In general.--The Commissions shall appoint to\nthe Committee not more than 14 nongovernmental voting\nmembers who--\n(i) represent a broad spectrum of\ninterests, equally divided between the\nCommissions; and\n(ii) serve at the pleasure of the\nappointing Commission.\n(B) Specific members.--For each of the Commissions,\nthe appointees under subparagraph (A) of this paragraph\nshall include--\n(i) 2 individuals described in paragraph\n(2)(A);\n(ii) 2 individuals described in paragraph\n(2)(B);\n(iii) 1 individual described in paragraph\n(2)(C);\n(iv) 2 individuals described in paragraph\n(2)(D); and\n(v) 1 individual described in paragraph\n(2)(E).\n(2) Members described.--A member described in this\nparagraph is--\n(A) an individual who is employed by, or is a\nrelated person with respect to, a digital asset market\nparticipant;\n(B) a person registered with either of the\nCommissions and that is engaged in activities relating\nto digital assets;\n(C) an individual engaged in academic research\nrelating to digital assets;\n(D) a retail user of digital assets; and\n(E) a State securities regulator.\n(3) NIST.--The Director of the National Institute of\nStandards and Technology, or the designee of the Director,\nshall serve in an advisory capacity as a nonvoting, ex officio\nmember of the Committee, and shall not be excluded from any\nproceedings, meetings, discussions, or deliberations of the\nCommittee, except that the chair of the Committee, upon an\naffirmative vote of the Committee, may exclude the Director or\nthe designee from any proceedings, meetings, discussions, or\ndeliberations of the Committee when necessary to safeguard and\npromote the free exchange of confidential information.\n(4) Co-designated federal officers; commissioner support.--\n(A) Co-designated federal officers.--\n(i) In general.--Each Commission shall\ndesignate 1 Federal officer to serve as a co-\ndesignated Federal officer of the Committee.\n(ii) Shared duties.--The duties required by\nsection 1009(e) of title 5, United States Code,\nto be carried out by a designated officer or\nemployee of the Federal Government with respect\nto the Committee shall be shared by the Federal\nofficers of the Committee who are co-designated\nunder clause (i).\n(B) Commissioner support.--\n(i) In general.--Commissioners of the\nCommissions may be supported by officers or\nemployees of the respective Commission who may\nprepare or transmit materials, coordinate with\nagency staff, liaise with Committee leadership,\npropose agenda items, gather information, and\notherwise support the participation of that\ncommissioner in Committee business, in an ex\nofficio, nonvoting capacity.\n(ii) Rule of construction.--An officer or\nemployee described in clause (i) shall not be\nconsidered to be a member of the Committee for\npurposes of chapter 10 of title 5, United\nStates Code.\n(C) Information sharing.--The co-designated Federal\nofficers under subparagraph (A) and the officers or\nemployees of the respective Commissions providing\nsupport under subparagraph (B) shall share information\nabout digital asset activities under this Act, in\naccordance with section 902, including with regard to\npreventing insider trading.\n(5) Committee leadership.--The members of the Committee\nshall elect, from among the membership of the Committee, a\nsecretary and an assistant secretary.\n(6) Rotating chair.--The chair and vice chair of the\nCommittee shall rotate annually between the Commissions, with\nthe Commission designating the chair in even-numbered calendar\nyears, the Commodity Futures Trading Commission designating the\nchair in odd-numbered calendar years, the Commission\ndesignating the vice chair in odd-numbered calendar years, and\nthe Commodity Futures Trading Commission designating the vice\nchair in even-numbered calendar years.\n(7) Terms; vacancies; holdover.--\n(A) In general.--Each non-Federal member of the\nCommittee shall be appointed for a term of 4 years.\n(B) Service until new appointment.--A member of the\nCommittee may continue to serve after the expiration of\nthe term of the member until a successor is appointed.\n(C) Vacancies.--A vacancy with respect to\nmembership in the Committee shall be filled only for\nthe remainder of the applicable term.\n(D) Reappointment.--A member of the Committee may\nbe reappointed.\n(8) Status of members.--A member of the Committee appointed\nunder paragraph (1) shall not be deemed to be an employee or\nagent of either of the Commissions solely by reason of\nmembership on the Committee.\n(e) No Compensation for Committee Members.--\n(1) Non-federal members.--All Committee members appointed\nunder subsection (d)(1) shall--\n(A) serve without compensation; and\n(B) while away from the home or regular place of\nbusiness of the member in the performance of services\nfor the Committee, be allowed travel expenses,\nincluding per diem in lieu of subsistence, in the same\nmanner as persons employed intermittently in Government\nservice are allowed expenses under section 5703 of\ntitle 5, United States Code.\n(2) No compensation for co-designated federal officers.--\nThe Federal officers co-designated under subsection (d)(4)(A)\nshall serve without compensation in addition to that received\nfor their services as officers or employees of the United\nStates.\n(f) Frequency of Meetings.--The Committee shall meet--\n(1) not less frequently than twice annually; and\n(2) at such other times as either of the Commissions may\nrequest.\n(g) Procedures; Advisory Nature.--\n(1) In general.--The Committee shall operate pursuant to\nchapter 10 of title 5, United States Code, except as otherwise\nexpressly provided by this section.\n(2) Advisory nature of recommendations.--The\nrecommendations of the Committee are advisory in nature, shall\nnot create any legal rights or obligations, and shall not limit\nor delay the independent authority of either of the\nCommissions.\n(h) Time Limits.--The Commissions shall--\n(1) not later than 90 days after the date of enactment of\nthis Act, adopt a joint charter for the Committee;\n(2) not later than 120 days after the date of enactment of\nthis Act, make the appointments required under subsection\n(d)(1); and\n(3) not later than 180 days after the date of enactment of\nthis Act, hold the initial meeting of the Committee.\n(i) Funding.--Subject to the availability of funds, the Commissions\nshall jointly fund the Committee.\n(j) Duration and Renewal.--\n(1) Initial period.--The Committee shall remain in effect\nfor 10 years beginning on the date of enactment of this Act.\n(2) Renewal thereafter.--At the conclusion of the 10-year\nperiod described in paragraph (1)--\n(A) the Committee shall be subject to subsections\n(a) and (b) of section 1013 of title 5, United States\nCode; and\n(B) the Commissions may renew the Committee for\nsuccessive 2-year periods by publishing a notice in the\nFederal Register, consistent with chapter 10 of title\n5, United States Code.\n\nSEC. 902. MEMORANDUM OF UNDERSTANDING.\n\n(a) Memorandum of Understanding.--The Commission shall enter into a\nmemorandum of understanding with the Commodity Futures Trading\nCommission to ensure--\n(1) coordinated supervision and enforcement with respect to\nregistrants of the Commission and the Commodity Futures Trading\nCommission, including with regard to--\n(A) the anti-fraud and anti-manipulation\nauthorities of the Commission, such as with regard to\ninsider trading; and\n(B) the market integrity authorities of the\nCommodity Futures Trading Commission; and\n(2) appropriate information sharing between the Commission\nand the Commodity Futures Trading Commission to further the\npurposes of and compliance with this Act, the amendments made\nby this Act, the Securities Act of 1933 (15 U.S.C. 77a et seq.)\n(as amended by this Act), the Securities Exchange Act of 1934\n(15 U.S.C. 78a et seq.) (as amended by this Act), and the\nCommodity Exchange Act (7 U.S.C. 1 et seq.).\n(b) Rule of Construction.--Nothing in this section may be construed\nto limit the anti-fraud, anti-manipulation, or false reporting\nenforcement authorities of the Commodity Futures Trading Commission\nwith respect to a contract of sale of a commodity and persons effecting\nsuch contracts.\n(c) Rule of Construction.--Nothing in this Act, or any amendment\nmade by this Act, may be construed to limit or prevent the continued\napplication of applicable law regarding the insider trading of\nsecurities, including digital asset securities, including section 21A\nof the Securities Exchange Act of 1934 (15 U.S.C. 78u-1).\n\nSEC. 903. FINCEN APPROPRIATIONS.\n\n(a) Authorization of Appropriations.--For the purposes of\ndeveloping policy relating to digital assets, acquiring information\ntechnology resources, funding the operations described in sections 202\nand 203 of this Act, and enforcement of the laws within its\njurisdiction relating to digital assets, there is authorized to be\nappropriated to the Financial Crimes Enforcement Network of the\nDepartment of the Treasury the following:\n(1) $30,000,000 for fiscal year 2026, to remain available\nuntil September 30, 2027.\n(2) $30,000,000 for fiscal year 2027, to remain available\nuntil September 30, 2028.\n(3) $30,000,000 for fiscal year 2028, to remain available\nuntil September 30, 2029.\n(4) $30,000,000 for fiscal year 2029, to remain available\nuntil September 30, 2030.\n(5) $30,000,000 for fiscal year 2030, to remain available\nuntil September 30, 2031.\n(b) Incentive Premium for Highly Qualified Individuals.--\nNotwithstanding any other provision of law or regulation, the Director\nof the Financial Crimes Enforcement Network of the Department of the\nTreasury may pay an annual incentive premium of not more than 20\npercent of the annual rate of basic pay for a position if necessary to\nattract highly qualified individuals for positions that the Director\nhas certified to the Director of the Office of Personnel Management\nreflect the needs of the Financial Crimes Enforcement Network.\n\nSEC. 904. BUILD NOW ACT.\n\n(a) Definitions.--In this section:\n(1) Covered recipient.--The term ``covered recipient''\nmeans a metropolitan city or urban county, as those terms are\ndefined in section 102 of the Housing and Community Development\nAct of 1974 (42 U.S.C. 5302), that receives funds under section\n106.\n(2) Current annual growth rate.--The term ``current annual\ngrowth rate'', with respect to an eligible recipient and a\nfiscal year, means the average annual percentage increase in\nthe number of housing units in the jurisdiction of the eligible\nrecipient, as calculated by the Secretary, during the period--\n(A) beginning with the third quarter of the sixth\npreceding fiscal year; and\n(B) ending with the third quarter of the preceding\nfiscal year.\n(3) Eligible recipient.--The term ``eligible recipient''\nmeans any covered recipient unless--\n(A)(i) the median Small Area Fair Market Rent in\nthe jurisdiction of the covered recipient is at or\nbelow the 60th percentile of median Small Area Fair\nMarket Rents in the jurisdictions of all covered\nrecipients; and\n(ii) the median home value in the jurisdiction of\nthe covered recipient is below the median home value\nfor the United States;\n(B) the annual rental vacancy rate in the\njurisdiction of the covered recipient is greater than\nthe national annual rental vacancy rate for the most\nrecent year available, as published by the Bureau of\nthe Census;\n(C) during the 1-year period preceding the date on\nwhich the Secretary allocates funds under section 106,\nthe jurisdiction of the covered recipient has been the\nsubject of a major disaster or emergency declaration\nunder section 401 or 501, respectively, of the Robert\nT. Stafford Disaster Relief and Emergency Assistance\nAct (42 U.S.C. 5170, 5191); or\n(D) the covered recipient lacks the legal authority\nto enact or update zoning and permitting ordinances.\n(4) Extremely high-growth recipient.--The term ``extremely\nhigh-growth recipient'' means an eligible recipient for which\nthe current annual growth rate is at or above 4 percent.\n(5) Housing growth improvement rate.--The term ``housing\ngrowth improvement rate'', with respect to an eligible\nrecipient and a fiscal year, means the quotient of--\n(A)(i) the current annual growth rate of the\neligible recipient, minus\n(ii) the prior annual growth rate of the eligible\nrecipient; and\n(B) the sum obtained by adding the absolute values\nof the current annual growth rate and the prior annual\ngrowth rate of the eligible recipient.\n(6) Prior annual growth rate.--The term ``prior annual\ngrowth rate'', with respect to an eligible recipient and a\nfiscal year, means the average annual percentage increase in\nthe number of housing units in the jurisdiction of the eligible\nrecipient, as calculated by the Secretary, during the period--\n(A) beginning with the third quarter of the 11th\npreceding fiscal year; and\n(B) ending with the third quarter of the sixth\npreceding fiscal year.\n(7) Secretary.--The term ``Secretary'' means the Secretary\nof Housing and Urban Development.\n(8) Section 106.--The term ``section 106'' means section\n106 of the Housing and Community Development Act of 1974 (42\nU.S.C. 5306).\n(b) Adjustments to Community Development Block Grant Allocations.--\n(1) In general.--In allocating amounts to an eligible\nrecipient under section 106 for a fiscal year, the Secretary\nshall adjust the allocation based on the housing growth\nimprovement rate of the eligible recipient, in accordance with\nparagraph (2) of this subsection.\n(2) Adjustments.--\n(A) Housing growth improvement rate at or above\nmedian; extremely high-growth recipients.--\n(i) In general.--If, with respect to a\nfiscal year for which the allocation under\nsection 106 is being determined, the housing\ngrowth improvement rate for an eligible\nrecipient is at or above the median housing\ngrowth improvement rate for all eligible\nrecipients other than extremely high-growth\nrecipients, or if an eligible recipient is an\nextremely high-growth recipient, the Secretary\nshall allocate to the eligible recipient for\nthat fiscal year, in addition to the amount\nthat would otherwise be allocated to the\neligible recipient under section 106, a bonus\namount, as determined under clause (ii) of this\nsubparagraph.\n(ii) Bonus amount.--For purposes of clause\n(i), the bonus amount for an eligible recipient\nfor a fiscal year shall be equal to the product\nof--\n(I) the aggregate amount by which\nallocations to eligible recipients are\ndecreased under subparagraph (B) for\nthat fiscal year; and\n(II) the quotient of--\n(aa) the number of housing\nunits, as of the third quarter\nof the preceding fiscal year,\nin the jurisdiction of the\neligible recipient, as\ncalculated by the Secretary;\nand\n(bb) the number of housing\nunits, as of the third quarter\nof the preceding fiscal year,\nin the jurisdictions of all\neligible recipients that\nreceive a bonus amount under\nthis paragraph, as calculated\nby the Secretary.\n(B) Housing growth improvement rate below median.--\nIf, with respect to a fiscal year for which the\nallocation under section 106 is being determined, the\nhousing growth improvement rate for an eligible\nrecipient is below the median housing growth\nimprovement rate for all eligible recipients other than\nextremely high-growth recipients, the Secretary shall\ndecrease the amount that would otherwise be allocated\nto the eligible recipient under section 106 for that\nfiscal year by 10 percent.\n(c) Calculation of Housing Units.--\n(1) Housing and urban development requirements.--In\ncalculating the number of housing units in the jurisdiction of\nan eligible recipient under any provision of this section, the\nSecretary shall--\n(A) use the Current Address Count Listing Files and\nother data products, as needed, of the Bureau of the\nCensus tabulated from the Master Address File; and\n(B) make calculations at the block level, using\nboundaries that reflect the most current boundaries.\n(2) Census bureau and postal service requirements.--The\nBureau of the Census and the United States Postal Service shall\nprovide any relevant data to the Secretary upon request to\nassist the Secretary in making a calculation described in\nparagraph (1).\n(3) Adjustment of calculation periods.--The Secretary may\nadjust the calculation periods under subparagraphs (A) and (B)\nof subsection (a)(2), subparagraphs (A) and (B) of subsection\n(a)(6), and items (aa) and (bb) of subsection (b)(2)(A)(ii)(II)\nby not more than 2 months to achieve alignment with the data\nprovided by the Bureau of the Census.\n(d) Annual Report on Housing Growth Improvement Rate.--Before\nallocating funds under section 106 for a fiscal year, the Secretary\nshall publish a report that--\n(1) includes the housing growth improvement rate for each\neligible recipient; and\n(2) lists, for the most recent fiscal year for which\nallocations were made under section 106--\n(A) the eligible recipients that received a bonus\namount under subsection (b)(2)(A) of this section; and\n(B) the eligible recipients for which the\nallocation under section 106 was decreased under\nsubsection (b)(2)(B) of this section.\n(e) Notification; Implementation Dates.--\n(1) Notification.--\n(A) In general.--Not later than 60 days after the\ndate of enactment of this Act, the Secretary shall\nnotify each eligible recipient of the recipient's\nhousing growth improvement rate and whether that\nhousing growth improvement rate is above, at, or below\nthe median housing growth improvement rate for all\neligible recipients other than extremely high-growth\nrecipients.\n(B) Guidance.--As part of the notification under\nsubparagraph (A), the Secretary shall share guidance,\nincluding resources developed by the Department of\nHousing and Urban Development, on best practices and\nrecommendations for policies to reduce regulatory\nbarriers to housing and increase housing supply.\n(2) Implementation dates.--Subsection (b) shall take effect\nbeginning with the third full fiscal year after the date of\nenactment of this Act and remain in effect through fiscal year\n2043.\n(3) No effect on previous appropriations.--This section\nshall not apply to amounts appropriated before the date of\nenactment of this Act.\n\nSEC. 905. RULEMAKINGS.\n\nExcept as otherwise provided, not later than 1 year after the date\nof enactment of this Act, each applicable regulator shall adopt rules\nto carry out this Act, and the amendments made by this Act, through\nappropriate notice and comment rulemaking.\n\nSEC. 906. EFFECTIVE DATE.\n\nThis Act, and the amendments made by this Act, shall take effect on\nthe date that is 360 days after the date of enactment of this Act,\nexcept that, if a provision of this Act, or an amendment made by this\nAct, requires a rulemaking, that provision shall take effect on the\nlater of--\n(1) the date that is 360 days after the date of enactment\nof this Act; or\n(2) the date that is 60 days after the publication in the\nFederal Register of the final rule implementing the provision.\nCalendar No. 423\n\n119th CONGRESS\n\n2d Session\n\nH. R. 3633\n\n_______________________________________________________________________\n\nAN ACT\n\nTo provide for a system of regulation of the offer and sale of digital\ncommodities by the Securities and Exchange Commission and the Commodity\nFutures Trading Commission, to amend the Federal Reserve Act to\nprohibit the Federal reserve banks from offering certain products or\nservices directly to an individual, to prohibit the use of central bank\ndigital currency for monetary policy, and for other purposes.\n\n_______________________________________________________________________\n\nJune 1, 2026\n\nReported with an amendment","changes":[{"id":606,"doc_id":31,"v_from":373,"v_to":13690,"detected_at":"2026-09-11 02:53:18","added":14189,"removed":0,"summary":"--- \n+++ \n+\n+FULL TEXT\n+[Congressional Bills 119th Congress]\n+[From the U.S. Government Publishing Office]\n+[H.R. 3633 Reported in Senate (RS)]\n+\n+\n+\n+Calendar No. 423\n+119th CONGRESS\n+2d Session\n+H. R. 3633\n+\n+_______________________________________________________________________\n+\n+IN THE SENATE OF THE UNITED STATES\n+\n+September 18 (legislative day, September 16), 2025\n+\n+Received; read twice and referred to the Committee on Banking,\n+Housing, and Urban Affairs\n+\n+June 1, 2026\n+\n+Reported by Mr. Scott of South Carolina, with an amendment\n+[Strike out all after the enacting clause and insert the part printed\n+in italic]\n+\n+_______________________________________________________________________\n+\n+AN ACT\n+\n+To provide for a system of regulation of the offer and sale of digital\n+commodities by the Securities and Exchange Commission and the Commodity\n+Futures Trading Commission, to amend the Federal Reserve Act to\n+prohibit the Federal reserve banks from offering certain products or\n+services directly to an individual, to prohibit the use of central bank\n+digital currency for monetary policy, and for other purposes.\n+\n+Be it enacted by the Senate and House of Representatives of the\n+United States of America in Congress assembled,\n+\n+SECTION 1. SHORT TITLES; TABLE OF CONTENTS.\n+\n+ (a) Short Titles.--This Act may be cited as the ``Digital\n+Asset Market Clarity Act of 2025'' or the ``CLARITY Act of 2025'' and\n+the ``Anti-CBDC Surveillance State Act''.\n+ (b) Table of Contents.--The table of contents for this Act\n+is as follows:\n+\n+Sec. 1. Short titles; table of contents.\n+TITLE I--DEFINITIONS; RULEMAKING; EXPEDITED REGISTRATION\n+\n+Sec. 101. Definitions under the Securities Act of 1933.\n+Sec. 102. Definitions under the Securities Exchange Act of\n+1934.\n+Sec. 103. Definitions under the Commodity Exchange Act."}],"passport":{"data":{"act":{"jurisdiction":"США","title_official":"Digital Asset Market Clarity Act of 2025 (CLARITY Act of 2025)","title_short":"CLARITY Act","level":"закон","date_adopted":"2025-09-18","date_in_force":"","date_version":"","phased":"","status":"действует","sunset":"","regulator":"Комиссия по торговле товарными фьючерсами (CFTC), Комиссия по ценным бумагам (SEC)","related":""},"goal":{"problem":"регулирование цифровой экономики, включая цифровые активы и блокчейн-технологии","goal":"создание ясной правовой базы для торговли цифровыми товарами, обеспечение прозрачности и безопасности сделок, защита инвесторов и предотвращение отмывания денег и финансирования терроризма","targets":"отсутствуют","scope":"цифровое коммодитизирование, торговля цифровыми активами, блокчейн-системы","exclusions":"сделки, которые соответствуют критериям исключений"},"subjects_note":{"protected":"инвесторы, пользователи цифровых активов, участники рынка цифровых активов"},"subjects":[{"role":"поставщик, платформа, оператор, регулятор","who":"поставщики цифровых активов, платформы, операторы цифровых активов, регуляторы (CFTC, SEC)","criteria":"деятельность связана с цифровыми активами и блокчейн-технологиями","count":"нет данных"}],"norms":[{"address":"ст. 301","addressee":"поставщик цифровых активов","essence":"поставщики обязаны регистрироваться в SEC, если их годовой объем продаж превышает установленный порог","type":"обязанность","mechanism":"административный барьер, риск санкций","cost_channel":"административный барьер","cost_kind":"разовые","trigger":"достижение установленного годового объема продаж","sanction":"штраф, санкция SEC","refs":"отсутствует","form":"цифровая, смешанная","in_force":"","ru_analog":"отсутствует"}]},"made_by":"GigaChat-2","made_at":"2026-09-16 06:51:27","edited_at":null,"edited_by":null}}