119TH CONGRESS 1ST SESSION H. R. 3633

AN ACT

• To provide for a system of regulation of the offer and sale of digital commodities by the Securities and Exchange Commission and the Commodity Futures Trading Commission, and for other purposes.
  • 1 Be it enacted by the Senate and House of Representa-
  • 2 tives of the United States of America in Congress assembled,

1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

• 2 (a) SHORT TITLE.—This Act may be cited as the
• 3 ''Digital Asset Market Clarity Act of 2025'' or the
• 4 ''CLARITY Act of 2025''.
• 5 (b) TABLE OF CONTENTS.—The table of contents for

6 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—DEFINITIONS; RULEMAKING; EXPEDITED REGISTRATION

• Sec. 101. Definitions under the Securities Act of 1933.
• Sec. 102. Definitions under the Securities Exchange Act of 1934.
• Sec. 103. Definitions under the Commodity Exchange Act.
• Sec. 104. Definitions under this Act.
• Sec. 105. Rulemakings.
• Sec. 106. Expedited registration for digital commodity exchanges, brokers, and dealers; provisional status.
• Sec. 107. Commodity Exchange Act and securities laws savings provisions.
• Sec. 108. Administrative requirements.
• Sec. 109. Treatment of certain non-controlling blockchain developers.
• Sec. 110. Application of the Bank Secrecy Act.
• Sec. 111. Rule of construction.
• Sec. 112. Implementation.

TITLE II—OFFERS AND SALES OF DIGITAL COMMODITIES

• Sec. 201. Treatment of investment contract assets.
• Sec. 202. Exempted primary transactions in digital commodities.
• Sec. 203. Treatment of secondary transactions in digital commodities that originally involved investment contracts.
• Sec. 204. Requirements for offers and sales of digital commodities by digital commodity related persons and digital commodity affiliated persons.
• Sec. 205. Mature blockchain system requirements.
• Sec. 206. Effective date.

TITLE III—REGISTRATION FOR INTERMEDIARIES AT THE SECURITIES AND EXCHANGE COMMISSION

• Sec. 301. Treatment of digital commodities and permitted payment stablecoins.
• Sec. 302. Anti-fraud authority over permitted payment stablecoins and certain digital commodity transactions.
• Sec. 303. Eligibility of alternative trading systems.
• Sec. 304. Rulemaking for dual-registered entities.
• Sec. 305. Modernization of recordkeeping requirements.
• Sec. 306. Exemptive authority.
• Sec. 307. Additional registrations with the Commodity Futures Trading Commission.
• Sec. 308. Exempting digital commodities from State securities laws.

• Sec. 309. Exclusion for decentralized finance activities.
• Sec. 310. Treatment of custody activities by banking institutions.
• Sec. 311. Broker and dealer disclosures regarding the treatment of assets.
• Sec. 312. Digital commodity activities that are financial in nature.
• Sec. 313. Effective date; administration.
• Sec. 314. Educational material requirements.
• Sec. 315. Discretionary Surplus Fund.

TITLE IV—REGISTRATION FOR DIGITAL COMMODITY INTER-MEDIARIES AT THE COMMODITY FUTURES TRADING COMMIS-SION

• Sec. 401. Commission jurisdiction over digital commodity transactions.
• Sec. 402. Requiring futures commission merchants to use qualified digital asset custodians.
• Sec. 403. Trading certification and approval for digital commodities.
• Sec. 404. Registration of digital commodity exchanges.
• Sec. 405. Qualified digital asset custodians.
• Sec. 406. Registration and regulation of digital commodity brokers and dealers.
• Sec. 407. Registration of associated persons.
• Sec. 408. Registration of commodity pool operators and commodity trading advisors.
• Sec. 409. Exclusion for decentralized finance activities.
• Sec. 410. Resources for implementation and enforcement.
• Sec. 411. Requirements related to control persons.
• Sec. 412. Other tradable assets.
• Sec. 413. Conflict of interest rulemaking.
• Sec. 414. Effective date.
• Sec. 415. Sense of Congress.

TITLE V—INNOVATION AND TECHNOLOGY IMPROVEMENTS

• Sec. 501. Findings; sense of Congress.
• Sec. 502. Strategic Hub for Innovation and Financial Technology.
• Sec. 503. Codification of LabCFTC.
• Sec. 504. Study on decentralized finance.
• Sec. 505. Study on non-fungible tokens.
• Sec. 506. Study on expanding financial literacy amongst digital commodity holders.
• Sec. 507. Study on financial market infrastructure improvements.
• Sec. 508. Study on blockchain in payments.
• Sec. 509. Study on illicit use of digital assets.
• Sec. 510. GAO study on certain centralized intermediaries that are primarily located in foreign jurisdictions.
• Sec. 511. Studies on foreign adversary participation.
• Sec. 512. Conforming amendments.

TITLE I—DEFINITIONS; RULE- MAKING; EXPEDITED REG-ISTRATION

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

Section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)) is amended by adding at the end the following: ''(20) BLOCKCHAIN.—The term 'blockchain' means—

''(A) any technology—

''(i) where data is—

''(I) shared across a network to create a distributed ledger of inde- pendently verifiable transactions or in- formation among network partici-pants;

''(II) linked using cryptography to maintain the integrity of the dis- tributed ledger and to execute other functions; and

''(III) propagated among network participants to reach consensus on the state of the distributed ledger and any other functions; and

1	''(ii) composed of source code that is
2	publicly available; and
3	''(B) any similar technology to the tech
4	nology described in subparagraph (A).
5	''(21) BLOCKCHAIN APPLICATION.—The term
6	'blockchain application' means any executable soft
7	ware that is deployed to a blockchain and composed
8	of source code that is publicly available, including a
9	smart contract or any network of smart contracts, or
10	other similar technology.
11	''(22) BLOCKCHAIN PROTOCOL.—The term
12	'blockchain protocol' means publicly available source
13	code of a blockchain that is executed by the network
14	participants of a blockchain to facilitate its func
15	tioning, or other similar technology.
16	''(23) BLOCKCHAIN SYSTEM.—The term
17	'blockchain system' means any blockchain, together
18	with its blockchain protocol or any blockchain appli
19	cation or network of blockchain applications.
20	''(24) DECENTRALIZED SYS GOVERNANCE
21	TEM.—
22	''(A) IN GENERAL.—The term 'decentral
23	ized governance system' means, with respect to
24	a blockchain system, any transparent, rules
25	based system permitting persons to form con-

sensus or reach agreement in the development, provision, publication, maintenance, or adminis- tration of such blockchain system, where par- ticipation is not limited to, or under the effec- tive control of, any person or group of persons under common control.

''(B) RELATIONSHIP OF PERSONS TO DE- CENTRALIZED GOVERNANCE SYSTEMS.—With respect to a decentralized governance system, the decentralized governance system and any persons participating in the decentralized gov- ernance system shall be treated as separate per- sons unless such persons are under common control or acting pursuant to an agreement to act in concert.

''(C) LEGAL ENTITIES FOR DECENTRAL- IZED GOVERNANCE SYSTEMS.—The term 'de- centralized governance system' shall include a legal entity used to implement the rules-based system described in subparagraph (A), provided that the legal entity does not operate pursuant to centralized management. For the purposes of this subparagraph, the delegation of ministerial or administrative authority at the direction of the participants in a decentralized governance

1	system shall not be construed to be centralized
2	management.
3	''(25) DIGITAL ASSET.—The term 'digital asset'
4	means any digital representation of value which is
5	recorded on a cryptographically-secured distributed
6	ledger or other similar technology.
7	''(26) DIGITAL COMMODITY.—The term 'digital
8	commodity' has the meaning given that term under
9	section 1a of the Commodity Exchange Act (7
10	U.S.C. 1a).
11	''(27) DIGITAL PER COMMODITY AFFILIATED
12	SON.—The term 'digital commodity affiliated per
13	son'—
14	''(A) means a person (including a digital
15	commodity related person) that, with respect to
16	any digital commodity—
17	''(i) acquires or has any right to ac
18	quire 5 percent or more of the total out
19	standing units of such digital commodity
20	from a digital commodity issuer or an
21	agent or underwriter thereof;
22	''(ii) is a founder of the digital com
23	modity issuer; or
24	''(iii) is an executive officer, director,
25	trustee, general partner, or person serving

1	in a similar capacity of the digital com
2	modity issuer or held such role at any
3	point in the previous 12-month period; and
4	''(B) does not include a decentralized gov
5	ernance system.
6	''(28) DIGITAL COMMODITY ISSUER.—
7	''(A) IN GENERAL.—With respect to a dig
8	ital commodity, the term 'digital commodity
9	issuer' means any person that—
10	''(i) issues or causes to be issued, or
11	proposes to issue or cause to be issued, a
12	unit of such digital commodity to a person;
13	or
14	''(ii) offers or sells a right to a future
15	issuance of a unit of such digital com
16	modity to a person.
17	''(B) PROHIBITION EVASION.—It shall ON
18	be unlawful for any person to knowingly evade
19	classification as a 'digital commodity issuer'
20	and facilitate an arrangement for the primary
21	purpose of effecting an offer, sale, distribution,
22	or other issuance of a digital commodity, in
23	cluding via any arrangement involving the
24	transfer of intellectual property associated with

1	the blockchain system to which the digital com
2	modity relates.
3	''(29) DIGITAL PER COMMODITY RELATED
4	SON.—
5	''(A) IN GENERAL.—With respect to a dig
6	ital commodity issuer, the term 'digital com
7	modity related person'—
8	''(i) means a person—
9	''(I) that is or was in the pre
10	vious 6-month period a promoter, sen
11	ior employee, advisory board member,
12	consultant, advisor, or person serving
13	in a similar capacity; or
14	''(II) that acquires or has any
15	right to acquire 1 percent or more of
16	the total outstanding units of such
17	digital commodity from a digital com
18	modity issuer or an agent or under
19	writer thereof; and
20	''(ii) does not include a decentralized
21	governance system.
22	''(B) SENIOR DEFINED.—In EMPLOYEE
23	this paragraph and with respect to a digital
24	commodity issuer, the term 'senior employee'
25	means any employee materially involved in the

1	management of the digital commodity issuer,
2	including management of the development of
3	the blockchain system to which the digital com
4	modity relates.
5	''(30) END USER DISTRIBUTION.—
6	''(A) IN GENERAL.—The term 'end user
7	distribution' means a distribution of a unit of
8	a digital commodity that—
9	''(i) does not involve an exchange of
10	more than a nominal value of cash, prop
11	erty, or other assets; and
12	''(ii) is distributed in a broad and eq
13	uitable manner based on conditions capable
14	of being satisfied by any participant in the
15	blockchain system, including, as incentive
16	based rewards—
17	''(I) to users of the digital com
18	modity or any blockchain system to
19	which the digital commodity relates;
20	''(II) for activities directly related
21	to the operation of the blockchain sys
22	tem, such as mining, validating, stak
23	ing, or other activity directly tied to
24	the operation of the blockchain sys
25	tem; or

1	''(III) to the existing holders of
2	another digital commodity, in propor
3	tion to the total units of such other
4	digital commodity as are held by each
5	person.
6	''(B) PROTOCOL PARTICIPA CONSENSUS
7	TION.—The term 'end user distribution' in
8	cludes the following:
9	''(i) SELF STAKING.—The distribution
10	of a unit of a digital commodity as a pro
11	grammatic result of validating or staking
12	activity for a blockchain system's con
13	sensus mechanism, including the staking of
14	a digital commodity and the operation of a
15	node or validator for such activity where
16	the owner of the staked digital commodity
17	and operator of the node or validator are
18	the same person or entity.
19	''(ii) SELF-CUSTODIAL STAKING WITH
20	PARTY.—The distribution of a A THIRD
21	unit of a digital commodity as a pro
22	grammatic result of validating or staking
23	activity for a blockchain system's con
24	sensus mechanism, including the staking of

1	a digital commodity and the operation of a
2	node or validator for such activity where—
3	''(I) the owner of the staked dig
4	ital commodity and operator of the
5	node or validator for such activity are
6	different persons or entities; and
7	''(II) the operator of the node or
8	validator does not maintain custody or
9	control of the staked digital com
10	modity.
11	''(iii) CUSTODIAL AND ANCILLARY
12	SERVICES.—Subject to the rules STAKING
13	issued pursuant to subparagraph (C), the
14	provision of custodial or ancillary staking
15	services enabling the owner of a digital
16	commodity to participate in validating or
17	staking activity for a blockchain system's
18	consensus mechanism that results in the
19	programmatic distribution of a unit of a
20	digital commodity, provided that such cus
21	todial or ancillary services are exclusively
22	administrative or ministerial in nature.
23	''(C) RULEMAKING CUS TO DEFINE THE
24	SERVICES.— TODIAL AND ANCILLARY STAKING
25	Not later than 270 days after the date of the

enactment of this paragraph, the Commission shall issue rules defining the custodial and an- cillary staking services described in subpara- graph (B)(iii) that are exclusively administra- tive or ministerial in nature, consistent with what is necessary or appropriate for the public interest or for the protection of investors. ''(31) MATURE BLOCKCHAIN SYSTEM.—The term 'mature blockchain system' means a blockchain system, together with its related digital commodity, that is not controlled by any person or group of per- sons under common control. ''(32) PERMITTED PAYMENT STABLECOIN.— The term 'permitted payment stablecoin' means a payment stablecoin (as defined in section 2 of the GENIUS Act) issued by a permitted payment stablecoin issuer. ''(33) PERMITTED PAYMENT STABLECOIN ISSUER.—The term 'permitted payment stablecoin issuer' has the meaning given that term in section 2 of the GENIUS Act.''. SEC. 102. DEFINITIONS UNDER THE SECURITIES EX- CHANGE ACT OF 1934. Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended—

1	(1) by redesignating the second paragraph (80)
2	(relating to funding portals) as paragraph (81); and
3	(2) by adding at the end the following:
4	''(82) BANK ACT.—The term 'Bank SECRECY
5	Secrecy Act' means—
6	''(A) section 21 of the Federal Deposit In
7	surance Act (12 U.S.C. 1829b);
8	''(B) chapter 2 of title I of Public Law 91–
9	508 (12 U.S.C. 1951 et seq.); and
10	''(C) subchapter II of chapter 53 of title
11	31, United States Code.
12	''(83) ADDITIONAL COMMODITY-RE DIGITAL
13	LATED TERMS.—
14	''(A) SECURITIES 1933.—The ACT OF
15	terms 'blockchain system', 'decentralized gov
16	ernance system', 'digital asset', 'digital com
17	modity affiliated person', 'digital commodity
18	issuer', 'digital commodity related person', 'end
19	user distribution', 'mature blockchain system',
20	'permitted payment stablecoin', and 'permitted
21	payment stablecoin issuer' have the meaning
22	given those terms, respectively, under section
23	2(a) of the Securities Act of 1933 (15 U.S.C.
24	77b(a)).

1	''(B) COMMODITY ACT.—The EXCHANGE
2	terms 'digital commodity', 'digital commodity
3	broker', 'digital commodity dealer', 'digital com
4	modity exchange', 'decentralized finance mes
5	saging system', and 'decentralized finance trad
6	ing protocol' have the meaning given those
7	terms, respectively, under section 1a of the
8	Commodity Exchange Act (7 U.S.C. 1a).''.
9	SEC. 103. DEFINITIONS UNDER THE COMMODITY EX
10	CHANGE ACT.
11	(a) IN GENERAL.—Section 1a of the Commodity Ex
12	change Act (7 U.S.C. 1a) is amended—
13	(1) in paragraph (10)—
14	(A) in subparagraph (A)—
15	(i) by redesignating clauses (iii) and
16	(iv) as clauses (iv) and (v), respectively;
17	and
18	(ii) by inserting after clause (ii) the
19	following:
20	''(iii) digital commodity;''; and
21	(B) by redesignating subparagraph (B) as
22	subparagraph (C) and inserting after subpara
23	graph (A) the following:
24	''(B) EXCLUSION.—For purposes of this
25	paragraph, the term 'trading in commodity in-

1	terests' shall not include transacting in digital
2	commodities for the purpose of—
3	''(i) acting as a digital commodity
4	custodian;
5	''(ii) establishing, maintaining, or
6	managing inventory or payment instru
7	ments for commercial purposes; or
8	''(iii) maintaining or supporting the
9	operation of, or validating transactions on,
10	a blockchain system.'';
11	(2) in paragraph (11)—
12	(A) in subparagraph (A)(i)—
13	(i) by redesignating subclauses (III)
14	and (IV) as subclauses (IV) and (V), re
15	spectively; and
16	(ii) by inserting after subclause (II)
17	the following:
18	''(III) digital commodity;''; and
19	(B) by redesignating subparagraph (B) as
20	subparagraph (C) and inserting after subpara
21	graph (A) the following:
22	''(B) EXCLUSION.—For purposes of this
23	paragraph, the term 'trading in commodity in
24	terests' shall not include transacting in digital
25	commodities for the purpose of—

''(i) acting as a digital commodity custodian; ''(ii) establishing, maintaining, or managing inventory or payment instru- ments for commercial purposes; or ''(iii) maintaining or supporting the operation of, or validating transactions on, a blockchain system.''; (3) in paragraph (12)(A)(i)— (A) in subclause (II), by adding at the end a semicolon; (B) by redesignating subclauses (III) and (IV) as subclauses (IV) and (V), respectively; and (C) by inserting after subclause (II) the following: ''(III) a digital commodity;''; (4) by redesignating paragraphs (16) through (51) as paragraphs (17) through (52), respectively, and inserting after paragraph (15) the following: ''(16) TERMS RELATED TO DIGITAL COMMOD- ITIES.— ''(A) ASSOCIATED PERSON OF A DIGITAL COMMODITY BROKER.—

1	''(i) IN GENERAL.—Except as pro
2	vided in clause (ii), the term 'associated
3	person of a digital commodity broker'
4	means a person who is associated with a
5	digital commodity broker as a partner, of
6	ficer, employee, or agent (or any person oc
7	cupying a similar status or performing
8	similar functions) in any capacity that in
9	volves—
10	''(I) the solicitation or acceptance
11	of an order for the purchase or sale of
12	a digital commodity; or
13	''(II) the supervision of any per
14	son engaged in the solicitation or ac
15	ceptance of an order for the purchase
16	or sale of a digital commodity.
17	''(ii) EXCLUSION.—The term 'associ
18	ated person of a digital commodity broker'
19	does not include any person associated
20	with a digital commodity broker the func
21	tions of which are solely clerical or ministe
22	rial.
23	''(B) ASSOCIATED PERSON OF A DIGITAL
24	COMMODITY DEALER.—

1	''(i) IN GENERAL.—Except as pro
2	vided in clause (ii), the term 'associated
3	person of a digital commodity dealer'
4	means a person who is associated with a
5	digital commodity dealer as a partner, offi
6	cer, employee, or agent (or any person oc
7	cupying a similar status or performing
8	similar functions) in any capacity that in
9	volves—
10	''(I) the solicitation or acceptance
11	of a contract for the purchase or sale
12	of a digital commodity; or
13	''(II) the supervision of any per
14	son engaged in the solicitation or ac
15	ceptance of a contract for the pur
16	chase or sale of a digital commodity.
17	''(ii) EXCLUSION.—The term 'associ
18	ated person of a digital commodity dealer'
19	does not include any person associated
20	with a digital commodity dealer the func
21	tions of which are solely clerical or ministe
22	rial.
23	''(C) BANK ACT.—The term SECRECY
24	'Bank Secrecy Act' means—

1	''(i) section 21 of the Federal Deposit
2	Insurance Act (12 U.S.C. 1829b);
3	''(ii) chapter 2 of title I of Public Law
4	91–508 (12 U.S.C. 1951 et seq.); and
5	''(iii) subchapter II of chapter 53 of
6	title 31, United States Code.
7	''(D) DECENTRALIZED MES FINANCE
8	SAGING SYSTEM.—
9	''(i) IN GENERAL.—The term 'decen
10	tralized finance messaging system' means
11	a software application that provides a user
12	with the ability to create or submit an in
13	struction, communication, or message to a
14	decentralized finance trading protocol for
15	the purpose of executing a transaction by
16	the user.
17	''(ii) ADDITIONAL REQUIREMENTS.—
18	The term 'decentralized finance messaging
19	system' does not include any system that
20	provides any person other than the user
21	with control over—
22	''(I) the funds of the user; or
23	''(II) the execution of the trans
24	action of the user.

1	''(E) DECENTRALIZED FINANCE TRADING
2	PROTOCOL.—
3	''(i) IN GENERAL.—The term 'decen
4	tralized finance trading protocol' means a
5	blockchain system through which multiple
6	participants can execute a financial trans
7	action—
8	''(I) in accordance with an auto
9	mated rule or algorithm that is pre
10	determined and non-discretionary; and
11	''(II) without reliance on any
12	other person to maintain control of
13	the digital assets of the user during
14	any part of the financial transaction.
15	''(ii) EXCLUSIONS.—
16	''(I) IN GENERAL.—The term
17	'decentralized finance trading pro
18	tocol' does not include a blockchain
19	system if—
20	''(aa) a person or group of
21	persons under common control or
22	acting pursuant to an agreement
23	to act in concert has the author
24	ity, directly or indirectly, through
25	any contract, arrangement, un-

1	derstanding, relationship, or oth
2	erwise, to control or materially
3	alter the functionality, operation,
4	or rules of consensus or agree
5	ment of the blockchain system; or
6	''(bb) the blockchain system
7	does not operate, execute, and
8	enforce its operations and trans
9	actions based solely on pre-estab
10	lished, transparent rules encoded
11	directly within the source code of
12	the blockchain system.
13	''(II) SPECIAL RULE.—For pur
14	poses of subclause (I), a decentralized
15	governance system shall not be consid
16	ered to be a person or a group of per
17	sons under common control or acting
18	pursuant to an agreement to act in
19	concert.
20	''(F) DIGITAL COMMODITY.—
21	''(i) IN GENERAL.—The term 'digital
22	commodity' means a digital asset that is
23	intrinsically linked to a blockchain system,
24	and the value of which is derived from or

1	is reasonably expected to be derived from
2	the use of the blockchain system.
3	''(ii) RELATIONSHIP TO A
4	SYSTEM.—For purposes of BLOCKCHAIN
5	this subparagraph, a digital asset is intrin
6	sically linked to a blockchain system if the
7	digital asset is directly related to the
8	functionality or operation of the blockchain
9	system or to the activities or services for
10	which the blockchain system is created or
11	utilized, including where the digital asset
12	is—
13	''(I) issued or generated by the
14	programmatic functioning of the
15	blockchain system;
16	''(II) used to transfer value be
17	tween participants in the blockchain
18	system;
19	''(III) used to access the activi
20	ties or services of the blockchain sys
21	tem;
22	''(IV) used to participate in the
23	decentralized governance system of
24	the blockchain system;

1	''(V) used or removed from cir
2	culation in whole or in part to pay
3	fees or otherwise verify or validate
4	transactions on the blockchain system;
5	''(VI) used as payment or incen
6	tive to participants in the blockchain
7	system to engage in the activities of
8	the blockchain system, provide serv
9	ices to other participants in the
10	blockchain system, or otherwise par
11	ticipate in the functionality of the
12	blockchain system; or
13	''(VII) used as payment or incen
14	tive to participants in the blockchain
15	system to validate transactions, secure
16	the blockchain system, provide com
17	putational services, maintain or dis
18	tribute information, or otherwise par
19	ticipate in the operations of the
20	blockchain system.
21	''(iii) EXCLUSION.—The term 'digital
22	commodity' does not include any of the fol
23	lowing:
24	''(I) SECURITY.—

1 ''(aa) Any security, other
2 than a note, an investment con
3 tract, or a certificate of interest
4 or participation in any profit
5 sharing agreement.
6 ''(bb) A note, an investment
7 contract, or a certificate of inter
8 est or participation in any profit
9 sharing agreement that—
10 ''(AA) represents or
11 gives the holder an owner
12 ship interest or other inter
13 est in the revenues, profits,
14 obligations, debts, assets, or
15 assets or debts to be ac
16 quired of the issuer of the
17 digital asset or another per
18 son (other than a decentral
19 ized governance system);
20 ''(BB) makes the hold
21 er a creditor of the issuer of
22 the digital asset or another
23 person; or
24 ''(CC) represents or
25 gives the holder the right to

1	receive interest or the return
2	of principal from the issuer
3	of the digital asset or an
4	other person.
5	''(II) SECURITY DERIVATIVE.—A
6	digital asset that, based on its terms
7	and other characteristics, is, rep
8	resents, or is functionally equivalent
9	to an agreement, contract, or trans
10	action that is—
11	''(aa) a security future, as
12	defined in section 2a of the Secu
13	rities Act of 1933;
14	''(bb) a security-based swap,
15	as defined in section 2a of the
16	Securities Act of 1933;
17	''(cc) a put, call, straddle,
18	option, or privilege on any secu
19	rity, certificate of deposit, or
20	group or index of securities (in
21	cluding any interest therein or
22	based on the value thereof), as
23	defined in section 2a of the Secu
24	rities Act of 1933; or

1	''(dd) a put, call, straddle,
2	option, or privilege on any secu
3	rity, as defined in section 2a of
4	the Securities Act of 1933.
5	''(III) PERMITTED PAYMENT
6	STABLECOIN.—A digital asset that is
7	a permitted payment stablecoin.
8	''(IV) BANKING DEPOSIT.—
9	''(aa) A deposit (as defined
10	under section 3 of the Federal
11	Deposit Insurance Act (12
12	U.S.C. 1813)), regardless of the
13	technology used to record the de
14	posit.
15	''(bb) An account (as de
16	fined in section 101 of the Fed
17	eral Credit Union Act (12 U.S.C.
18	1752)), regardless of the tech
19	nology used to record the ac
20	count.
21	''(V) COMMODITY.—A digital
22	asset that references, represents an
23	interest in, or is functionally equiva
24	lent to—

1	''(aa) an agricultural com
2	modity;
3	''(bb) an excluded com
4	modity, other than a security; or
5	''(cc) an exempt commodity,
6	other than the digital commodity
7	itself, as shall be further defined
8	by the Commission.
9	''(VI) COMMODITY DERIVA
10	TIVE.—A digital asset that, based on
11	its terms and other characteristics, is,
12	represents, or is functionally equiva
13	lent to an agreement, contract, or
14	transaction that is—
15	''(aa) a contract of sale of a
16	commodity for future delivery or
17	an option thereon;
18	''(bb) a security futures
19	product;
20	''(cc) a swap;
21	''(dd) an agreement, con
22	tract, or transaction described in
23	section 2(c)(2)(C)(i) or section
24	2(c)(2)(D)(i);

1	''(ee) a commodity option
2	authorized under section 4c; or
3	''(ff) a leverage transaction
4	authorized under section 19.
5	''(VII) POOLED INVESTMENT VE
6	HICLE.—
7	''(aa) IN GENERAL.—A dig
8	ital asset not described by sub
9	clause (I) that, based on its
10	terms and other characteristics,
11	is, represents, or is functionally
12	equivalent to an interest in—
13	''(AA) a commodity
14	pool, as defined in this Act;
15	or
16	''(BB) a pooled invest
17	ment vehicle.
18	''(bb) POOLED INVESTMENT
19	VEHICLE DEFINED.—In this sub
20	clause, the term 'pooled invest
21	ment vehicle' means—
22	''(AA) any investment
23	company as defined in sec
24	tion 3(a) of the Investment

1 Company Act of 1940 (15
2 U.S.C. 80a–3(a));
3 ''(BB) any company (as
4 defined in section 2 of such
5 Act (15 U.S.C. 80a–2)) that
6 would be an investment
7 company under section 3(a)
8 of such Act but for the ex
9 clusions provided from that
10 definition by section 3(c) of
11 such Act, if for purposes of
12 this subclause the company
13 were assumed to be an
14 issuer (as defined in section
15 2 of such Act); or
16 ''(CC) any entity or
17 person that is not an invest
18 ment company but holds or
19 will hold assets other than
20 securities.
21 ''(VIII) GOOD, COLLECTIBLE,
22 NON-COMMODITY AND OTHER
23 ASSET.—A digital asset that has
24 value, utility, or significance beyond
25 its mere existence as a digital asset,

1	including the digital equivalent of a
2	tangible or intangible good, such as—
3	''(aa) a work of art, a musi
4	cal composition, a literary work,
5	or other intellectual property;
6	''(bb) collectibles, merchan
7	dise, virtual land, and video game
8	assets;
9	''(cc) affinity, rewards, or
10	loyalty points, including airline
11	miles or credit card points, that
12	are not primarily speculative in
13	nature; or
14	''(dd) rights, licenses, and
15	tickets.
16	''(iv) RULE CONSTRUCTION.—No OF
17	presumption shall exist that a digital asset
18	is a security, nor shall a digital asset be
19	excluded from being a digital commodity
20	pursuant to clause (iii)(I), solely due to—
21	''(I) the digital asset providing
22	voting or economic rights with respect
23	to the blockchain system to which the
24	digital asset relates or the decentral
25	ized governance system of the

• blockchain system to which the digital asset relates; ''(II) the value of the digital
• asset having the potential to appre- ciate or depreciate in response to the efforts, operations, or financial per- formance of the blockchain system to which the digital asset relates or the decentralized governance system of the blockchain system to which the digital asset relates; or
• ''(III) the value of the digital asset appreciating or depreciating due to the use of the blockchain system to which the digital asset relates or the decentralized governance system of the blockchain system to which the digital asset relates.
• ''(G) DIGITAL COMMODITY BROKER.— ''(i) IN GENERAL.—The term 'digital commodity broker' means any person who, as a regular business— ''(I) is engaged in—
• ''(aa) soliciting or accepting an order from a customer for—

1	''(AA) the purchase or
2	sale of a digital commodity;
3	or
4	''(BB) an agreement,
5	contract, or transaction de
6	scribed in section
7	2(c)(2)(D)(iv); and
8	''(bb) in conjunction with
9	the activities in item (aa), ac
10	cepts or maintains control over—
11	''(AA) the funds of any
12	customer; or
13	''(BB) the execution of
14	any transaction of a cus
15	tomer;
16	''(II) is engaged in soliciting or
17	accepting orders from a customer for
18	the purchase or sale of a unit of a
19	digital commodity on or subject to the
20	rules of a registered entity; or
21	''(III) is registered with the Com
22	mission as a digital commodity
23	broker.

1	''(ii) EXCEPTIONS.—The term 'digital
2	commodity broker' does not include a per
3	son solely because the person—
4	''(I) solicits or accepts an order
5	described in clause (i)(I)(aa)(AA)
6	from a customer who is an eligible
7	contract participant;
8	''(II) enters into 1 or more dig
9	ital commodity transactions that are
10	attributable or solely incidental to
11	making, sending, receiving, or facili
12	tating payments, whether involving a
13	payment service provider or on a peer
14	to-peer basis; or
15	''(III) is a bank (as defined
16	under section 3(a) of the Securities
17	Exchange Act of 1934) engaging in
18	certain banking activities with respect
19	to a digital commodity in the same or
20	a similar manner as a bank is ex
21	cluded from the definition of a broker
22	under such section, as determined by
23	the Commission.
24	''(iii) FURTHER DEFINITION.—The
25	Commission, by rule or regulation, may ex-

1	clude from the term 'digital commodity
2	broker' any person or class of persons if
3	the Commission determines that the rule
4	or regulation will effectuate the purposes
5	of this Act.
6	''(H) DIGITAL COMMODITY DEALER.—
7	''(i) IN GENERAL.—The term 'digital
8	commodity dealer' means any person who,
9	as a regular business—
10	''(I) is, or offers to be a
11	counterparty to a person for the pur
12	chase or sale of a digital commodity
13	as a regular business, and in conjunc
14	tion with the activities, accepts or
15	maintains control over the funds of
16	any counterparty; or
17	''(II) is registered with the Com
18	mission as a digital commodity dealer.
19	''(ii) EXCEPTION.—The term 'digital
20	commodity dealer' does not include a per
21	son solely because the person—
22	''(I) is or offers to be a
23	counterparty to a person who is an el
24	igible contract participant;

1	''(II) enters into a digital com
2	modity transaction with an eligible
3	contract participant;
4	''(III) enters into a digital com
5	modity transaction on or through a
6	registered digital commodity ex
7	change, with a registered digital com
8	modity broker, or through a decentral
9	ized finance trading protocol;
10	''(IV) enters into a digital com
11	modity transaction for the person's
12	own account, either individually or in
13	a fiduciary capacity, but not as a part
14	of a regular business;
15	''(V) enters into 1 or more digital
16	commodity transactions that are at
17	tributable or solely incidental to mak
18	ing, sending, receiving, or facilitating
19	payments, whether involving a pay
20	ment service provider or on a peer-to
21	peer basis; or
22	''(VI) is a bank (as defined under
23	section 3(a) of the Securities Ex
24	change Act of 1934) engaging in cer
25	tain banking activities with respect to

1	a digital commodity in the same or a
2	similar manner as a bank is excluded
3	from the definition of a dealer under
4	section 3(a)(5) of such Act, as deter
5	mined by the Commission.
6	''(iii) FURTHER DEFINITION.—The
7	Commission, by rule or regulation, may ex
8	clude from the term 'digital commodity
9	dealer' any person or class of persons if
10	the Commission determines that the rule
11	or regulation will effectuate the purposes
12	of this Act.
13	''(I) DIGITAL EXCHANGE.— COMMODITY
14	The term 'digital commodity exchange' means a
15	trading facility that offers or seeks to offer a
16	cash or spot market in at least 1 digital com
17	modity.
18	''(J) MIXED TRANS DIGITAL ASSET
19	ACTION.—The term 'mixed digital asset trans
20	action' means a transaction in which a digital
21	commodity is traded for a security.
22	''(K) TERMS SECU DEFINED UNDER THE
23	1933.—The terms 'blockchain RITIES ACT OF
24	system', 'decentralized governance system', 'dig
25	ital asset', 'digital commodity issuer', 'digital

1	commodity affiliated person', 'digital commodity
2	related person', 'end user distribution', 'mature
3	blockchain system', 'permitted payment
4	stablecoin', and 'permitted payment stablecoin
5	issuer' have the meaning given those terms, re
6	spectively, under section 2(a) of the Securities
7	Act of 1933 (15 U.S.C. 77b(a)).''; and
8	(5) in paragraph (41) (as so redesignated by
9	paragraph (4) of this subsection)—
10	(A) by striking ''and'' at the end of sub
11	paragraph (E);
12	(B) by striking the period at the end of
13	subparagraph (F) and inserting ''; and''; and
14	(C) by adding at the end the following:
15	''(G) a digital commodity exchange reg
16	istered under section 5i.''.
17	(b) CONFORMING AMENDMENTS.—
18	(1) Each of the following provisions of law is
19	amended by striking ''1a(18)'' and inserting
20	''1a(19)'':
21	(A) Section 4s(h)(5)(A)(i) of the Com
22	modity Exchange Act (7 U.S.C. 6s(h)(5)(A)(i)).
23	(B) Section 5(e) of the Securities Act of
24	1933 (15 U.S.C. 77e(e)).

1	(C) Section 6(g)(5)(B) of the Securities
2	Exchange Act of 1934 (15 U.S.C.
3	78f(g)(5)(B)).
4	(D) Section 15F(h)(5)(A)(i) of the Securi
5	ties Exchange Act of 1934 (15 U.S.C. 78o–
6	10(h)(5)(A)(i)).
7	(2) Section 752 of the Wall Street Trans
8	parency and Accountability Act of 2010 (15 U.S.C.
9	8325) is amended by striking ''1a(39)'' and insert
10	ing ''1a(40)''.
11	(3) Section 4s(f)(1)(D) of the Commodity Ex
12	change Act (7 U.S.C. 6s(f)(1)(D)) is amended by
13	striking ''1a(47)(A)'' and inserting ''1a(48)(A)''.
14	(4) Each of the following provisions of the
15	Commodity Exchange Act is amended by striking
16	''1a(47)(A)(v)'' and inserting ''1a(48)(A)(v)'':
17	(A) Section 4t(b)(1)(C) (7 U.S.C.
18	6t(b)(1)(C)).
19	(B) Section 5(d)(23) (7 U.S.C. 7(d)(23)).
20	(C) Section 5b(k)(3) (7 U.S.C. 7a–
21	1(k)(3)).
22	(D) Section 5h(f)(10)(A)(iii) (7 U.S.C. 7b–
23	3(f)(10)(A)(iii)).

1	(5) Section 21(f)(4)(C) of the Commodity Ex
2	change Act (7 U.S.C. 24a(f)(4)(C)) is amended by
3	striking ''1a(48)'' and inserting ''1a(49)''.
4	(6) Section 403 of the Legal Certainty for
5	Bank Products Act of 2000 (7 U.S.C. 27a) is
6	amended—
7	(A) in subsection (a)(2), by striking
8	''1a(47)(A)(v)'' and inserting ''1a(48)(A)(v)'';
9	and
10	(B) in each of subsections (b)(1) and
11	(c)(2), by striking ''1a(47)'' and inserting
12	''1a(48)''.
13	(7) Section 712 of the Wall Street Trans
14	parency and Accountability Act of 2010 (15 U.S.C.
15	8302) is amended—
16	(A) in subsection (a)(8), by striking
17	''1a(47)(D)'' each place it appears and insert
18	ing ''1a(48)(D)''; and
19	(B) in subsection (d)(1), by striking
20	''1a(47)(A)(v)'' each place it appears and in
21	serting ''1a(48)(A)(v)''.
22	SEC. 104. DEFINITIONS UNDER THIS ACT.
23	In this Act:
24	(1) DEFINITIONS EX UNDER THE COMMODITY
25	ACT.—The terms ''decentralized finance CHANGE

messaging system'', ''decentralized finance trading protocol'', ''digital commodity'', ''digital commodity broker'', ''digital commodity dealer'', ''digital com- modity exchange'', and ''mixed digital asset trans- action'' have the meaning given those terms, respec- tively, under section 1a of the Commodity Exchange Act (7 U.S.C. 1a).

(2) DEFINITIONS UNDER THE SECURITIES ACT OF 1933.—The terms ''blockchain'', ''blockchain sys- tem'', ''blockchain protocol'', ''decentralized govern- ance system'', ''digital asset'', ''digital commodity issuer'', ''end user distribution'', ''mature blockchain system'', ''permitted payment stablecoin'', and ''per- mitted payment stablecoin issuer'' have the meaning given those terms, respectively, under section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)).

(3) DEFINITIONS UNDER THE SECURITIES EX- CHANGE ACT OF 1934.—The terms ''Bank Secrecy Act'', ''securities laws'', and ''self-regulatory organi- zation'' have the meaning given those terms, respec- tively, under section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).

SEC. 105. RULEMAKINGS.

(a) DEFINITIONS.—The Commodity Futures Trading Commission and the Securities and Exchange Commission

shall jointly issue rules to further define the following terms:

• (1) The terms—
• (A) ''blockchain'', ''blockchain applica- tion'', ''blockchain system'', ''blockchain pro- tocol'', ''decentralized governance system'', ''digital commodity affiliated person'', ''digital commodity issuer'', ''digital commodity related person'', ''end user distribution'', and ''mature blockchain system'', as defined under section 2(a) of the Securities Act of 1933;
• (B) ''unilateral authority'', as such term is used in section 42 of the Securities Exchange Act of 1934 and section 1a of the Commodity Exchange Act; and

(C) ''programmatic functioning'', as such term is used in sections 4C of the Securities Act of 1933, section 42 of the Securities Ex- change Act of 1934, and section 1a of the Com-modity Exchange Act.

(2) The terms ''digital commodity'', ''decentral- ized finance messaging system'', and ''decentralized finance trading protocol'', as defined under section 1a of the Commodity Exchange Act.

1	(b) JOINT RULEMAKING MIXED DIGITAL ASSET FOR
2	TRANSACTIONS.—The Securities and Exchange Commis
3	sion and the Commodity Futures Trading Commission
4	shall jointly issue rules applicable to mixed digital asset
5	transactions under this Act and the amendments made by
6	this Act, including by further defining such term.
7	(c) PROTECTION SELF-CUSTODY.— OF
8	(1) IN GENERAL.—A United States individual
9	shall retain the right to—
10	(A) maintain a hardware wallet or software
11	wallet for the purpose of facilitating the individ
12	ual's own lawful custody of digital assets; and
13	(B) engage in direct, peer-to-peer trans
14	actions in digital assets with another individual
15	or entity for the individual's own lawful pur
16	poses using a hardware wallet or software wal
17	let, if—
18	(i) such other individual or entity is
19	not a financial institution (as defined in
20	section 5312 of title 31, United States
21	Code); and
22	(ii) the transactions do not involve
23	any property or interests in property that
24	are blocked pursuant to, or are otherwise
25	prohibited by, United States sanctions.

1	(2) APPLICATION.—This subsection—
2	(A) applies solely to personal use by indi
3	viduals; and
4	(B) does not apply to individuals acting in
5	a custodial or fiduciary capacity for others.
6	(3) RULE OF CONSTRUCTION.—Nothing in this
7	subsection shall be construed to limit the authority
8	of the Secretary of the Treasury, the Securities and
9	Exchange Commission, the Commodity Futures
10	Trading Commission, the Board of Governors of the
11	Federal Reserve System, the Comptroller of the Cur
12	rency, the Federal Deposit Insurance Corporation,
13	or the National Credit Union Administration to
14	carry out any enforcement action or special measure
15	authorized under applicable law, including—
16	(A) the Bank Secrecy Act, section 9714 of
17	the Combating Russian Money Laundering Act
18	(31 U.S.C. 5318A note), and section 7213A of
19	the Fentanyl Sanctions Act (21 U.S.C. 2313a);
20	or
21	(B) any other law relating to illicit finance,
22	money laundering, terrorism financing, or
23	United States sanctions.
24	(d) JOINT RULEMAKING, PROCEDURES, OR GUID

ANCE FOR DELISTING.—Not later than 180 days after the

date of the enactment of this Act, the Commodity Futures Trading Commission and the Securities and Exchange Commission shall jointly issue rules, procedures, or guid- ance (as determined appropriate by the Commissions) re- garding the process to delist an asset for trading under section 106 if the Commissions determine that the listing is inconsistent with the Commodity Exchange Act, the se- curities laws (including regulations under those laws), or this Act.

(e) JOINT RULES FOR PORTFOLIO MARGINING DE-TERMINATIONS.—

(1) IN GENERAL.—Not later than 360 days after the date of the enactment of this Act, the Commodity Futures Trading Commission and the Securities and Exchange Commission shall jointly issue rules describing the process for persons reg- istered with either such Commission to seek a joint order or determination with respect to margin, cus- tomer protection, segregation, or other requirements as necessary to facilitate portfolio margining of secu- rities (including related extensions of credit), secu- rity-based swaps, contracts for future delivery, op- tions on a contract for future delivery, swaps, and digital commodities, or any subset thereof, in—

1	(A) a securities account carried by a reg
2	istered broker or dealer or a security-based
3	swap account carried by a registered security
4	based swap dealer;
5	(B) a futures or cleared swap account car
6	ried by a registered futures commission mer
7	chant;
8	(C) a swap account carried by a swap deal
9	er; or
10	(D) a digital commodity account carried by
11	a registered digital commodity broker or digital
12	commodity dealer that is also registered in such
13	other capacity as is necessary to also carry the
14	other customer or counterparty positions being
15	held in the account.
16	(2) PROCESS.—With respect to a joint order or
17	determination described in paragraph (1), the rules
18	required to be issued pursuant to paragraph (1)
19	shall require—
20	(A) the joint order or determination to be
21	issued only if the order or determination is in
22	the public interest and provides for the appro
23	priate protection of customers;
24	(B) applicants to file a standard applica
25	tion, in a form and manner determined by the

1	Securities and Exchange Commission and the
2	Commodity Futures Trading Commission,
3	which shall include the information necessary to
4	make the joint order or determination;
5	(C) the Securities and Exchange Commis
6	sion and the Commodity Futures Trading Com
7	mission to make a final determination not later
8	than 270 days after the filing of a completed
9	application;
10	(D) the Securities and Exchange Commis
11	sion and the Commodity Futures Trading Com
12	mission to consider the public interest of the
13	joint order or determination through the solici
14	tation of public comments; and
15	(E) the Securities and Exchange Commis
16	sion and the Commodity Futures Trading Com
17	mission to consult with other relevant foreign or
18	domestic regulators, including the Board of
19	Governors of the Federal Reserve System, the
20	Federal Deposit Insurance Corporation, and the
21	Office of the Comptroller of the Currency, as
22	appropriate.
23	(f) CAPITAL REQUIREMENTS ADDRESS NETTING TO
24	AGREEMENTS.—No later than 360 days following the date
25	of enactment of this Act, the Board of Governors of the

Federal Reserve System, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation shall de- velop risk-based and leverage capital requirements for in- sured depository institutions, depository institution hold- ing companies, and nonbank financial companies super- vised by the Board of Governors that address netting agreements that provide for termination and close-out net- ting across multiple types of financial transactions, con- sistent with subsection (e), in the event of a counterparty's default.

SEC. 106. EXPEDITED REGISTRATION FOR DIGITAL COM- MODITY EXCHANGES, BROKERS, AND DEAL-ERS; PROVISIONAL STATUS.

(a) REGISTRATION.—

(1) IN GENERAL.—Unless exempted from reg- istration, a person shall not act as a digital com- modity broker, digital commodity dealer, or digital commodity exchange after the end of the 90-day pe- riod beginning on the date the process described in paragraph (2) is adopted by the Commodity Futures Trading Commission, unless, as the case may be, the person is registered as a—

(A) digital commodity broker pursuant to section 4u of the Commodity Exchange Act;

1	(B) digital commodity dealer pursuant to
2	section 4u of the Commodity Exchange Act; or
3	(C) digital commodity exchange pursuant
4	to section 5i of the Commodity Exchange Act.
5	(2) EXPEDITED PROCESS.—Within 180 days
6	after the date of the enactment of this Act, the
7	Commodity Futures Trading Commission shall
8	adopt, by rule, regulation, or order, a process for ex
9	pedited registration of persons required to be reg
10	istered pursuant to paragraph (1).
11	(b) PROVISIONAL STATUS.—
12	(1) IN GENERAL.—A person who is registered
13	in accordance with subsection (a) of this section
14	shall be in provisional status until—
15	(A) in the case of a digital commodity
16	broker or dealer, 270 days after the final effec
17	tive date of the rulemakings required under sec
18	tion 4u of the Commodity Exchange Act; or
19	(B) in the case of a digital commodity ex
20	change, 270 days after the final effective date
21	of the rulemakings required under section 5i of
22	such Act.
23	(2) PAYMENT FEES.—A person in provi OF
24	sional status shall pay all fees and penalties required
25	under section 410.

1	(c) OPERATIONS PRIOR REGULATIONS.— TO
2	(1) REQUIREMENTS.—A person in provisional
3	status shall be subject to the requirements of this
4	section and the Commodity Exchange Act and any
5	rules or regulations promulgated under this section
6	or the Commodity Exchange Act, as applicable.
7	(2) LISTINGS.—
8	(A) IN GENERAL.—Except as provided in
9	subparagraph (B), a person in provisional sta
10	tus may continue to offer, solicit, trade, facili
11	tate, execute, clear, report, or otherwise deal in
12	any digital asset offered on or through the fa
13	cilities of the person before the date of registra
14	tion under this section, until such time as the
15	joint rulemaking on definitions required under
16	section 105(a) is effective.
17	(B) DELISTING.—Before the effective date
18	of the joint rulemaking on definitions under
19	section 105(a), a person in provisional status
20	shall cease offering, soliciting, trading, facili
21	tating, executing, clearing, reporting, or other
22	wise dealing in any digital asset required to be
23	delisted pursuant to a joint delisting process es
24	tablished under section 105(d).

(3) EXEMPTIVE AUTHORITY.—In order to pro- mote responsible innovation and fair competition, or protect customers, the Commodity Futures Trading Commission may exempt any persons or class of per- sons registered pursuant to subsection (a) and in provisional status pursuant to subsection (b) from any requirements of this section or the Commodity Exchange Act or any rules or regulations promul- gated under this section or the Commodity Ex-change Act, as applicable.

(d) CUSTOMER DISCLOSURE BEFORE REGISTRA-TION.—

(1) IN GENERAL.—Beginning 30 days after the date of the enactment of this Act, any person acting as a digital commodity exchange, digital commodity broker, or digital commodity dealer shall disclose to the customers of the person so acting, in the disclo- sure documents, offering documents, and pro- motional material of the person so acting, in a prominent manner, that the person is not registered with or regulated by the Commodity Futures Trad-ing Commission.

(2) EXPIRATION.—Paragraph (1) of this sub- section shall not apply to any person who registers pursuant to subsection (a).

1	SEC. 107. COMMODITY EXCHANGE ACT AND SECURITIES
2	LAWS SAVINGS PROVISIONS.
3	(a) IN GENERAL.—Nothing in this Act shall affect
4	or apply to, or be interpreted to affect or apply to—
5	(1) any agreement, contract, or transaction that
6	is subject to the Commodity Exchange Act as—
7	(A) a contract of sale of a commodity for
8	future delivery or an option on such a contract;
9	(B) a swap;
10	(C) a security futures product;
11	(D) an option authorized under section 4c
12	of such Act;
13	(E) an agreement, contract, or transaction
14	described in section 2(c)(2)(C)(i) of such Act;
15	or
16	(F) a leverage transaction authorized
17	under section 19 of such Act;
18	(2) any agreement, contract, or transaction that
19	is subject to the securities laws as—
20	(A) a security-based swap;
21	(B) a security futures product; or
22	(C) an option on or based on the value of
23	a security; or
24	(3) the activities of any person with respect to
25	any such agreement, contract, or transaction.

(b) PROHIBITIONS ON SPOT DIGITAL COMMODITY ENTITIES.—Nothing in this Act authorizes, or shall be in- terpreted to authorize, a digital commodity exchange, dig- ital commodity broker, or digital commodity dealer to en- gage in any activities involving any transaction, contract, or agreement described in subsection (a)(1), solely by vir- tue of being registered as a digital commodity exchange, digital commodity broker, or digital commodity dealer.

(c) DEFINITIONS.—In this section, each term shall have the meaning provided in the Commodity Exchange Act or the regulations prescribed under such Act.

SEC. 108. ADMINISTRATIVE REQUIREMENTS.

Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) is amended—

(1) in paragraph (3)—

(A) in subparagraph (B), by striking ''or'' at the end;

(B) in subparagraph (C), by striking the period and inserting ''; or''; and

(C) by adding at the end the following:

''(D) a contract of sale of a digital com-modity.'';

(2) in paragraph (4)—

(A) in subparagraph (A)—

1	(i) in clause (ii), by striking ''or'' at
2	the end;
3	(ii) in clause (iii), by striking the pe
4	riod and inserting ''; or''; and
5	(iii) by adding at the end the fol
6	lowing:
7	''(iv) a contract of sale of a digital
8	commodity.'';
9	(B) in subparagraph (B)—
10	(i) in clause (ii), by striking ''or'' at
11	the end;
12	(ii) in clause (iii), by striking the pe
13	riod and inserting ''; or''; and
14	(iii) by adding at the end the fol
15	lowing:
16	''(iv) a contract of sale of a digital
17	commodity.''; and
18	(C) in subparagraph (C)—
19	(i) in clause (ii), by striking ''or'' at
20	the end;
21	(ii) by striking ''(iii) a swap, provided
22	however,'' and inserting the following:
23	''(iii) a swap; or
24	''(iv) a contract of sale of a digital
25	commodity,

1	provided, however,''; and
2	(iii) by striking ''clauses (i), (ii), or
3	(iii)'' and insert ''any of clauses (i)
4	through (iv)''.

SEC. 109. TREATMENT OF CERTAIN NON-CONTROLLING BLOCKCHAIN DEVELOPERS.

(a) IN GENERAL.—Notwithstanding applicable law, a non-controlling blockchain developer or provider of a blockchain service shall not be treated as a money trans- mitter or as engaged in ''money transmitting'' or, fol- lowing the date of enactment of this Act, be otherwise sub- ject to any new registration requirement that is substan- tially similar to the requirement that currently applies to money transmitters, solely on the basis of—

(1) creating or publishing software to facilitate the creation of, or provision of maintenance services to, a blockchain or blockchain service;

(2) providing hardware or software to facilitate a customer's own custody or safekeeping of the cus-tomer's digital assets; or

(3) providing infrastructure support to main-tain a blockchain service.

(b) RULE OF CONSTRUCTION.—Nothing in this sec- tion shall be construed to affect whether a blockchain de-veloper or provider of a blockchain service is otherwise

subject to classification or treatment as a money trans- mitter, or as engaged in ''money transmitting'', under ap- plicable State or Federal law, including laws relating to anti-money laundering or countering the financing of ter- rorism, based on conduct outside the scope of subsection (a). Nothing in this section shall be construed to affect whether a blockchain developer or provider of a blockchain service is otherwise subject to classification or treatment as a financial institution under the Bank Secrecy Act, this Act, or any Act enacted after the date of enactment of this Act.

(c) EFFECT ON OTHER LAWS.—

(1) INTELLECTUAL PROPERTY LAW.—Nothing in this section shall be construed to limit or expand any law pertaining to intellectual property.

(2) STATE LAW.—Nothing in this section shall be construed to prevent any State from enforcing any State law that is consistent with this section. No cause of action may be brought and no liability may be imposed under any State or local law that is in-consistent with this section.

(d) DEFINITIONS.—In this section:

(1) BLOCKCHAIN DEVELOPER.—The term ''blockchain developer'' means any person or busi-ness that creates or publishes software to facilitate

the creation of, or provide maintenance to, a blockchain or a blockchain service.

(2) BLOCKCHAIN SERVICE.—The term ''blockchain service'' means any information, trans- action, or computing service or system that provides or enables access to a blockchain network by mul- tiple users, including specifically a service or system that enables users to send, receive, exchange, or store digital assets described by blockchain net-works.

(3) NON-CONTROLLING BLOCKCHAIN DEVEL- OPER OR PROVIDER OF A BLOCKCHAIN SERVICE.— The term ''non-controlling blockchain developer or provider of a blockchain service'' means a blockchain developer or provider of a blockchain service that in the regular course of operations, does not have the legal right or the unilateral and independent ability to control, initiate upon demand, or effectuate trans- actions involving digital assets that users are enti- tled to, without the approval, consent, or direction of any other third party.

SEC. 110. APPLICATION OF THE BANK SECRECY ACT.

(a) IN GENERAL.—Section 5312(c)(1)(A) of title 31, United States Code, is amended—

1	(1) by inserting ''digital commodity broker, dig
2	ital commodity dealer,'' after ''futures commission
3	merchant,''; and
4	(2) by inserting before the period the following:
5	''and any digital commodity exchange registered, or
6	required to register, under the Commodity Exchange
7	Act which permits direct customer access''.
8	(b) BANK SECRECY ACT REQUIREMENTS.—
9	(1) REGULATIONS.—The Secretary of the
10	Treasury, acting through the Director of the Finan
11	cial Crimes Enforcement Network, and in consulta
12	tion with Commodity Futures Trading Commission,
13	shall issue requirements consistent with the require
14	ments of futures commission merchants to apply the
15	Bank Secrecy Act to digital commodity brokers, dig
16	ital commodity dealers, and digital commodity ex
17	changes that are tailored to the size and complexity
18	of such entities, including by requiring each such en
19	tity to—
20	(A) establish and maintain an anti-money
21	laundering and countering the financing of ter
22	rorism program, which shall include—
23	(i) an appropriate risk assessment;

(ii) the development of internal poli-cies, procedures, and controls;

1	(iii) the designation of a compliance
2	officer;
3	(iv) an ongoing employee training pro
4	gram; and
5	(v) an independent audit function to
6	test such program;
7	(B) retain appropriate records of trans
8	actions;
9	(C) monitor and report suspicious activity,
10	which may include use of appropriate distrib
11	uted ledger analytics; and
12	(D) maintain an effective customer identi
13	fication program to identify and verify account
14	holders and carry out appropriate customer due
15	diligence.
16	(2) COMPLIANCE SANCTIONS.—A digital WITH
17	commodity broker, digital commodity dealer, or dig
18	ital commodity exchange shall comply with all laws
19	and regulations related to United States sanctions
20	administered by the Office of Foreign Assets Con
21	trol.
22	SEC. 111. RULE OF CONSTRUCTION.
23	Nothing in this Act, or the amendments made by this
24	Act, shall be construed to limit or prevent the continued
25	application of applicable ethics statutes and regulations

administered by the Office of Government Ethics, or the ethics rules of the Senate and the House of Representa- tives, including section 208 of title 18, United States Code, and sections 2635.702 and 2635.802 of title 5, Code of Federal Regulations. For the avoidance of doubt, exist- ing Office of Government Ethics laws and the ethics rules of the Senate and the House of Representatives prohibit any member of Congress or senior executive branch official from issuing a digital commodity during their time in pub- lic service. For the purposes of this section, an employee described in section 202 of title 18, United States Code, shall be deemed an executive branch employee for pur-poses of complying with section 208 of that title.

SEC. 112. IMPLEMENTATION.

(a) GLOBAL RULEMAKING TIMEFRAME.—Unless oth- erwise provided in this Act or an amendment made by this Act, the Commodity Futures Trading Commission and the Securities and Exchange Commission, or both, shall indi- vidually, and jointly where required, promulgate rules and regulations required of each Commission under this Act or an amendment made by this Act not later than 360 days after the date of enactment of this Act.

(b) RULES AND REGISTRATION BEFORE FINAL EF-FECTIVE DATES.—

1	(1) IN GENERAL.—In order to prepare for the
2	implementation of this Act, the Commodity Futures
3	Trading Commission and the Securities and Ex
4	change Commission may, before any effective date
5	provided in this Act—
6	(A) promulgate rules, regulations, or or
7	ders permitted or required by this Act;
8	(B) conduct studies and prepare reports
9	and recommendations required by this Act;
10	(C) register persons under this Act; and
11	(D) exempt persons, agreements, contracts,
12	or transactions from provisions of this Act,
13	under the terms contained in this Act.
14	(2) LIMITATION EFFECTIVENESS.—An ac ON
15	tion by the Commodity Futures Trading Commission
16	or the Securities and Exchange Commission under
17	paragraph (1) shall not become effective before the
18	effective date otherwise applicable to the action
19	under this Act.
20	TITLE II—OFFERS AND SALES OF
21	DIGITAL COMMODITIES
22	SEC. 201. TREATMENT OF INVESTMENT CONTRACT ASSETS.
23	(a) SECURITIES ACT 1933.—Section 2(a) of the OF
24	Securities Act of 1933 (15 U.S.C. 77b(a)), as amended
25	by section 101, is further amended—

1	(1) in paragraph (1), by adding at the end the
2	following: ''The term 'investment contract' does not
3	include an investment contract asset.''; and
4	(2) by adding at the end the following:
5	''(36) The term 'investment contract asset'
6	means a digital commodity—
7	''(A) that can be exclusively possessed and
8	transferred, person to person, without necessary
9	reliance on an intermediary, and is recorded on
10	a blockchain; and
11	''(B) sold or otherwise transferred, or in
12	tended to be sold or otherwise transferred, pur
13	suant to an investment contract.''.
14	(b) INVESTMENT ADVISERS ACT 1940.—Section OF
15	202(a)(18) of the Investment Advisers Act of 1940 (15
16	U.S.C. 80b–2(a)(18)) is amended by adding at the end
17	the following: ''The term 'investment contract' does not
18	include an investment contract asset (as such term is de
19	fined under section 2(a) of the Securities Act of 1933).''.
20	(c) INVESTMENT COMPANY ACT 1940.—Section OF
21	2(a)(36) of the Investment Company Act of 1940 (15
22	U.S.C. 80a–2(a)(36)) is amended by adding at the end
23	the following: ''The term 'investment contract' does not
24	include an investment contract asset (as such term is de
25	fined under section 2(a) of the Securities Act of 1933).''.

(d) SECURITIES EXCHANGE ACT OF 1934.—Section 3(a)(10) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)) is amended by adding at the end the following: ''The term 'investment contract' does not in- clude an investment contract asset (as such term is de- fined under section 2(a) of the Securities Act of 1933).''. (e) SECURITIES INVESTOR PROTECTION ACT OF 1970.—Section 16(14) of the Securities Investor Protec- tion Act of 1970 (15 U.S.C. 78lll(14)) is amended by add- ing at the end the following: ''The term 'investment con- tract' does not include an investment contract asset (as such term is defined under section 2(a) of the Securities Act of 1933).''. SEC. 202. EXEMPTED PRIMARY TRANSACTIONS IN DIGITAL COMMODITIES.

(a) IN GENERAL.—The Securities Act of 1933 (15 U.S.C. 77a et seq.) is amended—

(1) in section 4(a), by adding at the end the following:

''(8) the offer or sale of an investment contract involving units of a digital commodity by its digital commodity issuer (including all entities controlled by or under common control with the issuer), if—

''(A) the blockchain system to which the digital commodity relates, together with the dig-

1	ital commodity, is certified as a mature
2	blockchain system under section 42 of the Secu
3	rities Exchange Act of 1934 or the issuer in
4	tends for the blockchain system to which the
5	digital commodity relates to be a mature
6	blockchain system by the later of—
7	''(i) the date that is four years after
8	the first sale of the investment contract in
9	volving a unit of such digital commodity in
10	reliance on the exemption provided under
11	this paragraph, subject to any extensions
12	as may be granted by the Commission; or
13	''(ii) the date that is four years after
14	the effective date of this paragraph;
15	''(B) the sum of all cash and other consid
16	eration to be received by the digital commodity
17	issuer in reliance on the exemption provided
18	under this paragraph, during the 12-month pe
19	riod preceding the date of such offering, includ
20	ing the amount received in such offering, is not
21	more than $50,000,000 (as such amount is an
22	nually adjusted by the Commission to reflect
23	the change in the Consumer Price Index for All
24	Urban Consumers published by the Bureau of
25	Labor Statistics of the Department of Labor);

1	''(C) after the completion of the trans
2	action, a purchaser does not own more than 10
3	percent of the total amount of the outstanding
4	units of the digital commodity;
5	''(D) the transaction does not involve the
6	offer or sale of an investment contract involving
7	units of a digital commodity by its digital com
8	modity issuer that—
9	''(i) is not organized under the laws of
10	a State, a territory of the United States,
11	or the District of Columbia;
12	''(ii) is a development stage company
13	that either—
14	''(I) has no specific business plan
15	or purpose; or
16	''(II) has indicated that the busi
17	ness plan of the company is to merge
18	with or acquire an unidentified com
19	pany;
20	''(iii) is an investment company, as
21	defined in section 3 of the Investment
22	Company Act of 1940 (15 U.S.C. 80a–3),
23	or is excluded from the definition of invest
24	ment company by section 3(c) of that Act
25	(15 U.S.C. 80a–3(b) or 80a–3(c));

''(iv) is issuing fractional undivided interests in oil or gas rights, or a similar interest in other mineral rights; ''(v) is, or has been, subject to any order of the Commission entered pursuant to section 12(j) of the Securities Exchange Act of 1934 during the 5-year period be- fore the filing of the offering statement; or ''(vi) is disqualified pursuant to sec- tion 230.262 of title 17, Code of Federal Regulations; and ''(E) the issuer meets the requirements of section 4B(b).''; and (2) by inserting after section 4A the following: ''SEC. 4B. REQUIREMENTS WITH RESPECT TO CERTAIN DIG- ITAL COMMODITY TRANSACTIONS. ''(a) COMMISSION JURISDICTION.—For the purposes of this section: ''(1) The Commission shall have jurisdiction and enforcement authority with respect to disclo- sures described in this section. ''(2) Section 17 shall apply to a statement made in an offering statement, disclosure, or report

filed under this section to the same extent as such section 17 applies to a statement made in any other

offering statement, disclosure, or report filed under this Act.

''(b) REQUIREMENTS FOR DIGITAL COMMODITY ISSUERS.—

''(1) TERMS AND CONDITIONS.—A digital com- modity issuer offering or selling an investment con- tract involving units of a digital commodity in reli- ance on section 4(a)(8) shall file with the Commis- sion an offering statement and any related docu- ments, in such form and with such content as pre- scribed by the Commission, including financial infor- mation, a description of the issuer and the oper- ations of the issuer, the financial condition of the issuer, a description of the plan of distribution of any unit of a digital commodity that is to be offered as well as the intended use of the offering proceeds, and a description of the development plan for the blockchain system, and the related digital com- modity, to become a mature blockchain system, if such blockchain system is not already certified as a mature blockchain system pursuant to section 42 of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).

''(2) INFORMATION REQUIRED FOR PUR-CHASERS.—A digital commodity issuer that has filed

a statement under paragraph (1) to offer and sell an investment contract involving a unit of a digital commodity in reliance on section 4(a)(8) shall in-clude in such statement the following information:

''(A) MATURITY STATUS.—Whether the blockchain system to which the digital com- modity relates has been certified as a mature blockchain system pursuant to section 42 of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) and, where such blockchain system is not so certified, a statement of the digital commodity issuer's intent for the blockchain system to which the digital commodity relates to be a mature blockchain system within the time period described in section 4(a)(8)(A).

''(B) SOURCE CODE.—The source code, or a publicly accessible webpage displaying such source code, for any blockchain system to which the digital commodity relates, and whether the source code was sourced from an external third party, whether there are any existing external dependencies, and whether the code underwent a third-party security audit, along with material results of any such audit.

1	''(C) TRANSACTION HISTORY.—A descrip
2	tion of the steps necessary to independently ac
3	cess, search, and verify the transaction history
4	of any blockchain system to which the digital
5	commodity relates, to the extent any such inde
6	pendent access, search, and verification activi
7	ties are technically feasible with respect to such
8	blockchain system.
9	''(D) DIGITAL ECONOMICS.— COMMODITY
10	A description of the purpose of any blockchain
11	system to which the digital commodity relates
12	and the operation of any such blockchain sys
13	tem, including—
14	''(i) information explaining the launch
15	and supply process, including the number
16	of units of the digital commodity to be
17	issued in an initial allocation, the total
18	number of units of the digital commodity
19	to be created, the release schedule for the
20	units of the digital commodity, and the
21	total number of units of the digital com
22	modity outstanding;
23	''(ii) information explaining the tech
24	nical requirements for holding, accessing,
25	and transferring the digital commodity;

1	''(iii) information on any applicable
2	consensus mechanism or process for vali
3	dating transactions, method of generating
4	or mining digital commodities, and any
5	process for burning or destroying units of
6	the digital commodity on the blockchain
7	system;
8	''(iv) an explanation of any mecha
9	nism for driving value to the digital com
10	modity of such blockchain system; and
11	''(v) an explanation of governance
12	mechanisms for implementing changes to
13	the blockchain system or forming con
14	sensus among holders of units of such dig
15	ital commodity.
16	''(E) PLAN DEVELOPMENT.—The cur OF
17	rent state and timeline for the development of
18	any blockchain system to which the digital com
19	modity relates, detailing how and when the
20	blockchain system is intended to be a mature
21	blockchain system, if the blockchain system is
22	not yet certified as a mature blockchain system,
23	and the various roles that exist or are intended
24	to exist in connection with the blockchain sys
25	tem, such as users, service providers, devel-

1	opers, transaction validators, and governance
2	participants, including a discussion of any
3	mechanisms by which control or authority are
4	exerted with respect to the blockchain system or
5	its related digital commodity, and any critical
6	operational dependencies of the blockchain sys
7	tem or its related digital commodity.
8	''(F) OWNERSHIP DISCLOSURES.—
9	''(i) IN GENERAL.—A list of all per
10	sons who are digital commodity related
11	persons or digital commodity affiliated per
12	sons who have been issued a unit of the
13	digital commodity by the digital commodity
14	issuer or have a right to a unit of the dig
15	ital commodity from the digital commodity
16	issuer.
17	''(ii) CONFIDENTIALITY.—The Com
18	mission shall keep each list described
19	under clause (i) confidential, consistent
20	with what is necessary or appropriate in
21	the public interest or for the protection of
22	investors.
23	''(G) RISK DISCLOSURES.—A de FACTOR
24	scription of the material risks surrounding own
25	ership of a unit of a digital commodity.

1	''(3) ONGOING DISCLOSURE REQUIREMENTS
2	SYSTEMS.—Subject to FOR MATURING BLOCKCHAIN
3	paragraph (5), the issuer of a digital commodity re
4	lated to a blockchain system that is not yet certified
5	as a mature blockchain system under section 42 of
6	the Securities Exchange Act of 1934 that has filed
7	a statement under paragraph (1) to offer and sell an
8	investment contract involving a unit of a digital
9	commodity in reliance on section 4(a)(8) shall file
10	the following with the Commission:
11	''(A) SEMIANNUAL REPORTS.—Every 6
12	months, a report containing—
13	''(i) an updated description of the cur
14	rent state and timeline for the development
15	of the blockchain system to which the dig
16	ital commodity relates, showing how and
17	when the blockchain is intended to be a
18	mature blockchain system;
19	''(ii) a description of the efforts of the
20	issuer and digital commodity related per
21	sons in developing the blockchain system to
22	which the digital commodity relates;
23	''(iii) the amount of money raised by
24	the digital commodity issuer in reliance on
25	section 4(a)(8), how much of that money

1	has been spent, and the general categories
2	of activities for which that money has been
3	spent and amounts spent per category; and
4	''(iv) financial statements, where ap
5	plicable.
6	''(B) CURRENT REPORTS.—A current re
7	port reflecting any material changes relevant to
8	the information previously reported to the Com
9	mission by the digital commodity issuer, which
10	shall be filed as soon as practicable after the
11	material change occurred, in accordance with
12	such rules as the Commission may prescribe as
13	necessary or appropriate in the public interest
14	or for the protection of investors.
15	''(4) RULEMAKING.—Not later than 360 days
16	after the date of the enactment of this section, the
17	Commission shall prescribe rules on requirements
18	applicable to issuers of digital commodities in reli
19	ance on section 4(a)(8).
20	''(5) TERMINATION OF CERTAIN REPORTING
21	REQUIREMENTS; POST-MATURITY RE REPORTING
22	QUIREMENTS.—
23	''(A) IN GENERAL.—The ongoing reporting
24	requirements under paragraph (3) shall not
25	apply to a digital commodity issuer 180 days

1	after the end of the covered fiscal year, if the
2	information with respect to the digital com
3	modity and the blockchain system to which it
4	relates described in subparagraphs (A) through
5	(C) of paragraph (2) is made publicly available
6	and the disclosure requirements under subpara
7	graph (C) of this paragraph are satisfied.
8	''(B) COVERED DEFINED.— FISCAL YEAR
9	In this paragraph, the term 'covered fiscal year'
10	means, with respect to a digital commodity, the
11	first fiscal year of a digital commodity issuer in
12	which the blockchain system to which such dig
13	ital commodity relates is certified as a mature
14	blockchain system under section 42 of the Secu
15	rities Exchange Act of 1934.
16	''(C) POST-MATURITY RE REPORTING
17	QUIREMENTS.—After the blockchain system to
18	which a digital commodity relates is certified as
19	a mature blockchain system under section 42 of
20	the Securities Exchange Act of 1934, any dig
21	ital commodity issuer that has filed a statement
22	under paragraph (1) to offer and sell an invest
23	ment contract involving a unit of a digital com
24	modity in reliance on section 4(a)(8) and is en
25	gaged in material ongoing efforts related to the

1	mature blockchain system shall disclose, in a
2	manner reasonably calculated to inform the
3	public, and at such frequency as the Commis
4	sion may prescribe, by rule, a description of
5	such efforts, including—
6	''(i) any participation in a decentral
7	ized governance system of such blockchain
8	system;
9	''(ii) any participation in alterations
10	or proposed alterations to the functionality
11	or operation of such blockchain system;
12	''(iii) the use or planned use of any
13	funds raised in reliance on section 4(a)(8)
14	or any rulemaking pursuant to section
15	202(c) of the CLARITY Act of 2025 in
16	such efforts;
17	''(iv) the amount of units of the dig
18	ital commodity, or rights thereto, owned
19	and controlled by such issuer and any use,
20	sale, trading, or other disposition thereof;
21	and
22	''(v) any affiliations of such issuer
23	material to the efforts of such issuer.
24	''(D) TERMINATION OF AND EXEMPTION
25	POST-MATURITY REQUIRE- FROM REPORTING

1	MENTS.—Not later than 270 days after the
2	date of the enactment of this section, the Com
3	mission shall issue rules—
4	''(i) for terminating the disclosure re
5	quirements described in subparagraph (C)
6	during the first fiscal year in which the
7	digital commodity issuer does not engage
8	in material ongoing efforts related to the
9	mature blockchain system; and
10	''(ii) to, as is necessary or appropriate
11	in the public interest or for the protection
12	of investors, exempt a digital commodity
13	issuer from the requirements described in
14	subparagraph (C) where only a de minimis
15	amount of market activity involving the
16	digital commodity of such digital com
17	modity issuer is taking place.
18	''(E) RULE CONSTRUCTION.—Nothing OF
19	in subparagraph (C) may be construed to make
20	any digital commodity described in such sub
21	paragraph a security.
22	''(c) REQUIREMENTS INTERMEDIARIES.—A per FOR
23	son acting as an intermediary in connection with the offer
24	or sale of an investment contract involving units of a dig
25	ital commodity in reliance on section 4(a)(8) shall—

''(1) register with the Commission as a broker or dealer; and

''(2) be a member of a national securities asso- ciation registered under section 15A of the Securi-ties Exchange Act of 1934 (15 U.S.C. 78o–3).

''(d) DISQUALIFICATION PROVISIONS.—The Commis- sion shall issue rules to apply the disqualification provi- sions under section 230.262 of title 17, Code of Federal Regulations, to the exemption provided under section 4(a)(8).

''(e) FAILURE TO MATURE.—

''(1) IN GENERAL.—Not later than 270 days after the date of the enactment of this section, the Commission shall issue rules applying such addi- tional obligations and disclosures for the digital com- modity issuers, digital commodity related persons, and digital commodity affiliated persons of a blockchain system described under subsection (b)(1) that does not become a mature blockchain system within the time period described in section 4(a)(8)(A) as are necessary or appropriate in the public interest or for the protection of investors. Such obligations and disclosures shall include the following:

1	''(A) DISCLOSURES.—Disclosures regard
2	ing the following:
3	''(i) FAILURE MATURE.—A de TO
4	tailed explanation of the reason that the
5	blockchain system has not become a ma
6	ture blockchain system within the time pe
7	riod described in section 4(a)(8)(A).
8	''(ii) DEVELOPMENT PLANS.—The fu
9	ture plans of development of the
10	blockchain system, including information
11	required under subsection (b)(3).
12	''(iii) RISK DISCLOSURES.— FACTOR
13	The material risks surrounding ownership
14	of a unit of a digital commodity that re
15	lates to a blockchain system described
16	under subsection (b)(1) that has not be
17	come a mature blockchain system within
18	the time period described in section
19	4(a)(8)(A).
20	''(B) OBLIGATIONS.—Transaction report
21	ing and beneficial ownership disclosure obliga
22	tions applicable to digital commodity related
23	persons and digital commodity affiliated per
24	sons of such blockchain system.

1	''(2) QUALIFICATION REQUIRED.—The Com
2	mission may not permit any additional reliance on
3	an exempt offering for the offer or sale of an invest
4	ment contract involving a unit of a digital com
5	modity by the issuer of the digital commodity related
6	to a blockchain system described under subsection
7	(a)(1) that has not become a mature blockchain sys
8	tem within the time period described in section
9	4(a)(8)(A) unless the Commission has qualified any
10	offering statement related to such exempt offering.''.
11	(b) ADDITIONAL EXEMPTIONS.—
12	(1) CERTAIN REGISTRATION REQUIREMENTS.—
13	Section 12(g)(6) of the Securities Exchange Act of
14	1934 (15 U.S.C. 78l(g)(6)) is amended by striking
15	''under section 4(6)'' and inserting ''under section
16	4(a)(6) or 4(a)(8)''.
17	(2) EXEMPTION REGULATION.— FROM STATE
18	Section 18(b)(4) of the Securities Act of 1933 (15
19	U.S.C. 77r(b)(4)) is amended—
20	(A) in subparagraph (B), by striking ''sec
21	tion 4(4)'' and inserting ''section 4(a)(4)'';
22	(B) in subparagraph (C), by striking ''sec
23	tion 4(6)'' and inserting ''section 4(a)(6)'';
24	(C) in subparagraph (F)—

1	(i) by striking ''section 4(2)'' each
2	place such term appears and inserting
3	''section 4(a)(2)''; and
4	(ii) by striking ''or'' at the end;
5	(D) in subparagraph (G), by striking the
6	period and inserting ''; or''; and
7	(E) by adding at the end the following:
8	''(H) section 4(a)(8).''.
9	(c) USE OTHER EXEMPTIONS.— OF
10	(1) RULE CONSTRUCTION.—Except as pro OF
11	vided in this subsection, nothing in this section or
12	the amendments made by this section may be con
13	strued as prohibiting the offer or sale of an invest
14	ment contract involving units of a digital commodity
15	in reliance on an exemption from registration under
16	the Securities Act of 1933, including as provided
17	under section 3, 4(a), or 19 of the Securities Act of
18	1933, other than that provided under section 4(a)(8)
19	of the Securities Act of 1933.
20	(2) RULEMAKINGS.—
21	(A) The Securities and Exchange Commis
22	sion may issue rules—
23	(i) to permit the issuer of a digital
24	commodity related to a blockchain system

described under section 4B(b)(1) of the

1	Securities Act of 1933 that has not become
2	a mature blockchain system within the
3	time period described in section 4(a)(8)(A)
4	of such Act, or the issuer of a digital com
5	modity described in subparagraph (B)(iii),
6	to utilize an exempt offering to offer or sell
7	an investment contract involving the digital
8	commodity, if the Commission qualifies
9	any offering statement related to such ex
10	empt offering; and
11	(ii) for the offer and sale of invest
12	ment contracts involving units of a digital
13	commodity by issuers that are not orga
14	nized under the laws of a State, a territory
15	of the United States, or the District of Co
16	lumbia.
17	(B) Not later than 270 days after the date
18	of the enactment of this section, the Securities
19	and Exchange Commission shall issue the fol
20	lowing rules:
21	(i) A rule requiring a digital com
22	modity issuer that last offered or sold an
23	investment contract involving units of a
24	digital commodity in reliance on an exemp
25	tion from registration under the Securities

1	Act of 1933, including as provided under
2	section 3, 4(a), or 19 of the Securities Act
3	of 1933, prior to the date of enactment of
4	this Act, to file a comparable set of disclo
5	sures to those described under section 4B
6	of the Securities Act of 1933 as the Com
7	mission determines appropriate based on
8	the exemption, the maturity of the
9	blockchain system to which such digital
10	commodity relates, and any material ongo
11	ing efforts of such digital commodity issuer
12	(provided that for blockchains certified as
13	a mature blockchain system under section
14	42 of the Securities Exchange Act of 1934,
15	such disclosures shall be comparable to
16	those under section 4B(b)(5)(C)), not later
17	than the later of—
18	(I) one year after the effective
19	date of this section; or
20	(II) the date of any secondary
21	market sale of such digital commodity
22	made in reliance on section 203.
23	(ii) A rule requiring a digital com
24	modity issuer that offers or sells an invest
25	ment contract involving units of a digital

1	commodity in reliance on an exemption
2	from registration under the Securities Act
3	of 1933, including as provided under sec
4	tion 3, 4(a), or 19 of the Securities Act of
5	1933, other than that provided under sec
6	tion 4(a)(8) of the Securities Act of 1933,
7	on or after the date of enactment of this
8	Act, to file a comparable set of disclosures
9	to those described under section 4B of the
10	Securities Act of 1933 as the Commission
11	determines appropriate based on the ex
12	emption, the maturity of the blockchain
13	system to which such digital commodity re
14	lates, and any material ongoing efforts of
15	such digital commodity issuer, prior to the
16	date of any secondary market sale of such
17	digital commodity made in reliance on sec
18	tion 203.
19	(iii) With respect to a digital com
20	modity where the digital commodity issuer
21	is required to file disclosures under clause
22	(i) or (ii) and where the blockchain system
23	to which the digital commodity relates is
24	not certified as a mature blockchain sys
25	tem pursuant to section 42 of the Securi-

1	ties Exchange Act of 1934 after the 4-year
2	period beginning on the date that the first
3	such disclosure is filed—
4	(I) a rule prohibiting the offer or
5	sale of an investment contract involv
6	ing units of the digital commodity un
7	less the Commission has qualified any
8	offering statement related to such
9	offer or sale, where such offer or sale
10	is permitted pursuant to subpara
11	graph (A)(i); and
12	(II) a rule requiring the digital
13	commodity issuer to make disclosures
14	comparable to those described in
15	4B(e)(1)(A) of the Securities Act of
16	1933.
17	(iv) A rule permitting a successor to
18	a digital commodity issuer, or such other
19	appropriate person as designated by the
20	Commission, to make the disclosures re
21	quired under clause (i), where such issuer
22	does not make the required disclosures.

SEC. 203. TREATMENT OF SECONDARY TRANSACTIONS IN DIGITAL COMMODITIES THAT ORIGINALLY INVOLVED INVESTMENT CONTRACTS.

(a) SECONDARY MARKET TREATMENT.—Notwith- standing any other provision of law, the offer or sale of a digital commodity that originally involved an investment contract by a person other than the issuer of such digital commodity, or an agent or underwriter thereof, shall be deemed not to be an offer or sale of such investment con- tract between the issuer of the investment contract involv- ing the digital commodity, or an agent or underwriter thereof, and the purchaser of such digital commodity under—

(1) the Securities Act of 1933 (15 U.S.C. 77a et seq.);

(2) the Investment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.);

(3) the Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.);

(4) the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.);

(5) the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.); and

(6) any applicable provisions of State law.

(b) END USER DISTRIBUTIONS NOT AN OFFER OR SALE OF A SECURITY.—An end user distribution does not involve the offer or sale of a security.

(c) AGENT DEFINED.—In this section and with re- spect to a digital commodity issuer, the term ''agent'' means any person directly or indirectly controlled by the issuer or under direct or indirect common control with the issuer.

SEC. 204. REQUIREMENTS FOR OFFERS AND SALES OF DIG- ITAL COMMODITIES BY DIGITAL COMMODITY RELATED PERSONS AND DIGITAL COM-MODITY AFFILIATED PERSONS.

The Securities Act of 1933 (15 U.S.C. 77a et seq.), as amended by section 202, is further amended by insert-ing after section 4B the following:

''SEC. 4C. REQUIREMENTS FOR OFFERS AND SALES OF DIG- ITAL COMMODITIES BY DIGITAL COMMODITY RELATED PERSONS AND DIGITAL COM-MODITY AFFILIATED PERSONS.

''(a) IN GENERAL.—It shall be a violation of this Act for a digital commodity affiliated person or a digital com- modity related person to offer or sell a digital commodity acquired directly from its issuer, or an agent or under-writer thereof, pursuant to an investment contract in reli-

ance on section 4(a)(8) or another exemption under this Act, other than as provided in this section.

''(b) COMMISSION JURISDICTION.—

''(1) Where a digital commodity affiliated per- son or a digital commodity related person offers or sells a digital commodity acquired directly from its issuer, or an agent or underwriter thereof, pursuant to an investment contract in reliance on section 4(a)(8), or another exemption under this Act, other than as provided in this section, such digital com- modity affiliated person or digital commodity related person shall be considered an issuer of such invest-ment contract.

''(2) For the purposes of this section, the Com- mission shall have jurisdiction and enforcement au- thority with respect to an offer or sale of a digital commodity described in subsection (a).

''(c) RESTRICTIONS ON DIGITAL COMMODITY RE- LATED PERSONS AND DIGITAL COMMODITY AFFILIATED PERSONS.—

''(1) PRIOR TO BEING A MATURE BLOCKCHAIN SYSTEM.—Prior to the blockchain system to which a digital commodity relates being certified as a mature blockchain system under section 42 of the Securities Exchange Act of 1934, units of the digital com-

1	modity acquired by a digital commodity related per
2	son or digital commodity affiliated person directly
3	from its issuer (or an agent or underwriter thereof)
4	pursuant to an investment contract in reliance on
5	section 4(a)(8), or another exemption under this
6	Act, may be offered or sold by such digital com
7	modity related person or digital commodity affiliated
8	person if—
9	''(A) reports with respect to such digital
10	commodity, where required under section
11	4B(b)(3) (or, with respect to a digital com
12	modity not issued in reliance on section 4(a)(8),
13	a comparable set of reports where required by
14	the Commission) have been filed with the Com
15	mission;
16	''(B) the digital commodity related person
17	or digital commodity affiliated person has held
18	the units for not less than 12 months; and
19	''(C) the aggregate amount of the units of
20	the digital commodity offered or sold by the
21	digital commodity related person or digital com
22	modity affiliated person is—
23	''(i) in any 12-month period, or short
24	er period as the Commission may pre
25	scribe, not less than 5 percent or greater

1	than 20 percent of the total units of the
2	digital commodity acquired directly from
3	its issuer (or an agent or underwriter
4	thereof) by the digital commodity related
5	person or digital commodity affiliated per
6	son, as determined by the Commission pur
7	suant to paragraph (3); and
8	''(ii) an amount, as determined by the
9	Commission pursuant to paragraph (3),
10	not less than 30 percent or greater than
11	50 percent of the total units of the digital
12	commodity acquired directly from its issuer
13	(or an agent or underwriter thereof) by the
14	digital commodity related person or digital
15	commodity affiliated person.
16	''(2) AFTER BECOMING A MATURE BLOCKCHAIN
17	SYSTEM.—After the blockchain system to which a
18	digital commodity relates is certified as a mature
19	blockchain system under section 42 of the Securities
20	Exchange Act of 1934, units of the digital com
21	modity acquired by a digital commodity related per
22	son or digital commodity affiliated person directly
23	from its issuer (or an agent or underwriter thereof)
24	pursuant to an investment contract in reliance on

1	section 4(a)(8) or another exemption under this Act,
2	may be—
3	''(A) offered or sold by a digital commodity
4	related person; or
5	''(B) offered or sold by a digital com
6	modity affiliated person if—
7	''(i) information described in section
8	4B(b)(5)(C), where required (or, with re
9	spect to a digital commodity not issued in
10	reliance on section 4(a)(8), a comparable
11	set of information, where required) is pub
12	licly available;
13	''(ii) the digital commodity affiliated
14	person has held the units for not less than
15	the earlier of—
16	''(I) 12 months; or
17	''(II) 3 months following the date
18	on which the blockchain system is cer
19	tified as a mature blockchain system
20	under section 42 of the Securities Ex
21	change Act of 1934; and
22	''(iii) the aggregate amount of the
23	units of the digital commodity offered or
24	sold by the digital commodity affiliated
25	person in any 12-month period is an

1	amount, as determined by the Commission
2	pursuant to paragraph (3), not less than 5
3	percent or greater than 10 percent of the
4	total outstanding amount of the digital
5	commodity.
6	''(3) RULEMAKINGS REQUIRED.—Not later than
7	270 days after the date of the enactment of this sec
8	tion, consistent with protecting investors, maintain
9	ing fair, orderly, and efficient markets, and facili
10	tating capital formation, and to foster the develop
11	ment of mature blockchain systems, the Commission,
12	by rule, after notice and comment—
13	''(A) shall set the percentage amounts de
14	scribed in paragraphs (1)(C)(i), (1)(C)(ii), and
15	(2)(B)(iii); and
16	''(B) may provide an exemption from the
17	limitation described in paragraph (1)(C)(ii), if
18	the Commission requires any offer or sale pur
19	suant to such exemption of a digital commodity
20	related to a blockchain system that has failed to
21	become a mature blockchain system under this
22	Act or any rule promulgated hereunder to be
23	accompanied by the disclosures required under,
24	as applicable, section 4B(e)(1)(A) or section

202(c)(2)(B)(iii)(II) of the CLARITY Act of 2025.

''(d) RULES OF CONSTRUCTION.—For purposes of this section, the use of a digital commodity in the pro- grammatic functioning of the blockchain system to which it relates is not an offer or sale of a digital commodity. ''(e) MANIPULATIVE AND DECEPTIVE DEVICES; RE-PORTING.—

''(1) IN GENERAL.—It shall be unlawful for any digital commodity issuer, digital commodity related person, or digital commodity affiliated person, di- rectly or indirectly, by the use of any means or in- strumentality of interstate commerce or of the mails, to use or employ, in connection with the purchase or sale of any digital commodity, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

''(2) AFFIRMATIVE DEFENSE.—Not later than 270 days after the date of the enactment of this sec- tion, the Commission shall issue rules to implement paragraph (1), including by providing any affirma- tive defenses to an enforcement action thereunder as the Commission may prescribe as necessary or ap-

propriate in the public interest or for the protection of investors.

''(3) REPORTING.—Not later than 270 days after the date of the enactment of this section, the Commission shall issue rules to prescribe such trans- action reporting and beneficial ownership disclosure obligations applicable to digital commodity related persons and digital commodity affiliated persons, as necessary or appropriate in the public interest or for the protection of investors.

''(4) DIFFERENTIATION BETWEEN PERSONS.— In issuing rules required under paragraphs (2) and (3), the Commission shall differentiate between dig- ital commodity related persons and digital com- modity affiliated persons, as necessary or appro- priate in the public interest or for the protection of investors.

''(f) CERTAIN UNITS RECEIVED PRIOR TO ENACT- MENT.—A unit of a digital commodity received from the digital commodity issuer prior to the date of the enact- ment of this section through an offer or sale of an invest- ment contract involving units of a digital commodity in reliance on an exemption from registration under this Act, including as provided under section 3, 4(a), or 19, may

be offered or sold by a digital commodity related person or digital commodity affiliated person, if—

''(1) the digital commodity issuer is no longer engaged in material ongoing efforts related to the blockchain system to which the digital commodity re- lates and the blockchain system to which the digital commodity relates is certified as a mature blockchain system under section 42 of the Securities Exchange Act of 1934; or

''(2) the appropriate disclosures required under section 202(c)(2)(B) of the CLARITY Act of 2025 have been made with the Commission.

''(g) RULEMAKING ON FURTHER USAGE OF DIGITAL COMMODITIES.— The Commission, consistent with pro- tecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation, as well as fos- tering the development of mature blockchain systems, may, by rule, exempt unconditionally or on stated terms or conditions, a digital commodity related person or a dig- ital commodity affiliated person, or any class thereof, from the requirements of this section for the offer or sale of a digital commodity, including for the purposes of pro-moting market liquidity.''.

SEC. 205. MATURE BLOCKCHAIN SYSTEM REQUIREMENTS. Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by adding at the end the following:

''SEC. 42. MATURE BLOCKCHAIN SYSTEMS.

''(a) CERTIFICATION OF BLOCKCHAIN SYSTEMS.—

''(1) CERTIFICATION.—A digital commodity issuer, digital commodity related person, digital com- modity affiliated person, decentralized governance system of the blockchain system, or a registered dig- ital commodity exchange, or any other appropriate person as designated by the Commission, may certify to the Commission that the blockchain system to which a digital commodity relates is a mature blockchain system.

''(2) FILING REQUIREMENTS.—A certification described under paragraph (1) shall be filed with the Commission, and include such information that is reasonably necessary to establish that the blockchain system is not controlled by any person or group of persons under common control, which may include information regarding—

''(A) the operation of the blockchain sys-tem;

''(B) the functionality of the related digital commodity;

1	''(C) how the market value of the digital
2	commodity is substantially derived from the
3	programmatic functioning of such blockchain
4	system;
5	''(D) any decentralized governance system
6	which relates to the blockchain system; and
7	''(E) the current roles, if any, of the digital
8	commodity issuer, digital commodity affiliated
9	persons, and digital commodity related persons
10	where such roles are material to the develop
11	ment or operation of such blockchain system or
12	the decentralized governance system of such
13	blockchain system.
14	''(3) REBUTTABLE PRESUMPTION.—The Com
15	mission may rebut a certification described under
16	paragraph (1) with respect to a blockchain system if
17	the Commission, within 60 days of receiving such
18	certification, determines that the blockchain system
19	is not a mature blockchain system.
20	''(4) CERTIFICATION REVIEW.—
21	''(A) IN GENERAL.—Any blockchain sys
22	tem that relates to a digital commodity for
23	which a certification has been made under para
24	graph (1) shall be considered a mature
25	blockchain system 60 days after the date on

1	which the Commission receives a certification
2	under paragraph (1), unless the Commission
3	notifies the person who made the certification
4	within such time that the Commission is stay
5	ing the certification due to—
6	''(i) an inadequate explanation by the
7	person making the certification; or
8	''(ii) any novel or complex issues
9	which require additional time to consider.
10	''(B) PUBLIC NOTICE.—The Commission
11	shall make the following available to the public
12	and provide a copy to the Commodity Futures
13	Trading Commission:
14	''(i) Each certification received under
15	paragraph (1).
16	''(ii) Each stay of the Commission
17	under this subsection, and the reasons
18	therefor.
19	''(iii) Any response from a person
20	making a certification under paragraph (1)
21	to a stay of the certification by the Com
22	mission.
23	''(C) CONSOLIDATION.—The Commission
24	may consolidate and treat as one submission
25	multiple certifications made under paragraph

1	(1) for the same blockchain system which re
2	lates to a digital commodity which are received
3	during the review period provided under this
4	paragraph.
5	''(5) STAY OF CERTIFICATION.—
6	''(A) IN GENERAL.—A notification by the
7	Commission pursuant to paragraph (4)(A) shall
8	stay the certification once for up to an addi
9	tional 120 days from the date of the notifica
10	tion.
11	''(B) PUBLIC PERIOD.—Before COMMENT
12	the end of the 60-day period described under
13	paragraph (4)(A), the Commission may begin a
14	public comment period of at least 30 days in
15	conjunction with a stay under this subsection.
16	''(6) DISPOSITION CERTIFICATION.—A cer OF
17	tification made under paragraph (1) shall—
18	''(A) become effective—
19	''(i) upon the publication of a notifica
20	tion from the Commission to the person
21	who made the certification that the Com
22	mission does not object to the certification;
23	or
24	''(ii) at the expiration of the certifi
25	cation review period; and

1	''(B) not become effective upon the publi
2	cation of a notification from the Commission to
3	the person who made the certification that the
4	Commission has rebutted the certification.
5	''(7) RECERTIFICATION.—With respect to a
6	blockchain system for which a certification has been
7	rebutted under this subsection, no person may make
8	a certification under paragraph (1) with respect to
9	such blockchain system during the 90-day period be
10	ginning on the date of such rebuttal.
11	''(8) APPEAL OF REBUTTAL.—
12	''(A) IN GENERAL.—If a certification is re
13	butted under this section, the person making
14	such certification may appeal the decision to
15	the United States Court of Appeals for the Dis
16	trict of Columbia, not later than 60 days after
17	the notice of rebuttal is made.
18	''(B) REVIEW.—In an appeal under sub
19	paragraph (A), the court shall have de novo re
20	view of the determination to rebut the certifi
21	cation.
22	''(b) MATURITY CRITERIA.—
23	''(1) SENSE CONGRESS.—It is the sense of OF
24	the Congress that protecting investors, maintaining

fair, orderly, and efficient markets, and facilitating

1	capital formation necessitates establishing clear cri
2	teria for blockchain systems to be deemed mature,
3	as well as enabling the Commission to develop, with
4	out prejudice to any such criteria codified in statute,
5	alternative criteria by which blockchain systems may
6	be considered not to be controlled by any person or
7	group of persons under common control in order to
8	accommodate changes in markets and technology.
9	''(2) IN GENERAL.—The Commission may issue
10	rules identifying conditions by which a blockchain
11	system, together with its related digital commodity,
12	shall be considered a mature blockchain system, con
13	sistent with the protection of investors, maintenance
14	of fair, orderly, and efficient markets, and the facili
15	tation of capital formation.
16	''(3) RULES OF CONSTRUCTION.—
17	''(A) Nothing in this subsection may be
18	construed to permit the Commission to impose
19	additional criteria to the criteria in subsection
20	(c) for certifying that a blockchain system is a
21	mature blockchain system pursuant to sub
22	section (c).
23	''(B) Nothing in this subsection or sub
24	section (c) may be construed to limit the Com
25	mission's ability to identify alternative condi-

1	tions and criteria by which a blockchain system
2	may be considered a mature blockchain system.
3	''(c) DEEMED MATURE.—
4	''(1) IN GENERAL.—Notwithstanding subsection
5	(b), for the purposes of subsection (a), a digital com
6	modity issuer, digital commodity related person, dig
7	ital commodity affiliated person, or decentralized
8	governance system of the blockchain system may es
9	tablish that a blockchain system, together with its
10	related digital commodity, is not controlled by any
11	person or group of persons under common control,
12	if the blockchain system, together with its related
13	digital asset, meets the requirements described in
14	paragraph (2) or (3).
15	''(2) CRITERIA SYS FOR ANY BLOCKCHAIN
16	TEM.—The requirements described in this paragraph
17	are the following:
18	''(A) SYSTEM VALUE.—
19	''(i) MARKET VALUE.—The digital
20	commodity has a value that is substantially
21	derived from the use and functioning of
22	the blockchain system.
23	''(ii) DEVELOPMENT OF VALUE MECH
24	COMPLETED.— ANISM SUBSTANTIALLY
25	Where the digital commodity issuer has

1	made public a development plan describing
2	how the digital commodity's value is rea
3	sonably expected to be derived from the
4	programmatic functioning of the
5	blockchain system, the development of such
6	mechanisms has been substantially com
7	pleted.
8	''(B) FUNCTIONAL SYSTEM.—The
9	blockchain system allows network participants
10	to engage in the activities the blockchain system
11	is intended to provide, including—
12	''(i) using, transmitting, or storing
13	value, or otherwise executing transactions,
14	on the blockchain system;
15	''(ii) deploying, executing, or accessing
16	software or services, or otherwise offering
17	or participating in services, deployed on or
18	integrated with the blockchain system;
19	''(iii) participating in the consensus
20	mechanism, transaction validation process,
21	or decentralized governance system of the
22	blockchain system; or
23	''(iv) operating any client, node,
24	validator, or other form of computational

1	infrastructure with respect to the
2	blockchain system.
3	''(C) OPEN SYS AND INTEROPERABLE
4	TEM.—The blockchain system—
5	''(i) is composed of source code that is
6	open source; and
7	''(ii) does not restrict or prohibit
8	based on the exercise of unilateral author
9	ity any person, other than a digital com
10	modity issuer, digital commodity related
11	person, or digital commodity affiliated per
12	son from engaging in the activities the
13	blockchain system is intended to provide,
14	including the activities described in sub
15	paragraph (B).
16	''(D) PROGRAMMATIC SYSTEM.—The
17	blockchain system operates, executes, and en
18	forces its operations and transactions based
19	solely on pre-established, transparent rules en
20	coded directly within the source code of the
21	blockchain system.
22	''(E) SYSTEM GOVERNANCE.—No person
23	or group of persons under common control—
24	''(i) has the unilateral authority, di
25	rectly or indirectly, through any contract,

1	arrangement, understanding, relationship,
2	or otherwise, to control or materially alter
3	the functionality, operation, or rules of
4	consensus or agreement of the blockchain
5	system or its related digital commodity; or
6	''(ii) has the unilateral authority to di
7	rect the voting, in the aggregate, of 20
8	percent or more of the outstanding voting
9	power of such blockchain system by means
10	of a related digital commodity, nodes or
11	validators, a decentralized governance sys
12	tem, or otherwise, in a blockchain system
13	which can be altered by a voting system.
14	''(F) IMPARTIAL SYSTEM.—No person or
15	group of persons under common control pos
16	sesses a unique permission or privilege with re
17	spect to functionality, operation, or rules of
18	consensus or agreement of the blockchain sys
19	tem or its related digital commodity, unless
20	such alteration—
21	''(i) addresses errors, regular mainte
22	nance, or cybersecurity risks of the
23	blockchain system that affect the pro
24	grammatic functioning of the blockchain
25	system; and

1	''(ii) is adopted through the consensus
2	or agreement of a decentralized governance
3	system.
4	''(G) DISTRIBUTED OWNERSHIP.—No dig
5	ital commodity issuer, digital commodity related
6	person, or digital commodity affiliated person
7	beneficially owns, in the aggregate, 20 percent
8	or more of the total amount of units of the dig
9	ital commodity.
10	''(3) OPTIONAL CRITERIA FOR PREEXISTING
11	BLOCKCHAIN SYSTEMS.—The requirements described
12	in this paragraph are that the blockchain system—
13	''(A) was created prior to the date of en
14	actment of this section;
15	''(B) met the requirements of subpara
16	graphs (A) through (F) of paragraph (2) prior
17	to the date of enactment of this section; and
18	''(C) at least 50 percent of the units of the
19	digital commodity related to the blockchain sys
20	tem are held by persons other than the digital
21	commodity issuer, a digital commodity related
22	person, or a digital commodity affiliated person.
23	''(d) DECENTRALIZED GOVERNANCE SYSTEM.—

''(1) For the purposes of this section, a decen- tralized governance system is not a 'person' or a 'group of persons under common control'.

''(2) A blockchain system, together with its dig- ital commodity, shall not be precluded from being considered a mature blockchain system solely based on a functional, administrative, clerical, or ministe- rial action of a decentralized governance system, in- cluding any such action taken by a person acting on behalf of and at the direction of the decentralized governance system, as determined by the Commis- sion and consistent with the protection of investors, maintenance of fair, orderly, and efficient markets, and the facilitation of capital formation.

''(e) RULEMAKING.—Not more than 270 days after the date of enactment of this section, the Commission shall issue rules to carry out this section.''.

SEC. 206. EFFECTIVE DATE.

Unless otherwise provided in this title, this title and the amendments made by this title shall take effect 360 days after the date of enactment of this Act, except that, to the extent a provision of this title requires a rule- making, the provision shall take effect on the later of— (1) 360 days after the date of enactment of this Act; or

(2) 60 days after the publication in the Federal Register of the final rule implementing the provision. TITLE III—REGISTRATION FOR INTERMEDIARIES AT THE SE- CURITIES AND EXCHANGE COMMISSION

SEC. 301. TREATMENT OF DIGITAL COMMODITIES AND PER-

MITTED PAYMENT STABLECOINS.

(a) SECURITIES ACT OF 1933.—Section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)), as amended by the GENIUS Act, is amended by striking the final sentence and inserting the following: ''The term does not include a digital commodity or permitted payment stablecoin.''.

(b) SECURITIES EXCHANGE ACT OF 1934.—Section 3(a)(10) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)), as amended by the GENIUS Act, is amended by striking the final sentence and inserting the following: ''The term does not include a digital commodity or permitted payment stablecoin.''.

(c) INVESTMENT ADVISERS ACT OF 1940.—Section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(a)) is amended—

(1) in paragraph (18), as amended by the GE-NIUS Act, by striking the final sentence and insert-

1	ing the following: ''The term does not include a dig
2	ital commodity or permitted payment stablecoin.'';
3	(2) by redesignating the second paragraph (29)
4	(relating to commodity pools) as paragraph (31);
5	and
6	(3) by adding at the end, the following:
7	''(32) DIGITAL COMMODITY-RELATED TERMS.—
8	The terms 'digital commodity' and 'permitted pay
9	ment stablecoin' have the meaning given those
10	terms, respectively, under section 2(a) of the Securi
11	ties Act of 1933 (15 U.S.C. 77b(a)).''.
12	(d) INVESTMENT COMPANY ACT 1940.—Section OF
13	2(a) of the Investment Company Act of 1940 (15 U.S.C.
14	80a–2) is amended—
15	(1) in paragraph (36), as amended by the GE
16	NIUS Act, by striking the final sentence and insert
17	ing the following: ''The term does not include a dig
18	ital commodity or permitted payment stablecoin.'';
19	and
20	(2) by adding at the end, the following:
21	''(55) DIGITAL COMMODITY-RELATED TERMS.—
22	The terms 'digital commodity' and 'permitted pay
23	ment stablecoin' have the meaning given those
24	terms, respectively, under section 2(a) of the Securi
25	ties Act of 1933 (15 U.S.C. 77b(a)).''.

Act of 1970 (15 U.S.C. 78lll) is amended—

(1) in paragraph (14), as amended by the GE- NIUS Act, by striking the final sentence and insert- ing the following: ''The term does not include a dig- ital commodity or permitted payment stablecoin, as such terms are defined, respectively, under section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a))''; and

(2) by adding at the end the following:

''(15) TREATMENT OF PERMITTED PAYMENT STABLECOINS.—A permitted payment stablecoin, as defined in section 2(a) of the Securities Act of 1933, shall not qualify as 'cash' and a claim for a per- mitted payment stablecoin shall not qualify as a 'claim for cash'.''.

SEC. 302. ANTI-FRAUD AUTHORITY OVER PERMITTED PAY-

MENT STABLECOINS AND CERTAIN DIGITAL COMMODITY TRANSACTIONS.

(a) IN GENERAL.—Section 10 of the Securities Ex-change Act of 1934 (15 U.S.C. 78j) is amended—

(1) by moving subsection (c) so as to appear after subsection (b);

(2) by inserting after subsection (c) the fol-lowing:

''(d) To use or employ, in connection with the pur- chase or sale of any permitted payment stablecoin or dig- ital commodity, by or through, as applicable, a broker, dealer, national securities exchange, or an alternative trading system, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appro- priate in the public interest or for the protection of inves-tors.''; and

(3) by adding at the end the following: ''Rules promulgated under subsection (b) that prohibit fraud, manipulation, or insider trading (but not rules imposing or specifying reporting or record- keeping requirements, procedures, or standards as prophylactic measures against fraud, manipulation, or insider trading), and judicial precedents decided under subsection (b) and rules promulgated there- under that prohibit fraud, manipulation, or insider trading, shall apply with respect to permitted pay- ment stablecoin and digital commodity transactions engaged in by or through a broker or dealer or through an alternative trading system or, as applica-ble, a national securities exchange to the same ex-

tent as they apply to securities transactions. Judicial precedents decided under section 17(a) of the Secu- rities Act of 1933 and sections 9, 15, 16, 20, and 21A of this title, and judicial precedents decided under applicable rules promulgated under such sec- tions, shall apply to permitted payment stablecoins and digital commodities with respect to those cir- cumstances in which the permitted payment stablecoins and digital commodities are, as applica- ble, brokered, traded, or custodied by or through a broker or dealer or through an alternative trading system or a national securities exchange to the same extent as they apply to securities.''.''.

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

''SEC. 6A. TREATMENT OF TRANSACTIONS IN PERMITTED PAYMENT STABLECOINS.

''(a) AUTHORITY TO BROKER, TRADE, AND CUSTODY PERMITTED PAYMENT STABLECOINS.—Permitted pay- ment stablecoins may be brokered, traded, or custodied by a broker or dealer or through an alternative trading sys-tem or national securities exchange.

''(b) COMMISSION JURISDICTION.—The Commission shall only have jurisdiction over a transaction in a per- mitted payment stablecoin with respect to those cir- cumstances in which a permitted payment stablecoin is brokered, traded, or custodied— ''(1) by a broker or dealer; ''(2) through a national securities exchange; or ''(3) through an alternative trading system. ''(c) LIMITATION.—Subsection (b) shall only apply to a transaction described in subsection (b) for the purposes of regulating the offer, execution, solicitation, or accept- ance of a permitted payment stablecoin in those cir- cumstances in which the permitted payment stablecoin is brokered, traded, or custodied— ''(1) by a broker or dealer; ''(2) through a national securities exchange; or ''(3) through an alternative trading system.''. SEC. 303. ELIGIBILITY OF ALTERNATIVE TRADING SYS- TEMS. (a) IN GENERAL.—Section 5 of the Securities Ex- change Act of 1934 (15 U.S.C. 78e) is amended— (1) by striking ''It'' and inserting the following: ''(a) IN GENERAL.—It''; and (2) by adding at the end the following: ''(b) DIGITAL COMMODITY PROTECTIONS.—

1	''(1) IN GENERAL.—The Commission may not
2	preclude a trading platform from operating pursuant
3	to a covered exemption to exchange registration
4	under section 6 of this title on the basis that the as
5	sets traded or to be traded on such platform in
6	clude—
7	''(A) digital commodities or permitted pay
8	ment stablecoins; and
9	''(B) securities.
10	''(2) COVERED EXEMPTION.—In this sub
11	section, the term 'covered exemption' means an ex
12	emption—
13	''(A) described in subsection (a)(2); or
14	''(B) with respect to any other rule of the
15	Commission relating to the definition of 'ex
16	change'.''.
17	(b) SECURITIES EXCHANGE ACT 1934.—Section OF
18	3(a)(2) of the Securities Exchange Act of 1934 (15 U.S.C.
19	78c(a)(2)) is amended by adding at the end the following:
20	''Neither an alternative trading system predominantly fa
21	cilitating the trading of digital commodities, permitted
22	payment stablecoins, or both, relative to its securities trad
23	ed, nor a digital commodity exchange, is a 'facility' of an

(c) RULE OF CONSTRUCTION.—Nothing in this sec- tion, the amendments made by this section, or section 304 may be construed to—

(1) prohibit a national securities exchange from owning or operating any other type of alternative trading system; or

(2) create a presumption that any other type of alternative trading system owned or operated by a national securities exchange is a facility of that ex-change.

SEC. 304. RULEMAKING FOR DUAL-REGISTERED ENTITIES.

(a) CONFLICT OF INTEREST POLICIES AND PROCE- DURES.—Each person or entity dual-registered with the Commodity Futures Trading Commission as permitted under section 15(p) of the Securities Exchange Act of 1934 shall establish, maintain, and, as applicable, enforce and comply with written policies and procedures reason- ably designed to mitigate any conflicts of interest, includ- ing with respect to transactions or arrangements with af- filiates registered with the Securities and Exchange Com- mission, taking into consideration the nature of the busi-ness of such person or entity.

(b) EXEMPTION FROM DUPLICATIVE, CONFLICTING, OR UNDULY BURDENSOME PROVISIONS.—The Securities and Exchange Commission shall prescribe rules for a per-

son or entity with multiple registrations, where at least one such registration includes any dual registration per- mitted under section 15(p) of the Securities Exchange Act of 1934, to exempt the person or entity from duplicative, conflicting, or unduly burdensome provisions of the Secu- rities Exchange Act of 1934 and rules thereunder, to the extent such an exemption would protect investors, main- tain fair, orderly, and efficient markets, and facilitate cap-ital formation.

(c) IMPLEMENTING ORGANIZATIONS.—The Securities and Exchange Commission shall require any registered na- tional securities association that has as a member a reg- istered broker or registered dealer that is registered with the Commodity Futures Trading Commission as a digital commodity broker or digital commodity dealer as per- mitted under section 15(p)(1) of the Securities Exchange Act of 1934 or otherwise transacts in permitted payment stablecoins to revise such rules as may be necessary to further the purposes of and compliance with this section. (d) MEMORANDUM OF UNDERSTANDING.—The Secu- rities and Exchange Commission shall enter into a memo- randum of understanding with the Commodity Futures Trading Commission to ensure—

(1) non-duplicative supervision and enforcement with respect to registrants of the Securities and Ex-

change Commission dual-registered with the Com- modity Futures Trading Commission as permitted under section 15(p) of the Securities Exchange Act of 1934; and

(2) appropriate information sharing between the Commissions to further the purposes of and compliance with this section, the Securities Ex- change Act of 1934, and the Commodity Exchange Act.

(e) RULE OF CONSTRUCTION.—Nothing in this sec- tion shall be construed to limit the anti-fraud, anti-manip- ulation, or false reporting enforcement authorities of the Commodity Futures Trading Commission with respect to a contract of sale of a commodity and persons effecting such contracts.

SEC. 305. MODERNIZATION OF RECORDKEEPING REQUIRE-

MENTS.

(a) IN GENERAL.—For purposes of books and records requirements for brokers, dealers, transfer agents, national securities exchanges under the Securities and Ex- change Act of 1934 (15 U.S.C. 78a et seq.), investment advisers under the Investment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.), and investment companies under the Investment Company Act of 1940 (15 U.S.C. 80a– 1 et seq.), a person may, consistent with any rules promul-

gated under subsection (b), utilize records from a blockchain system.

(b) REVISION OF RULES.—Not later than 180 days after the date of enactment of this Act, the Securities and Exchange Commission shall issue and revise such rules as may be necessary to implement this section.

SEC. 306. EXEMPTIVE AUTHORITY.

Section 28 of the Securities Act of 1933 (15 U.S.C. 77z–3) is amended by striking ''by rule or regulation'' and inserting ''by rule, regulation, or order''.

SEC. 307. ADDITIONAL REGISTRATIONS WITH THE COM-MODITY FUTURES TRADING COMMISSION.

Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o) is amended by adding at the end the fol-lowing:

''(p) ADDITIONAL REGISTRATIONS WITH THE COM-MODITY FUTURES TRADING COMMISSION.—

''(1) REGISTERED BROKERS AND DEALERS.—A registered broker or registered dealer shall be per- mitted to maintain a registration with the Com- modity Futures Trading Commission as a digital commodity broker or digital commodity dealer.

''(2) NATIONAL SECURITIES EXCHANGES.—A national securities exchange or affiliate thereof shall be permitted to maintain a registration with the

1	Commodity Futures Trading Commission as a dig
2	ital commodity exchange.
3	''(3) ALTERNATIVE TRADING SYSTEMS.—An al
4	ternative trading system, and the operator thereof,
5	shall be permitted to maintain a registration with
6	the Commodity Futures Trading Commission as a
7	digital commodity exchange.
8	''(4) NOTICE OF APPLICATION.—Any person or
9	entity described in paragraph (1) through (3) shall
10	provide to the Securities and Exchange Commission,
11	at such time and in such form and manner as the
12	Securities and Exchange Commission shall prescribe,
13	notice of any application to register with the Com
14	modity Futures Trading Commission as a digital
15	commodity broker, digital commodity dealer, or dig
16	ital commodity exchange.''.
17	SEC. 308. EXEMPTING DIGITAL COMMODITIES FROM STATE
18	SECURITIES LAWS.
19	(a) COVERED SECURITY.—Section 18(b) of the Secu
20	rities Act of 1933 (15 U.S.C. 77r(b)) is amended by add
21	ing at the end the following:
22	''(5) EXEMPTION DIG IN CONNECTION WITH
23	COMMODITIES.—A digital commodity shall be ITAL
24	treated as a covered security.''.

(b) RULE OF CONSTRUCTION.—Nothing in this sec- tion, section 202, or the amendments made by such sec- tions may be construed to limit the existing authority de- scribed in section 18(c)(1) of the Securities Act of 1933 (15 U.S.C. 77r(c)(1)) of a securities commission (or any agency or office performing like functions) of any State with respect to a covered security or any security.

SEC. 309. EXCLUSION FOR DECENTRALIZED FINANCE AC-TIVITIES.

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

''SEC. 15H. DECENTRALIZED FINANCE ACTIVITIES NOT SUB-JECT TO THIS ACT.

''(a) IN GENERAL.—Notwithstanding any other pro- vision of this Act, a person shall not be subject to this Act and the regulations promulgated under this Act based on the person directly or indirectly engaging in any of the following activities, whether singly or in combination, in relation to the operation of a blockchain system or in rela-tion to a decentralized finance trading protocol:

''(1) Compiling network transactions or relay- ing, searching, sequencing, validating, or acting in a similar capacity.

1	''(2) Providing computational work, operating a
2	node or oracle service, or procuring, offering, or uti
3	lizing network bandwidth, or providing other similar
4	incidental services.
5	''(3) Providing a user-interface that enables a
6	user to read and access data about a blockchain sys
7	tem.
8	''(4) Developing, publishing, constituting, ad
9	ministering, maintaining, or otherwise distributing a
10	blockchain system or a decentralized finance trading
11	protocol.
12	''(5) Developing, publishing, constituting, ad
13	ministering, maintaining, or otherwise distributing a
14	decentralized finance messaging system, or operating
15	or participating in a liquidity pool, for the purpose
16	of executing a spot contract for the purchase or sale
17	of a digital commodity in relation to a decentralized
18	finance trading protocol.
19	''(6) Developing, publishing, constituting, ad
20	ministering, maintaining, or otherwise distributing
21	software or systems that create or deploy hardware
22	or software, including wallets or other systems, fa
23	cilitating an individual user's own personal ability to
24	keep, safeguard, or custody the user's digital assets
25	or related private keys.

''(b) EXCEPTIONS.—Subsection (a) shall not apply to the anti-fraud and anti-manipulation authorities of the Commission.''.

SEC. 310. TREATMENT OF CUSTODY ACTIVITIES BY BANK-ING INSTITUTIONS.

(a) TREATMENT OF CUSTODY ACTIVITIES.—The ap- propriate Federal banking agency, the National Credit Union Administration (in the case of a credit union), and the Securities and Exchange Commission may not require a depository institution, national bank, Federal credit union, State credit union, trust company, broker, or deal-er, or any affiliate thereof (the ''entity'')—

(1) to include assets held in custody that are not accounted for as assets of the entity as a liabil- ity on the financial statement or balance sheet of the entity, including digital commodity or permitted pay- ment stablecoin custody or safekeeping services; and (2) to hold regulatory capital against assets, in- cluding reserves backing such assets, in custody or safekeeping, except as necessary to mitigate against operational risks inherent with the custody or safe-keeping services, as determined by—

(A) the appropriate Federal banking agen-cy;

(B) the National Credit Union Administra
tion (in the case of a credit union);
(C) a State bank supervisor;
(D) a State credit union supervisor (as de
fined in section 6003 of the Anti-Money Laun
dering Act of 2020 (31 U.S.C. 5311 note)); or
(E) the Securities and Exchange Commis
sion (in the case of a broker or dealer).
(b) DEFINITIONS.—In this section:
(1) BANKING TERMS.—The terms ''appropriate
Federal banking agency'', ''depository institution'',
''national bank'', and ''State bank supervisor'' have
the meaning given those terms, respectively, under
U.S.C. 1813).
(2) CREDIT TERMS.—The terms ''Fed UNION
meaning given those terms, respectively, under sec
1752).
section 3 of the Federal Deposit Insurance Act (12 eral credit union'' and ''State credit union'' have the tion 101 of the Federal Credit Union Act (12 U.S.C. SEC. 311. BROKER AND DEALER DISCLOSURES REGARDING
THE TREATMENT OF ASSETS.
(a) IN
GENERAL.—Not later than 270 days after the date of the enactment of this Act, the Securities and Ex

closures regarding the treatment of customer assets in the event of an insolvency, resolution, or liquidation pro- ceeding to be provided by a registered broker or dealer to an investor before a digital commodity, a permitted pay- ment stablecoin, or an investment contract involving a unit of a digital commodity is received, acquired, or held by the broker or dealer for the account of the investor, which shall include, as necessary or appropriate for the protec-tion of investors—

(1) a description of the manner in which any digital commodity, permitted payment stablecoin, or investment contact involving a unit of a digital com- modity received, acquired, or held by the broker or dealer for the account of such investor would be treated in an insolvency, resolution, or liquidation proceeding with respect to the broker or dealer under—

18	(A) title II of the Dodd-Frank Wall Street
19	Reform and Consumer Protection Act (12
20	U.S.C. 5381 et seq.);
21	(B) the Securities Investor Protection Act
22	of 1970 (15 U.S.C. 78aaa et seq.); or

(C) as applicable, chapter 7 or chapter 11 of title 11, United States Code; and

1	(2) how the treatment described in paragraph
2	(1) differs from the treatment of securities and cash
3	received, acquired, or held by the broker or dealer
4	for the account of such investor in the event of an
5	insolvency, resolution, or liquidation proceeding with
6	respect to the broker or dealer under each law de
7	scribed under subparagraph (A) through (C) of
8	paragraph (1).
9	SEC. 312. DIGITAL COMMODITY ACTIVITIES THAT ARE FI
10	NANCIAL IN NATURE.
11	(a) DIGITAL COMMODITY ACTIVITIES THAT ARE FI
12	NATURE.—Section 4(k)(4) of the Bank Hold NANCIAL IN
13	ing Company Act of 1956 (12 U.S.C. 1843(k)(4)) is
14	amended—
15	(1) in subparagraph (A), by striking ''or securi
16	ties'' and inserting '', securities, or digital commod
17	ities''; and
18	(2) in subparagraph (E), by inserting ''or dig
19	ital commodities'' before the period at the end.
20	(b) NATIONAL BANK ACTIVITY.—
21	(1) IN GENERAL.—A national bank may use a
22	digital asset or blockchain system to perform, pro
23	vide, or deliver any activity, function, product, or
24	service that the national bank is otherwise author

(2) RULE OF CONSTRUCTION.—Nothing in this subsection may be construed to exempt a national bank's performance, provision, or delivery of an ac- tivity, function, product, or service from a require- ment that would apply if the activity were not per- formed, provided, or delivered using a digital asset or blockchain system.

(c) INSURED STATE BANKS AND SUBSIDIARIES OF INSURED STATE BANKS.—For purposes of sections 24(a) and 24(d) of the Federal Deposit Insurance Act (12 U.S.C. 1831a(a) and (d)), all of the activities authorized for a national bank under subsection (b) that are principal activities shall be permissible for an insured State bank and subsidiary of an insured State bank.

SEC. 313. EFFECTIVE DATE; ADMINISTRATION.

Except as otherwise provided under this title, this title and the amendments made by this title shall take ef- fect 360 days after the date of enactment of this Act, ex- cept that, to the extent a provision of this title requires a rulemaking, the provision shall take effect on the later of—

(1) 360 days after the date of enactment of this Act; or

(2) 60 days after the publication in the Federal Register of the final rule implementing the provision.

SEC. 314. EDUCATIONAL MATERIAL REQUIREMENTS.

2	The Securities and Exchange Commission, in con
3	sultation with the Commodity Futures Trading Commis
4	sion, shall require any registered entity that facilitates the
5	trading of digital commodities or investment contracts in
6	volving units of a digital commodity to provide clear and
7	accessible educational materials to the public, including—
8	(1) an overview of how blockchain technology
9	functions;
10	(2) a description of common risks associated
11	with digital commodities;
12	(3) a description of the differences between dig
13	ital commodity markets and traditional financial
14	markets;
15	(4) information on reporting requirements re
16	lated to digital commodity transactions or invest
17	ment contracts involving units of a digital com
18	modity; and
19	(5) guidance on recognizing fraudulent schemes
20	and instructions for reporting suspected fraud.
21	SEC. 315. DISCRETIONARY SURPLUS FUND.
22	(a) IN GENERAL.—The dollar amount specified
23	under section 7(a)(3)(A) of the Federal Reserve Act (12
24	U.S.C. 289(a)(3)(A)) is reduced by $15,000,000.
25	(b) EFFECTIVE DATE.—The amendment made by
26	subsection (a) shall take effect on September 30, 2035.
	•HR 3633 EH

TITLE IV—REGISTRATION FOR DIGITAL COMMODITY INTER- MEDIARIES AT THE COM- MODITY FUTURES TRADING COMMISSION SEC. 401. COMMISSION JURISDICTION OVER DIGITAL COM- MODITY TRANSACTIONS. (a) SAVINGS CLAUSE.—Section 2(a)(1) of the Com-modity Exchange Act (7 U.S.C. 2(a)(1)) is amended by

adding at the end the following:

''(J) Except as expressly provided in this Act, nothing in the CLARITY Act of 2025 shall affect or apply to, or be interpreted to affect or apply to—

''(i) any agreement, contract, or transaction that is subject to this Act as— ''(I) a contract of sale of a com- modity for future delivery or an op- tion on such a contract; ''(II) a swap; ''(III) a security futures product; ''(IV) an option authorized under section 4c of this Act;

''(V) an agreement, contract, or transaction described in subparagraph

1	(C)(i) or (D)(i) of subsection (c)(2) of
2	this section; or
3	''(VI) a leverage transaction au
4	thorized under section 19; or
5	''(ii) the activities of any person with
6	respect to any such an agreement, con
7	tract, or transaction.''.
8	(b) LIMITATION AUTHORITY OVER PERMITTED ON
9	PAYMENT STABLECOINS.—Section 2(c)(1) of the Com
10	modity Exchange Act (7 U.S.C. 2(c)(1)) is amended—
11	(1) in subparagraph (F), by striking ''or'' at
12	the end;
13	(2) in subparagraph (G), by striking the period
14	and inserting ''; or''; and
15	(3) by adding at the end the following:
16	''(H) permitted payment stablecoins.''.
17	(c) COMMISSION JURISDICTION OVER FINANCING
18	AGREEMENTS.—Section 2(c)(2)(D) of the Commodity Ex
19	change Act (7 U.S.C. 2(c)(2)(D)) is amended—
20	(1) in clause (ii)(I), by inserting after ''para
21	graph (1)'' the following: ''(other than an agree
22	ment, contract, or transaction in a permitted pay
23	ment stablecoin)''; and
24	(2) by redesignating clause (iv) as clause (v)
25	and inserting after clause (iii) the following:

1	''(iv) AGREEMENTS FI FOR MARGIN
2	NANCING.—Notwithstanding clause (iii), a
3	digital commodity broker may, subject to
4	the requirements of section 4u(c)(2), offer
5	to or enter into an agreement for margin
6	financing with a customer for the purchase
7	or sale of a digital commodity, provided
8	any purchase or sale made pursuant to the
9	agreement shall result in the delivery of
10	the digital commodity into or from an ac
11	count carried for the customer by the dig
12	ital commodity broker, as determined by
13	the Commission by rule or regulation,
14	based on commercial spot market prac
15	tices.''.
16	(d) COMMISSION AUTHORITY OVER CERTAIN DIG
17	COMMODITY STABLECOIN SPOT TRANS ITAL AND
18	ACTIONS.—Section 2(c)(2) of the Commodity Exchange
19	Act (7 U.S.C. 2(c)(2)) is amended by adding at the end
20	the following:
21	''(F) COMMISSION JURISDICTION WITH RE
22	TRANS SPECT TO DIGITAL COMMODITY
23	ACTIONS.—
24	''(i) IN GENERAL.—Subject to sec
25	tions 6d and 12(e), the Commission shall

1	have exclusive jurisdiction with respect to
2	any account, agreement, contract, or trans
3	action involving a contract of sale of a dig
4	ital commodity or tradable asset (as de
5	fined in section 4x) in interstate commerce,
6	including in a digital commodity or
7	tradable asset (as so defined) cash or spot
8	market, that is offered, solicited, traded,
9	facilitated, executed, cleared, reported, or
10	otherwise dealt in—
11	''(I) on or subject to the rules of
12	a registered entity or an entity that is
13	required to be registered as a reg
14	istered entity; or
15	''(II) by any other entity reg
16	istered, or required to be registered,
17	with the Commission.
18	''(ii) LIMITATIONS.—Clause (i) shall
19	not apply with respect to—
20	''(I) custodial or depository ac
21	tivities for a digital commodity of an
22	entity regulated by an appropriate
23	Federal banking agency or a State
24	bank supervisor (within the meaning

1	of section 3 of the Federal Deposit In
2	surance Act); or
3	''(II) an offer or sale of an in
4	vestment contract involving a digital
5	commodity or of a securities offer or
6	sale involving a digital commodity.
7	''(iii) MIXED TRANS DIGITAL ASSET
8	ACTIONS.—
9	''(I) IN GENERAL.—Clause (i)
10	shall not apply to a mixed digital
11	asset transaction.
12	''(II) REPORTS DIG ON MIXED
13	TRANSACTIONS.—A dig ITAL ASSET
14	ital commodity issuer, digital com
15	modity related person, digital com
16	modity affiliated person, or other per
17	son registered with the Securities and
18	Exchange Commission that engages in
19	a mixed digital asset transaction,
20	shall, on request of the Commission,
21	open to inspection and examination by
22	the Commission all books and records
23	relating to the mixed digital asset
24	transaction, subject to the confiden-

1	tiality and disclosure requirements of
2	section 8.
3	''(G) AGREEMENTS, CONTRACTS, AND
4	TRANSACTIONS IN STABLECOINS.—
5	''(i) TREATMENT OF PERMITTED PAY
6	COMMISSION-REG MENT STABLECOINS ON
7	ISTERED ENTITIES.—Subject to clauses (ii)
8	and (iii), the Commission shall have juris
9	diction over a cash or spot agreement, con
10	tract, or transaction in a permitted pay
11	ment stablecoin that is offered, offered to
12	enter into, entered into, executed, solicited,
13	or accepted, or for which the execution of
14	is confirmed—
15	''(I) on or subject to the rules of
16	a registered entity; or
17	''(II) by any other entity reg
18	istered with the Commission.
19	''(ii) PERMITTED PAYMENT
20	RULES.—This STABLECOIN TRANSACTION
21	Act shall apply to a transaction described
22	in clause (i) only for the purpose of regu
23	lating the offer, execution, solicitation, or
24	acceptance of a cash or spot permitted
25	payment stablecoin transaction on a reg-

istered entity or by any other entity reg- istered with the Commission, as if the per- mitted payment stablecoin were a digital commodity.

''(iii) NO AUTHORITY OVER PER- MITTED PAYMENT STABLECOINS.—Not- withstanding clauses (i) and (ii), the Com- mission shall not make a rule or regula- tion, impose a requirement or obligation on a registered entity or other entity reg- istered with the Commission, or impose a requirement or obligation on a permitted payment stablecoin issuer, regarding the operation of a permitted payment stablecoin issuer or a permitted payment stablecoin.''.

(e) CONFORMING AMENDMENTS.—The Commodity Exchange Act is amended—

(1) in section 1a(9) (7 U.S.C. 1a(9)), as amended by the GENIUS Act, by striking the sec-ond sentence; and

(2) in section 2(a)(1)(A) (7 U.S.C. 2(a)(1)(A)), in the 1st sentence, by inserting ''subparagraphs (F) and (G) of subsection (c)(2) of this section or'' be-fore ''section 19''.

1	SEC. 402. REQUIRING FUTURES COMMISSION MERCHANTS
2	TO USE QUALIFIED DIGITAL ASSET
3	CUSTODIANS.
4	Section 4d of the Commodity Exchange Act (7 U.S.C.
5	6d) is amended—
6	(1) in subsection (a)(2)—
7	(A) in the 1st proviso, by striking ''any
8	bank or trust company'' and inserting ''any
9	bank, trust company, or qualified digital asset
10	custodian, as applicable,''; and
11	(B) by inserting '': Provided further, That
12	any such property that is a digital asset shall
13	be held in a qualified digital asset custodian''
14	before the period at the end; and
15	(2) in subsection (f)(3)(A)(i), by striking ''any
16	bank or trust company'' and inserting ''any bank,
17	trust company, or qualified digital asset custodian''.
18	SEC. 403. TRADING CERTIFICATION AND APPROVAL FOR
19	DIGITAL COMMODITIES.
20	Section 5c of the Commodity Exchange Act (7 U.S.C.
21	7a–2) is amended—
22	(1) in subsection (a), by striking ''5(d) and
23	5b(c)(2)'' and inserting ''5(d), 5b(c)(2), and 5i(c)'';
24	(2) in subsection (b)—

1	(A) in each of paragraphs (1) and (2), by
2	inserting ''digital commodity exchange,'' before
3	''derivatives''; and
4	(B) in paragraph (3), by inserting ''digital
5	commodity exchange,'' before ''derivatives'' each
6	place it appears;
7	(3) in subsection (c)—
8	(A) in paragraph (2), by inserting ''or par
9	ticipants'' before ''(in a'';
10	(B) in paragraph (4)(B), by striking
11	''1a(10)'' and inserting ''1a(9)''; and
12	(C) in paragraph (5), by adding at the end
13	the following:
14	''(D) SPECIAL COM RULES FOR DIGITAL
15	CONTRACTS.—In certifying any new MODITY
16	rule or rule amendment, or listing any new con
17	tract or instrument, in connection with a con
18	tract of sale of a commodity for future delivery,
19	option, swap, or other agreement, contract, or
20	transaction, that is based on or references a
21	digital commodity, a registered entity shall
22	make or rely on a certification under subsection
23	(d) for the digital commodity.''; and
24	(4) by inserting after subsection (c) the fol
25	lowing:

''(d) CERTIFICATIONS FOR DIGITAL COMMODITY TRADING.—

3	''(1) IN GENERAL.—Notwithstanding subsection
4	(c), for the purposes of listing or offering a digital
5	commodity for trading in a digital commodity cash
6	or spot market, an eligible entity shall submit a
7	written certification to the Commission that the dig
8	ital commodity meets the requirements of this Act
9	(including the regulations prescribed under this
10	Act).
11	''(2) CONTENTS OF THE CERTIFICATION.—
12	''(A) IN GENERAL.—In making a written
13	certification under this paragraph, the eligible
14	entity shall furnish to the Commission an anal
15	ysis of how the digital commodity meets the re
16	quirements of section 5i(c)(3).
17	''(B) RELIANCE DISCLO ON PRIOR
18	SURES.—In making a certification under this
19	subsection, an eligible entity may rely on the
20	records and disclosures of any relevant person
21	registered with the Securities and Exchange
22	Commission or other State or Federal agency.
23	''(3) MODIFICATIONS.—

1	''(A) IN GENERAL.—An eligible entity shall
2	modify a certification made under paragraph
3	(1) to—
4	''(i) account for significant changes in
5	any information provided to the Commis
6	sion under paragraph (2)(A)(ii); or
7	''(ii) permit or restrict trading in
8	units of a digital commodity held by a dig
9	ital commodity related person or a digital
10	commodity affiliated person.
11	''(B) RECERTIFICATION.—Modifications
12	required by this subsection shall be subject to
13	the same disapproval and review process as a
14	new certification under paragraphs (4) and (5).
15	''(4) DISAPPROVAL.—
16	''(A) IN GENERAL.—The written certifi
17	cation described in paragraph (1) shall become
18	effective unless the Commission finds that the
19	listing of the digital commodity is inconsistent
20	with the requirements of this Act or the rules
21	and regulations prescribed under this Act.
22	''(B) ANALYSIS REQUIRED.—The Commis
23	sion shall include, with any findings referred to
24	in subparagraph (A), a detailed analysis of the
25	factors on which the decision was based.

1	''(C) PUBLIC FINDINGS.—The Commission
2	shall make public any disapproval decision, and
3	any related findings and analysis, made under
4	this paragraph.
5	''(5) REVIEW.—
6	''(A) IN GENERAL.—Unless the Commis
7	sion makes a disapproval decision under para
8	graph (4), the written certification described in
9	paragraph (1) shall become effective, pursuant
10	to the certification by the eligible entity and no
11	tice of the certification to the public (in a man
12	ner determined by the Commission) on the date
13	that is—
14	''(i) 20 business days after the date
15	the Commission receives the certification
16	(or such shorter period as determined by
17	the Commission by rule or regulation), in
18	the case of a digital commodity that has
19	not been certified under this section or for
20	which a certification is being modified
21	under paragraph (3); or
22	''(ii) 1 business day after the date the
23	Commission receives the certification (or
24	such shorter period as determined by the
25	Commission by rule or regulation) for any

1	digital commodity that has been certified
2	under this section.
3	''(B) EXTENSIONS.—The time for consid
4	eration under subparagraph (A) may be ex
5	tended through notice to the eligible entity that
6	there are novel or complex issues that require
7	additional time to analyze, that the explanation
8	by the submitting eligible entity is inadequate,
9	or of a potential inconsistency with this Act—
10	''(i) once, for 30 business days,
11	through written notice to the eligible entity
12	by the Commission; and
13	''(ii) once, for an additional 30 busi
14	ness days, through written notice to the el
15	igible entity from the Commission that in
16	cludes a description of any deficiencies
17	with the certification, including any—
18	''(I) novel or complex issues
19	which require additional time to ana
20	lyze;
21	''(II) missing information or in
22	adequate explanations; or
23	''(III) potential inconsistencies
24	with this Act.

''(6) PRIOR APPROVAL BEFORE REGISTRA-TION.—

''(A) IN GENERAL.—A person applying for registration with the Commission for the pur- poses of listing or offering a digital commodity for trading in a digital commodity cash or spot market may request that the Commission grant prior approval for the person to list or offer the digital commodity on being registered with the Commission.

''(B) REQUEST FOR PRIOR APPROVAL.—A person seeking prior approval under subpara- graph (A) shall furnish the Commission with a written certification that the digital commodity meets the requirements of this Act (including the regulations prescribed under this Act) and the information described in paragraph (2).

''(C) DEADLINE.—The Commission shall take final action on a request for prior approval not later than 90 business days after submis- sion of the request, unless the person submit- ting the request agrees to an extension of the time limitation established under this subpara-graph.

''(D) DISAPPROVAL.—

1	''(i) IN GENERAL.—The Commission
2	shall approve the listing of the digital com
3	modity unless the Commission finds that
4	the listing is inconsistent with this Act (in
5	cluding any regulation prescribed under
6	this Act).
7	''(ii) ANALYSIS REQUIRED.—The
8	Commission shall include, with any find
9	ings made under clause (i), a detailed anal
10	ysis of the factors on which the decision is
11	based.
12	''(iii) PUBLIC FINDINGS.—The Com
13	mission shall make public any disapproval
14	decision, and any related findings and
15	analysis, made under this paragraph.
16	''(7) ELIGIBLE ENTITY DEFINED.—In this sub
17	section, the term 'eligible entity' means a registered
18	entity or group of registered entities acting jointly.''.
19	SEC. 404. REGISTRATION OF DIGITAL COMMODITY EX
20	CHANGES.
21
22	is amended by inserting after section 5h the following:
23	''SEC. 5i. REGISTRATION OF DIGITAL COMMODITY EX
24	The Commodity Exchange Act (7 U.S.C. 1 et seq.) CHANGES.

''(1) REGISTRATION.—

2	''(A) IN GENERAL.—A trading facility that
3	offers or seeks to offer a cash or spot market
4	in at least 1 digital commodity shall register
5	with the Commission as a digital commodity ex
6	change.
7	''(B) APPLICATION.—A person desiring to
8	register as a digital commodity exchange shall

submit to the Commission an application in such form and containing such information as the Commission may require for the purpose of making the determinations required for ap-proval.

''(C) EXEMPTIONS.—A trading facility that offers or seeks to offer a cash or spot mar- ket in at least 1 digital commodity shall not be required to register under this section if the trading facility—

''(i) permits no more than a de mini- mis amount of trading activity, as the Commission may determine by rule or reg-ulation, in a digital commodity; or

''(ii) serves only customers in a single State, territory, or possession of the United States.

1	''(2) ADDITIONAL REGISTRATIONS.—
2	''(A) WITH THE COMMISSION.—In order to
3	foster the development of fair and orderly mar
4	kets, protect customers, and promote respon
5	sible innovation, the Commission—
6	''(i) shall prescribe rules to exempt an
7	entity registered with the Commission
8	under more than 1 section of this Act from
9	duplicative, conflicting, or unduly burden
10	some provisions of this Act and the rules
11	under this Act;
12	''(ii) shall prescribe rules to address
13	conflicts of interests and activities of the
14	entity; and
15	''(iii) may, after an analysis of the
16	risks and benefits, prescribe rules to pro
17	vide for portfolio margining.
18	''(B) WITH A REGISTERED FUTURES ASSO
19	CIATION.—
20	''(i) IN GENERAL.—A registered dig
21	ital commodity exchange shall become and
22	remain a member of a registered futures
23	association and comply with rules related
24	to such activity, if the registered digital
25	commodity exchange accepts customer

funds required to be segregated under sub-section (d).

3	''(ii) RULEMAKING REQUIRED.—The
4	Commission shall require any registered
5	futures association with a digital com
6	modity exchange as a member to provide
7	such rules as may be necessary to further
8	compliance with subsection (d), protect
9	customers, and promote the public interest.
10	''(C) REGISTRATION REQUIRED.—A person
11	required to be registered as a digital commodity
12	exchange under this section shall register with
13	the Commission as such regardless of whether
14	the person is registered with another State or
15	Federal regulator.

''(b) TRADING.—

''(1) PROHIBITION ON CERTAIN TRADING PRAC-TICES.—

''(A) Section 4b shall apply to any agree- ment, contract, or transaction in a digital com- modity as if the agreement, contract, or trans- action were a contract of sale of a commodity for future delivery.

''(B) Section 4c shall apply to any agree-ment, contract, or transaction in a digital com-

1	modity as if the agreement, contract, or trans
2	action were a transaction involving the purchase
3	or sale of a commodity for future delivery.
4	''(C) Section 4b–1 shall apply to any
5	agreement, contract, or transaction in a digital
6	commodity as if the agreement, contract, or
7	transaction were a contract of sale of a com
8	modity for future delivery.
9	''(2) PROHIBITION ON ACTING AS A
10	COUNTERPARTY.—
11	''(A) IN GENERAL.—A digital commodity
12	exchange or any affiliate of such an exchange
13	shall not trade on or subject to the rules of the
14	digital commodity exchange for its own account.
15	''(B) EXCEPTIONS.—Subject to any condi
16	tions, requirements, or limitations imposed by
17	the Commission pursuant to subparagraph (C),
18	a digital commodity exchange may engage in
19	trading on the exchange so long as the trading
20	is not solely for the purpose of the profit of the
21	exchange, including the following:
22	''(i) CUSTOMER DIRECTION.—A trans
23	action for, or entered into at the direction
24	of, or for the benefit of, an unaffiliated
25	customer.

1	''(ii) RISK MANAGEMENT.—A trans
2	action to manage the credit, market, and
3	liquidity risks associated with the digital
4	commodity business of the exchange.
5	''(iii) OPERATIONAL NEEDS.—A
6	transaction related to the operational
7	needs of the business of the digital com
8	modity exchange or its affiliate.
9	''(iv) FUNCTIONAL USE.—A trans
10	action related to the functional operation
11	of a blockchain system.
12	''(C) RULEMAKING.—The Commission
13	may, by rule, establish conditions, requirements,
14	or other limitations on the activities of a digital
15	commodity exchange and its affiliate permitted
16	pursuant to subparagraph (B) that are nec
17	essary for the protection of customers, the pro
18	motion of innovation, or the maintenance of
19	fair, orderly, and efficient markets.
20	''(D) NOTICE REQUIREMENT.—In order
21	for a digital commodity exchange or any affil
22	iate of a digital commodity exchange to engage
23	in trading on the affiliated exchange pursuant
24	to subsection (B), notice must be given to the
25	Commission that shall enumerate how any pro-

1	posed activity is consistent with the exceptions
2	in subsection (B) and the purposes of this Act.
3	''(c) CORE PRINCIPLES DIGITAL COMMODITY FOR
4	EXCHANGES.—
5	''(1) COMPLIANCE WITH CORE PRINCIPLES.—
6	''(A) IN GENERAL.—To be registered, and
7	maintain registration, as a digital commodity
8	exchange, a digital commodity exchange shall
9	comply with—
10	''(i) the core principles described in
11	this subsection; and
12	''(ii) any requirement that the Com
13	mission may impose by rule or regulation
14	pursuant to section 8a(5).
15	''(B) REASONABLE DISCRETION OF A DIG
16	EXCHANGE.—Unless other ITAL COMMODITY
17	wise determined by the Commission by rule or
18	regulation, a digital commodity exchange de
19	scribed in subparagraph (A) shall have reason
20	able discretion in establishing the manner in
21	which the digital commodity exchange complies
22	with the core principles described in this sub
23	section.
24	''(2) COMPLIANCE RULES.—A digital WITH
25	commodity exchange shall—

1	''(A) establish and enforce compliance with
2	any rule of the digital commodity exchange, in
3	cluding—
4	''(i) the terms and conditions of the
5	trades traded or processed on or through
6	the digital commodity exchange; and
7	''(ii) any limitation on access to the
8	digital commodity exchange;
9	''(B) establish and enforce trading, trade
10	processing, and participation rules that will
11	deter abuses and have the capacity to detect,
12	investigate, and enforce those rules, including
13	means—
14	''(i) to provide market participants
15	with impartial access to the market; and
16	''(ii) to capture information that may
17	be used in establishing whether rule viola
18	tions have occurred; and
19	''(C) establish rules governing the oper
20	ation of the exchange, including rules specifying
21	trading procedures to be used in entering and
22	executing orders traded or posted on the facil
23	ity.
24	''(3) LISTING COM STANDARDS FOR DIGITAL
25	MODITIES.—

''(A) IN GENERAL.—A digital commodity exchange shall establish policies and procedures to permit trading in a digital commodity only if—

5	''(i) reports with respect to the digital
6	commodity required under, as applicable,
7	section 4B(b)(3) or 4B(b)(5)(C) of the Se
8	curities Act of 1933 (or, with respect to a
9	digital commodity not issued in reliance on
10	section 4(a)(8) of the Securities Act of
11	1933, a comparable set of reports, where
12	required by the Securities and Exchange
13	Commission) have been filed with the Se
14	curities and Exchange Commission; or

''(ii) such other similar information as the Commission may, by rule or regulation require, that is related to the ongoing de- velopment plan of the blockchain system and is able to be publicly ascertained, has been provided to the public.

''(B) PUBLIC INFORMATION REQUIRE-MENTS.—

''(i) IN GENERAL.—A digital com-modity exchange shall—

1	''(I) permit trading in a digital
2	commodity only if the digital com
3	modity exchange reasonably deter
4	mines that the information required
5	by clause (ii) is correct, current, and
6	available to the public; and
7	''(II) establish policies and proce
8	dures to determine that the informa
9	tion provided pursuant to clause (ii) is
10	correct, current, and available to the
11	public.
12	''(ii) REQUIRED INFORMATION.—With
13	respect to a digital commodity and each
14	blockchain system to which the digital
15	commodity relates for which the digital
16	commodity exchange will make the digital
17	commodity available to the customers of
18	the digital commodity exchange, the fol
19	lowing information:
20	''(I) SOURCE CODE.—The source
21	code for any blockchain system to
22	which the digital commodity relates.
23	''(II) TRANSACTION HISTORY.—A
24	description of the steps necessary to
25	independently access, search, and

1	verify the transaction history of any
2	blockchain system to which the digital
3	commodity relates, to the extent any
4	such independent access, search, and
5	verification activities are technically
6	feasible with respect to the blockchain
7	system.
8	''(III) DIGITAL COMMODITY ECO
9	NOMICS.—A narrative description of
10	the purpose of any blockchain system
11	to which the digital commodity relates
12	and the operation of any such
13	blockchain system, including—
14	''(aa) information explaining
15	the launch and supply process,
16	including the number of digital
17	assets to be issued in an initial
18	allocation, the total number of
19	digital commodities to be created,
20	the release schedule for the dig
21	ital commodities, and the total
22	number of digital commodities
23	then outstanding;
24	''(bb) information detailing
25	any applicable consensus mecha-

1 nism or process for validating
2 transactions, method of gener
3 ating or mining digital commod
4 ities, and any process for burning
5 or destroying digital commodities
6 on the blockchain system;
7 ''(cc) an explanation of gov
8 ernance mechanisms for imple
9 menting changes to the
10 blockchain system or forming
11 consensus among holders of the
12 digital commodities; and
13 ''(dd) sufficient information
14 for a third party to create a tool
15 for verifying the transaction his
16 tory of the digital asset.
17 ''(IV) TRADING VOLUME AND
18 VOLATILITY.—The trading volume
19 and volatility of the digital commodity
20 on the exchange.
21 ''(V) ADDITIONAL INFORMA
22 TION.—Such additional information
23 as the Commission may determine by
24 rule to be necessary for a customer to
25 understand the financial and oper-

1	ational risks of a digital commodity,
2	and to be practically feasible to pro
3	vide.
4	''(iii) FORMAT.—The Commission
5	shall prescribe rules and regulations for
6	the standardization and simplification of
7	disclosures under clause (ii), including re
8	quiring that disclosures—
9	''(I) be conspicuous;
10	''(II) use plain language com
11	prehensible to customers;
12	''(III) are not drafted in a way
13	that presumes the customer already
14	has a base knowledge, familiarity, or
15	understanding of the basic termi
16	nology, operation, and function of
17	blockchain systems; and
18	''(IV) succinctly explain the in
19	formation that is required to be com
20	municated to the customer.
21	''(iv) RELIANCE DIS ON PREVIOUS
22	CLOSURES.—In complying with this sub
23	paragraph, a digital commodity exchange
24	may rely on and make available to the pub
25	lic relevant information publicly disclosed

1	to the Commission, the Securities and Ex
2	change Commission, or an appropriate
3	Federal banking agency.
4	''(C) DIGITAL COMMODITIES HELD BY RE
5	LATED AND DIGITAL COMMODITY AFFILIATED
6	PERSONS.—A digital commodity exchange shall
7	establish policies and procedures designed to
8	permit the trading of a unit of a digital com
9	modity acquired from the issuer and held by a
10	digital commodity affiliated person or a digital
11	commodity related person, only in accordance
12	with the requirements of section 4C of the Se
13	curities Act of 1933.
14	''(4) TREATMENT ASSETS.—A OF CUSTOMER
15	digital commodity exchange shall establish policies
16	and procedures that are designed to protect and en
17	sure the safety of customer money, assets, and prop
18	erty.

''(5) MONITORING OF TRADING AND TRADE PROCESSING.—

''(A) IN GENERAL.—A digital commodity exchange shall provide a competitive, open, and efficient market and mechanism for executing transactions that protects the price discovery process of trading on the exchange.

''(B) PROTECTION OF MARKETS AND MAR- KET PARTICIPANTS.—A digital commodity ex- change shall establish and enforce rules— ''(i) to protect markets and market participants from abusive practices com- mitted by any party, including abusive practices committed by a party acting as an agent for a participant; and ''(ii) to promote fair and equitable trading on the exchange. ''(C) TRADING PROCEDURES.—A digital commodity exchange shall— ''(i) establish and enforce rules or terms and conditions defining, or specifica- tions detailing— ''(I) trading procedures to be used in entering and executing orders traded on or through the facilities of the digital commodity exchange; and ''(II) procedures for trade proc- essing of digital commodities on or through the facilities of the digital commodity exchange; and ''(ii) monitor trading in digital com-modities to prevent manipulation, price

1	distortion, and disruptions, through sur
2	veillance, compliance, and disciplinary
3	practices and procedures, including meth
4	ods for conducting real-time monitoring of
5	trading and comprehensive and accurate
6	trade reconstructions.
7	''(6) ABILITY INFORMATION.—A TO OBTAIN
8	digital commodity exchange shall—
9	''(A) establish and enforce rules that will
10	allow the facility to obtain any necessary infor
11	mation to perform any of the functions de
12	scribed in this section;
13	''(B) provide the information to the Com
14	mission on request; and
15	''(C) have the capacity to carry out such
16	international information-sharing agreements as
17	the Commission may require.
18	''(7) EMERGENCY AUTHORITY.—A digital com
19	modity exchange shall adopt rules to provide for the
20	exercise of emergency authority, in consultation or
21	cooperation with the Commission or a registered en
22	tity, as is necessary and appropriate, including the
23	authority to facilitate the liquidation or transfer of
24	open positions in any digital commodity or to sus
25	pend or curtail trading in a digital commodity.

	157
1	''(8) TIMELY PUBLICATION OF TRADING INFOR
2	MATION.—
3	''(A) IN GENERAL.—A digital commodity
4	exchange shall make public timely information
5	on price, trading volume, and other trading
6	data on digital commodities to the extent pre

''(B) CAPACITY OF DIGITAL COMMODITY EXCHANGE.—A digital commodity exchange shall have the capacity to electronically capture and transmit trade information with respect to transactions executed on the exchange.

scribed by the Commission.

''(9) RECORDKEEPING AND REPORTING.—

''(A) IN GENERAL.—A digital commodity exchange shall—

''(i) maintain records relating to the business of the exchange, including a com- plete audit trail, in a form and manner ac- ceptable to the Commission for a period of 5 years;

''(ii) report to the Commission, in a form and manner acceptable to the Com- mission, such information as the Commis- sion determines to be necessary or appro-priate for the Commission to perform the

1	duties of the Commission under this Act;
2	and
3	''(iii) keep any such records of digital
4	commodities which relate to a security
5	open to inspection and examination by the
6	Securities and Exchange Commission.
7	''(B) INFORMATION-SHARING.—Subject to
8	section 8, and on request, the Commission shall
9	share information collected under subparagraph
10	(A) with—
11	''(i) the Board;
12	''(ii) the Securities and Exchange
13	Commission;
14	''(iii) each appropriate Federal bank
15	ing agency;
16	''(iv) each appropriate State bank su
17	pervisor (within the meaning of section 3
18	of the Federal Deposit Insurance Act);
19	''(v) the Financial Stability Oversight
20	Council;
21	''(vi) the Department of Justice; and
22	''(vii) any other person that the Com
23	mission determines to be appropriate, in
24	cluding—

''(I) foreign financial supervisors (including foreign futures authorities); ''(II) foreign central banks; and ''(III) foreign ministries. ''(C) CONFIDENTIALITY AGREEMENT.—Be- fore the Commission may share information with any entity described in subparagraph (B), the Commission shall receive a written agree- ment from the entity stating that the entity shall abide by the confidentiality requirements described in section 8 relating to the informa- tion on digital commodities that is provided. ''(D) PROVIDING INFORMATION.—A digital commodity exchange shall provide to the Com- mission (including any designee of the Commis-sion) information under subparagraph (A) in

such form and at such frequency as is required by the Commission.

''(10) ANTITRUST CONSIDERATIONS.—Unless necessary or appropriate to achieve the purposes of this Act, a digital commodity exchange shall not— ''(A) adopt any rules or take any actions that result in any unreasonable restraint of trade; or

1	''(B) impose any material anticompetitive
2	burden on trading.
3	''(11) CONFLICTS INTEREST.—The digital OF
4	commodity exchange shall establish and enforce
5	rules—
6	''(A) to minimize conflicts of interest in
7	the decision making processes of the contract
8	market; and
9	''(B) to establish a process for resolving
10	conflicts of interest referred to in subparagraph
11	(A).
12	''(12) FINANCIAL RESOURCES.—
13	''(A) IN GENERAL.—A digital commodity
14	exchange shall have adequate financial, oper
15	ational, and managerial resources, as deter
16	mined by the Commission, to discharge each re
17	sponsibility of the digital commodity exchange.
18	''(B) MINIMUM AMOUNT OF FINANCIAL RE
19	SOURCES.—A digital commodity exchange shall
20	possess financial resources that, at a minimum,
21	exceed the sum of—
22	''(i) the total amount that would en
23	able the digital commodity exchange to
24	cover the operating costs of the digital

1	commodity exchange for a 1-year period,
2	as calculated on a rolling basis; and
3	''(ii) the total amount necessary to
4	meet the financial obligations of the digital
5	commodity exchange to all customers of
6	the digital commodity exchange.
7	''(13) DISCIPLINARY PROCEDURES.—A digital
8	commodity exchange shall establish and enforce dis
9	ciplinary procedures that authorize the digital com
10	modity exchange to discipline, suspend, or expel
11	members or market participants that violate the
12	rules of the digital commodity exchange, or similar
13	methods for performing the same functions, includ
14	ing delegation of the functions to third parties.
15	''(14) GOVERNANCE FITNESS STANDARDS.—
16	''(A) GOVERNANCE ARRANGEMENTS.—A
17	digital commodity exchange shall establish gov
18	ernance arrangements that are transparent and
19	designed to permit consideration of the views of
20	market participants.
21	''(B) FITNESS STANDARDS.—A digital
22	commodity exchange shall establish and enforce
23	appropriate fitness standards for—
24	''(i) officers and directors; and

\mathbf{1}	"(ii) any individual or entity with di-
\overline{2}	rect access to, or control of, customer as-
3	sets.
\overline{4}	"(15) SYSTEM SAFEGUARDS.—A digital com-
5	modity exchange shall—
6	\lq\lq establish and maintain a program of
7	risk analysis and oversight to identify and mini-
8	mize sources of operational and security risks,
9	through the development of appropriate controls
10	and procedures, and automated systems in ac-
11	cordance with industry standards, that—
12	"(i) are reliable and secure; and
13	"(ii) have adequate scalable capacity;
14	"(B) establish and maintain emergency
15	procedures, backup resources, and a plan for
16	disaster recovery that allow for—
17	"(i) the timely recovery and resump-
18	tion of operations; and
19	"(ii) the fulfillment of the responsibil-
20	ities and obligations of the digital com-
21	modity exchange; and
22	"(C) periodically conduct tests to verify
23	that the backup resources of the digital com-
24	modity exchange are sufficient to ensure contin-
25	ued —

1	''(i) order processing and trade
2	matching;
3	''(ii) price reporting;
4	''(iii) market surveillance; and
5	''(iv) maintenance of a comprehensive
6	and accurate audit trail.
7	''(d) HOLDING CUSTOMER ASSETS.— OF
8	''(1) IN GENERAL.—A digital commodity ex
9	change shall hold customer money, assets, and prop
10	erty in a manner to minimize the risk of loss to the
11	customer or unreasonable delay in customer access
12	to the money, assets, and property of the customer.
13	''(2) SEGREGATION OF FUNDS.—
14	''(A) IN GENERAL.—A digital commodity
15	exchange shall treat and deal with all money,
16	assets, and property that is received by the dig
17	ital commodity exchange, or accrues to a cus
18	tomer as the result of trading in digital com
19	modities, as belonging to the customer.
20	''(B) COMMINGLING PROHIBITED.—Money,
21	assets, and property described in subparagraph
22	(A) shall be separately accounted for and shall
23	not be commingled with the funds of the digital
24	commodity exchange or be used to margin, se
25	cure, or guarantee any trades or accounts of

1	any customer or person other than the person
2	for whom the same are held.
3	''(C) EXCEPTIONS.—
4	''(i) USE OF FUNDS.—
5	''(I) IN GENERAL.—Notwith
6	standing subparagraph (A), money,
7	assets, and property described in sub
8	paragraph (A) may, for convenience,
9	be commingled and deposited in the
10	same account or accounts with any
11	bank, trust company, derivatives
12	clearing organization, or qualified dig
13	ital asset custodian.
14	''(II) WITHDRAWAL.—Notwith
15	standing subparagraph (A), such
16	share of the money, assets, and prop
17	erty described in subparagraph (A) as
18	in the normal course of business shall
19	be necessary to margin, guarantee, se
20	cure, transfer, adjust, or settle a con
21	tract of sale of a digital commodity
22	with a registered entity may be with
23	drawn and applied to such purposes,
24	including the payment of commis
25	sions, brokerage, interest, taxes, stor-

age, and other charges, lawfully ac- cruing in connection with the con-tract.

''(ii) COMMISSION ACTION.—Notwith- standing subparagraph (A), in accordance with such terms and conditions as the Commission may prescribe by rule, regula- tion, or order, any money, assets, or prop- erty of the customers of a digital com- modity exchange may be commingled and deposited in customer accounts with any other money, assets, or property received by the digital commodity exchange and re- quired by the Commission to be separately accounted for and treated and dealt with as belonging to the customer of the digital commodity exchange.

''(3) PERMITTED INVESTMENTS.—Money de- scribed in paragraph (2) may be invested in obliga- tions of the United States, in general obligations of any State or of any political subdivision of a State, and in obligations fully guaranteed as to principal and interest by the United States, or in any other investment that the Commission may by rule or reg-ulation prescribe, and such investments shall be

1	made in accordance with such rules and regulations
2	and subject to such conditions as the Commission
3	may prescribe.
4	''(4) CUSTOMER BANK PROTECTION DURING
5	RUPTCY.—
6	''(A) CUSTOMER PROPERTY.—All assets
7	held on behalf of a customer by a digital com
8	modity exchange, and all money, assets, and
9	property of any customer received by a digital
10	commodity exchange for trading or custody, or
11	to facilitate, margin, guarantee, or secure con
12	tracts of sale of a digital commodity (including
13	money, assets, or property accruing to the cus
14	tomer as the result of the transactions), shall
15	be considered customer property for purposes of
16	section 761 of title 11, United States Code.

''(B) TRANSACTIONS.—A transaction in- volving the sale of a unit of a digital commodity occurring on or subject to the rules of a digital commodity exchange shall be considered a con- tract for the purchase or sale of a commodity for future delivery, on or subject to the rules of, a contract market or board of trade for pur- poses of the definition of 'commodity contract' in section 761 of title 11, United States Code.

1	''(C) EXCHANGES.—A digital commodity
2	exchange shall be considered a futures commis
3	sion merchant for purposes of section 761 of
4	title 11, United States Code.
5	''(D) ASSETS SEGREGA REMOVED FROM
6	TION.—Assets removed from segregation due to
7	a customer election under paragraph (6) shall
8	not be considered customer property for pur
9	poses of section 761 of title 11, United States
10	Code.
11	''(5) MISUSE OF CUSTOMER PROPERTY.—
12	''(A) IN GENERAL.—It shall be unlawful—
13	''(i) for any digital commodity ex
14	change that has received any customer
15	money, assets, or property for custody to
16	dispose of, or use any such money, assets,
17	or property as belonging to the digital
18	commodity exchange or any person other
19	than a customer of the digital commodity
20	exchange; or
21	''(ii) for any other person, including
22	any depository, other digital commodity ex
23	change, or digital asset custodian that has
24	received any customer money, assets, or
25	property for deposit, to hold, dispose of, or

1	use any such money, assets, or property, or
2	property, as belonging to the depositing
3	digital commodity exchange or any person
4	other than the customers of the digital
5	commodity exchange.
6	''(B) USE DEFINED.—For pur FURTHER
7	poses of this section, 'use' of a digital com
8	modity includes utilizing any unit of a digital
9	asset to participate in a blockchain service de
10	fined in paragraph (6) or a decentralized gov
11	ernance system associated with the digital com
12	modity or the blockchain system to which the
13	digital commodity relates in any manner other
14	than that expressly directed by the customer
15	from whom the unit of a digital commodity was
16	received.
17	''(6) PARTICIPATION SERV IN BLOCKCHAIN
18	ICES.—
19	''(A) USE FUNDS.—A digital com OF
20	modity exchange (or a designee of a digital
21	commodity exchange) may use a unit of a dig
22	ital commodity belonging to a customer to pro
23	vide a blockchain service for a blockchain sys
24	tem to which the unit of the digital commodity
25	relates if—

1	''(i) the customer expressly permits
2	the use, in writing to the digital commodity
3	exchange; and
4	''(ii) the digital commodity exchange
5	complies with subparagraph (B).
6	''(B) LIMITATIONS.—
7	''(i) IN GENERAL.—The Commission
8	shall, by rule, establish notice and disclo
9	sure requirements, and may, by rule, es
10	tablish any other limitations and rules re
11	lated to a permission provided under sub
12	paragraph (A) that are reasonably nec
13	essary to protect customers, including eligi
14	ble contract participants, non-eligible con
15	tract participants, or any other class of
16	customers.
17	''(ii) CUSTOMER CHOICE.—A digital
18	commodity exchange may not require a
19	customer to provide the permission re
20	ferred to in subparagraph (A) as a condi
21	tion of doing business on the exchange.
22	''(C) REQUIREMENTS.—The Commission
23	may, by rule, waive or modify the requirements
24	of paragraph (2) or subsection (h), to facilitate
25	the use of a unit of a digital commodity belong-

ing to a customer to provide a blockchain serv-ice.

''(D) BLOCKCHAIN SERVICE DEFINED.—In this paragraph, the term 'blockchain service' means any activity relating to validating trans- actions on a blockchain system, providing secu- rity for a blockchain system, or other similar activity, including protocol consensus participa- tion activities described in section 2(a)(30)(B) of the Securities Act of 1933, required for the ongoing operation of a blockchain system.

''(e) MARKET ACCESS REQUIREMENTS.—The Com- mission may, by rule, impose any additional requirements related to the operations and activities of the digital com- modity exchange and an affiliated digital commodity broker necessary to protect market participants, promote fair and equitable trading on the digital commodity ex-change, and promote responsible innovation.

''(f) DESIGNATION OF CHIEF COMPLIANCE OFFI-CER.—

''(1) IN GENERAL.—A digital commodity ex- change shall designate an individual to serve as a chief compliance officer.

''(2) DUTIES.—The chief compliance officer shall—

1	''(A) report directly to the board or to the
2	senior officer of the exchange;
3	''(B) review compliance with the core prin
4	ciples in this subsection;
5	''(C) in consultation with the board of the
6	exchange, a body performing a function similar
7	to that of a board, or the senior officer of the
8	exchange, resolve any conflicts of interest that
9	may arise;
10	''(D) establish and administer the policies
11	and procedures required to be established pur
12	suant to this section;
13	''(E) ensure compliance with this Act and
14	the rules and regulations issued under this Act,
15	including rules prescribed by the Commission
16	pursuant to this section; and
17	''(F) establish procedures for the remedi
18	ation of noncompliance issues found during
19	compliance office reviews, look backs, internal
20	or external audit findings, self-reported errors,
21	or through validated complaints.
22	''(3) REQUIREMENTS PROCEDURES.—In FOR
23	establishing procedures under paragraph (2)(F), the
24	chief compliance officer shall design the procedures
25	to establish the handling, management response, re-

1	mediation, retesting, and closing of noncompliance
2	issues.
3	''(4) ANNUAL REPORTS.—
4	''(A) IN GENERAL.—In accordance with
5	rules prescribed by the Commission, the chief
6	compliance officer shall annually prepare and
7	sign a report that contains a description of—
8	''(i) the compliance of the digital com
9	modity exchange with this Act; and
10	''(ii) the policies and procedures, in
11	cluding the code of ethics and conflicts of
12	interest policies, of the digital commodity
13	exchange.
14	''(B) REQUIREMENTS.—The chief compli
15	ance officer shall—
16	''(i) submit each report described in
17	subparagraph (A) with the appropriate fi
18	nancial report of the digital commodity ex
19	change that is required to be submitted to
20	the Commission pursuant to this section;
21	and
22	''(ii) include in the report a certifi
23	cation that, under penalty of law, the re
24	port is accurate and complete.
25	''(g) APPOINTMENT TRUSTEE.— OF

1	''(1) IN GENERAL.—If a proceeding under sec
2	tion 5e results in the suspension or revocation of the
3	registration of a digital commodity exchange, or if a
4	digital commodity exchange withdraws from registra
5	tion, the Commission, on notice to the digital com
6	modity exchange, may apply to the appropriate
7	United States district court where the digital com
8	modity exchange is located for the appointment of a
9	trustee.
10	''(2) ASSUMPTION JURISDICTION.—If the OF
11	Commission applies for appointment of a trustee
12	under paragraph (1)—
13	''(A) the court may take exclusive jurisdic
14	tion over the digital commodity exchange and
15	the records and assets of the digital commodity
16	exchange, wherever located; and
17	''(B) if the court takes jurisdiction under
18	subparagraph (A), the court shall appoint the
19	Commission, or a person designated by the
20	Commission, as trustee with power to take pos
21	session and continue to operate or terminate
22	the operations of the digital commodity ex
23	change in an orderly manner for the protection
24	of customers subject to such terms and condi
25	tions as the court may prescribe.

1	''(h) QUALIFIED DIGITAL ASSET CUSTODIAN.—A
2	digital commodity exchange shall hold in a qualified digital
3	asset custodian each unit of a digital asset that is—
4	''(1) the property of a customer of the digital
5	commodity exchange;
6	''(2) required to be held by the digital com
7	modity exchange under subsection (c)(12) of this
8	section; or
9	''(3) otherwise so required by the Commission
10	to reasonably protect customers.
11	''(i) EXEMPTIONS.—
12	''(1) IN GENERAL.—In order to promote re
13	sponsible innovation and fair competition, or protect
14	customers, the Commission may (on its own initia
15	tive or on application of the digital commodity ex
16	change) exempt, either unconditionally or on stated
17	terms or conditions or for stated periods and either
18	retroactively or prospectively, or both, a digital com
19	modity exchange from the requirements of this Act,
20	if the Commission determines that—
21	''(A) the exemption would be consistent
22	with the public interest and the purposes of this
23	Act; and
24	''(B) the exemption will not have a mate
25	rial adverse effect on the ability of the Commis-

sion or the digital commodity exchange to dis- charge regulatory or self-regulatory duties under this Act.

''(2) FOREIGN EXCHANGES.—The Commission may exempt, conditionally or unconditionally, a dig- ital commodity exchange from registration under this section if the Commission finds that the digital commodity exchange is subject to comparable, com- prehensive supervision and regulation on a consoli- dated basis by the appropriate governmental au-thorities in the home country of the facility.

''(j) CUSTOMER DEFINED.—In this section, the term 'customer' means any person that maintains an account for the trading of digital commodities directly with a dig- ital commodity exchange (other than a person that is owned or controlled, directly or indirectly, by the digital commodity exchange) for its own behalf or on behalf of any other person.

''(k) FEDERAL PREEMPTION.—Notwithstanding any other provision of law, the Commission shall have exclusive jurisdiction over any digital commodity exchange reg- istered under this section with respect to activities and transactions subject to this Act.''.

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

''SEC. 5j. QUALIFIED DIGITAL ASSET CUSTODIANS.

''(a) IN GENERAL.—A person is a qualified digital asset custodian for purposes of this Act if the person— ''(1) holds digital assets on behalf of a person registered under this Act or a customer of a person registered under this Act; and

''(2) is in compliance with subsections (b) and (c).

''(b) SUPERVISION REQUIREMENT.—A person is in compliance with this subsection if the person is subject to—

''(1) supervision and examination for custody and safekeeping of digital assets by an appropriate Federal banking agency, the National Credit Union Administration, the Commission, or the Securities and Exchange Commission; or

''(2) adequate supervision and appropriate reg- ulation for custody and safekeeping of digital assets by—

''(A) a State bank supervisor (within the meaning of section 3 of the Federal Deposit In-surance Act);

1	''(B) a State officer, agency, or other enti
2	ty which has primary regulatory authority over
3	nondepository State trust companies;
4	''(C) a State credit union supervisor, as
5	defined under section 6003 of the Anti-Money
6	Laundering Act of 2020; or
7	''(D) an appropriate foreign governmental
8	authority in the home country of such person.
9	''(c) OTHER REQUIREMENTS.—A person shall be in
10	compliance with this subsection if:
11	''(1) NOT PROHIBITED.—The per OTHERWISE
12	son has not been prohibited by its supervisor from
13	engaging in an activity with respect to the custody
14	and safekeeping of digital assets.
15	''(2) INFORMATION SHARING.—
16	''(A) IN GENERAL.—The person shares in
17	formation with the Commission on request and
18	complies with such requirements for periodic
19	sharing of information regarding customer ac
20	counts that the person holds on behalf of an en
21	tity registered with the Commission as the
22	Commission determines by rule are reasonably
23	necessary to effectuate any of the provisions, or
24	to accomplish any of the purposes, of this Act.

1	''(B) PROVISION OF INFORMATION.—If the
2	person is subject to regulation and examination
3	by an appropriate Federal banking agency, the
4	person may satisfy any information request de
5	scribed in subparagraph (A) by providing the
6	Commission with a detailed listing, in writing,
7	of the digital assets of a customer in the cus
8	tody of, or use by, the person.
9	''(C) RULEMAKING FOR CFTC ENTITIES.—
10	''(i) IN GENERAL.—The Commission
11	shall prescribe rules to permit a person
12	registered with the Commission to be a
13	qualified digital asset custodian in compli
14	ance with this section.
15	''(ii) CONTENT.—In prescribing the
16	rules under subparagraph (A), the Com
17	mission shall require a person registered
18	with the Commission to—
19	''(I) implement requirement con
20	sistent with the requirements in sub
21	section (d)(1);
22	''(II) establish sufficient system
23	safeguards;
24	''(III) prevent or mitigate con
25	flicts of interest, as appropriate; and

1	''(IV) establish separate govern
2	ance arrangements for the custodial
3	function of the entity.
4	''(d) ADEQUATE SUPERVISION APPROPRIATE AND
5	REGULATION.—
6	''(1) IN GENERAL.—For purposes of subsection
7	(b), the terms 'adequate supervision' and 'appro
8	priate regulation' mean such minimum standards for
9	supervision and regulation as are reasonably nec
10	essary to protect the digital assets held by a person
11	registered under this Act, including standards relat
12	ing to the licensing, examination, and supervisory
13	processes that require the person to, at a min
14	imum—
15	''(A) receive a review and evaluation of
16	ownership, character and fitness, conflicts of in
17	terest, business model, financial statements,
18	funding resources, and policies and procedures
19	of the person;
20	''(B) hold capital sufficient for the finan
21	cial integrity of the person;
22	''(C) protect customer assets;
23	''(D) establish and maintain books and
24	records regarding the business of the person;

1	''(E) submit financial statements and au
2	dited financial statements to the applicable su
3	pervisor described in subsection (b);
4	''(F) provide disclosures to the applicable
5	supervisor described in subsection (b) regarding
6	actions, proceedings, and other items as deter
7	mined by the supervisor;
8	''(G) maintain and enforce policies and
9	procedures for compliance with applicable State
10	and Federal laws, including those related to
11	anti-money laundering and cybersecurity;
12	''(H) establish a business continuity plan
13	to ensure functionality in cases of disruption;
14	and
15	''(I) establish policies and procedures to re
16	solve complaints.
17	''(2) RULEMAKING DEFINI WITH RESPECT TO
18	TIONS.—
19	''(A) IN GENERAL.—For purposes of this
20	section, the Commission may, by rule, further
21	define the terms 'adequate supervision' and 'ap
22	propriate regulation' as necessary and appro
23	priate for the protection of customers, and con
24	sistent with the purposes of this Act.

1	''(B) EXISTING DIGITAL ASSET
2	CUSTODIANS.—A trust company operating as a
3	digital asset custodian before the effective date
4	of a rulemaking under subparagraph (A) is
5	deemed subject to adequate supervision and ap
6	propriate regulation if—
7	''(i) the trust company is expressly
8	permitted by a State bank supervisor to
9	engage in the custody and safekeeping of
10	digital assets;
11	''(ii) the State bank supervisor has es
12	tablished licensing, examination, and su
13	pervisory processes that require the trust
14	company to, at a minimum, meet the con
15	ditions described in subparagraphs (A)
16	through (I) of paragraph (1); and
17	''(iii) the trust company is in good
18	standing with its State bank supervisor.
19	''(C) TRANSITION PERIOD FOR CERTAIN
20	CUSTODIANS.—In implementing the rulemaking
21	under subparagraph (A), the Commission shall
22	provide a transition period of not less than 2
23	years for any trust company that is deemed
24	subject to adequate supervision and appropriate

1	regulation under subparagraph (B) on the ef
2	fective date of the rulemaking.
3	''(e) AUTHORITY TEMPORARILY SUSPEND STAND TO
4	ARDS.—The Commission may, by rule or order, tempo
5	rarily suspend, in whole or in part, any requirement im
6	posed under, or any standard referred to in, this section,
7	or any requirement to utilize a qualified digital asset cus
8	todian, if the Commission determines that the suspension
9	would be consistent with the public interest and the pur
10	poses of this Act.''.
11	SEC. 406. REGISTRATION AND REGULATION OF DIGITAL
12	COMMODITY BROKERS AND DEALERS.
13	The Commodity Exchange Act (7 U.S.C. 1 et seq.)
14	is amended by inserting after section 4t the following:
15	''SEC. 4u. REGISTRATION AND REGULATION OF DIGITAL
16	COMMODITY BROKERS AND DEALERS.
17	''(a) REGISTRATION.—
18	''(1) REQUIREMENT.—It shall be unlawful for
19	any person to act as a digital commodity broker or
20	digital commodity dealer unless the person is reg
21	istered as such with the Commission.
22	''(2) ADDITIONAL REGISTRATION.—
23	''(A) RULES.—In order to foster the devel

1	customers, and promote responsible innovation,
2	the Commission—
3	''(i) shall prescribe rules to exempt an
4	entity registered with the Commission
5	under more than 1 section of this Act from
6	duplicative, conflicting, or unduly burden
7	some provisions of this Act and the rules
8	under this Act;
9	''(ii) shall prescribe rules to address
10	conflicts of interests and the activities of
11	the entity; and
12	''(iii) may after an analysis of the
13	risks and benefits, prescribe rules to pro
14	vide for portfolio margining.
15	''(B) WITH REG MEMBERSHIP IN A
16	ASSOCIATION.—Any person ISTERED FUTURES
17	required to be registered as a digital commodity
18	broker or digital commodity dealer under this
19	section shall become and remain a member of
20	a registered futures association.
21	''(b) REQUIREMENTS.—
22	''(1) IN GENERAL.—A person shall register as
23	a digital commodity broker or digital commodity
24	dealer by filing a registration application with the
25	Commission.

''(2) CONTENTS.—

''(A) IN GENERAL.—The application shall be made in such form and manner as is pre- scribed by the Commission, and shall contain such information as the Commission considers necessary concerning the business in which the applicant is or will be engaged.

''(B) CONTINUAL REPORTING.—A person that is registered as a digital commodity broker or digital commodity dealer shall continue to submit to the Commission reports that contain such information pertaining to the business of the person as the Commission may require.

''(3) STATUTORY DISQUALIFICATION.—Except to the extent otherwise specifically provided by rule, regulation, or order, it shall be unlawful for a digital commodity broker or digital commodity dealer to permit any person who is associated with a digital commodity broker or a digital commodity dealer and who is subject to a statutory disqualification to ef- fect or be involved in effecting a contract of sale of a digital commodity on behalf of the digital com- modity broker or the digital commodity dealer, re- spectively, if the digital commodity broker or digital commodity dealer, respectively, knew, or in the exer-

1	cise of reasonable care should have known, of the
2	statutory disqualification.

''(c) RULEMAKING.—

''(1) IN GENERAL.—The Commission shall pre- scribe such rules applicable to registered digital com- modity brokers and registered digital commodity dealers as are appropriate to carry out this section, including rules in the public interest that limit the activities of digital commodity brokers and digital commodity dealers.

''(2) FINANCING AGREEMENTS.—

''(A) IN GENERAL.—The Commission shall prescribe rules and regulations applicable to digital commodity brokers or digital commodity dealers which shall set forth minimum require- ments related to disclosure, recordkeeping, mar- gin financing arrangements, rehypothecation, capital, reporting, business conduct, documenta- tion, and supervision of employees and agents, in connection with—

''(i) an agreement described in section 2(c)(2)(D)(iv); or

''(ii) any other margined, leveraged, or financing arrangement for the purchase

1	or sale of a digital commodity with an eli
2	gible contract participant.
3	''(B) SPECIFIC AUTHORITY.—Except as
4	prohibited in section 2(c)(2)(G)(iii), the Com
5	mission may also make, promulgate, and en
6	force such rules and regulations as, in the judg
7	ment of the Commission, are reasonably nec
8	essary to effectuate any of the provisions of, or
9	to accomplish any of the purposes of, this Act
10	in connection with an agreement referred to in
11	subparagraph (A) of this paragraph.
12	''(d) CAPITAL REQUIREMENTS.—
13	''(1) IN GENERAL.—Each digital commodity
14	broker and digital commodity dealer shall meet such
15	minimum capital requirements as the Commission
16	may prescribe to address the risks associated with
17	digital commodity trading and to ensure that the
18	digital commodity broker or digital commodity deal
19	er, respectively, is able, at all times, to—
20	''(A) meet, and continue to meet the obli
21	gations of such a registrant; and
22	''(B) fulfill obligations to customers or
23	counterparties for any margined, leveraged, or
24	financed transactions.

''(2) FUTURES COMMISSION MERCHANTS AND OTHER DEALERS.—Each futures commission mer- chant, introducing broker, digital commodity broker, digital commodity dealer, broker, and dealer shall maintain sufficient capital to comply with the strict- er of any applicable capital requirements to which the futures commission merchant, introducing broker, digital commodity broker, digital commodity dealer, broker, or dealer, respectively, is subject under this Act or the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). ''(e) REPORTING AND RECORDKEEPING.—Each dig- ital commodity broker and digital commodity dealer— ''(1) shall make such reports as are required by the Commission by rule or regulation regarding the transactions, positions, and financial condition of the digital commodity broker or digital commodity deal- er, respectively; ''(2) shall keep books and records in such form and manner and for such period as may be pre- scribed by the Commission by rule or regulation; and ''(3) shall keep the books and records open to

inspection and examination by any representative of the Commission.

''(f) DAILY TRADING RECORDS.—

''(1) IN GENERAL.—Each digital commodity broker and digital commodity dealer shall maintain daily trading records of the transactions of the dig- ital commodity broker or digital commodity dealer, respectively, and all related records (including re- lated forward or derivatives transactions) and re- corded communications, including electronic mail, in- stant messages, and recordings of telephone calls, for such period as the Commission may require by rule or regulation. ''(2) INFORMATION REQUIREMENTS.—The daily

trading records shall include such information as the Commission shall require by rule or regulation.

''(3) COUNTERPARTY RECORDS.—Each digital commodity broker and digital commodity dealer shall maintain daily trading records for each customer or counterparty in a manner and form that is identifi-able with each digital commodity transaction.

''(4) AUDIT TRAIL.—Each digital commodity broker and digital commodity dealer shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions.

''(g) BUSINESS CONDUCT STANDARDS.—

''(1) IN GENERAL.—Each digital commodity broker and digital commodity dealer shall conform

1	with such business conduct standards as the Com
2	mission, by rule or regulation, prescribes related
3	to—
4	''(A) fraud, manipulation, and other abu
5	sive practices involving spot or margined, lever
6	aged, or financed digital commodity trans
7	actions (including transactions that are offered
8	but not entered into);
9	''(B) diligent supervision of the business of
10	the registered digital commodity broker or dig
11	ital commodity dealer, respectively; and
12	''(C) such other matters as the Commis
13	sion deems appropriate.
14	''(2) BUSINESS REQUIREMENTS.— CONDUCT
15	The Commission shall, by rule, prescribe business
16	conduct requirements which—
17	''(A) require disclosure by a registered dig
18	ital commodity broker and registered digital
19	commodity dealer to any counterparty to the
20	transaction (other than an eligible contract par
21	ticipant) of—
22	''(i) information about the material
23	risks and characteristics of the digital com
24	modity; and

1	''(ii) information about the material
2	risks and characteristics of the transaction;
3	''(B) establish a duty for such a digital
4	commodity broker and such a digital commodity
5	dealer to communicate in a fair and balanced
6	manner based on principles of fair dealing and
7	good faith;
8	''(C) establish standards governing digital
9	commodity broker and digital commodity dealer
10	marketing and advertising, including
11	testimonials and endorsements; and
12	''(D) establish such other standards and
13	requirements as the Commission may determine
14	are appropriate for the protection of customers.
15	''(3) PROHIBITION PRAC ON FRAUDULENT
16	TICES.—It shall be unlawful for a digital commodity
17	broker or digital commodity dealer to—
18	''(A) employ any device, scheme, or artifice
19	to defraud any customer or counterparty;
20	''(B) engage in any transaction, practice,
21	or course of business that operates as a fraud
22	or deceit on any customer or counterparty; or
23	''(C) engage in any act, practice, or course
24	of business that is fraudulent, deceptive, or ma

nipulative.

''(h) DUTIES.—

2	''(1) RISK PROCEDURES.—Each MANAGEMENT
3	digital commodity broker and digital commodity
4	dealer shall establish robust and professional risk
5	management systems adequate for managing the
6	day-to-day business of the digital commodity broker
7	or digital commodity dealer, respectively.
8	''(2) DISCLOSURE INFORMA OF GENERAL
9	TION.—Each digital commodity broker and digital
10	commodity dealer shall disclose to the Commission
11	information concerning—
12	''(A) the terms and conditions of the trans
13	actions of the digital commodity broker or dig
14	ital commodity dealer, respectively;
15	''(B) the trading operations, mechanisms,
16	and practices of the digital commodity broker
17	or digital commodity dealer, respectively;
18	''(C) financial integrity protections relating
19	to the activities of the digital commodity broker
20	or digital commodity dealer, respectively; and
21	''(D) other information relevant to trading
22	in digital commodities by the digital commodity
23	broker or digital commodity dealer, respectively.

1	''(3) ABILITY TO OBTAIN INFORMATION.—Each
2	digital commodity broker and digital commodity
3	dealer shall—
4	''(A) establish and enforce internal systems
5	and procedures to obtain any necessary infor
6	mation to perform any of the functions de
7	scribed in this section; and
8	''(B) provide the information to the Com
9	mission, on request.
10	''(4) CONFLICTS INTEREST.—Each digital OF
11	commodity broker and digital commodity dealer shall
12	establish, maintain, and enforce written policies and
13	procedures reasonably designed, taking into consid
14	eration the nature of the business of the person, to
15	mitigate any conflicts of interest in transactions or
16	arrangements with affiliates.
17	''(5) ANTITRUST CONSIDERATIONS.—Unless
18	necessary or appropriate to achieve the purposes of
19	this Act, a digital commodity broker or digital com
20	modity dealer shall not—
21	''(A) adopt any process or take any action
22	that results in any unreasonable restraint of
23	trade; or
24	''(B) impose any material anticompetitive
25	burden on trading or clearing.

1	''(i) DESIGNATION CHIEF COMPLIANCE OFFI OF
2	CER.—
3	''(1) IN GENERAL.—Each digital commodity
4	broker and digital commodity dealer shall designate

an individual to serve as a chief compliance officer. ''(2) DUTIES.—The chief compliance officer shall—

''(A) report directly to the board or to the senior officer of the registered digital com- modity broker or registered digital commodity dealer;

''(B) review the compliance of the reg- istered digital commodity broker or registered digital commodity dealer with respect to the registered digital commodity broker and reg- istered digital commodity dealer requirements described in this section;

''(C) in consultation with the board of di- rectors, a body performing a function similar to the board, or the senior officer of the organiza- tion, resolve any conflicts of interest that may arise;

''(D) be responsible for administering each policy and procedure that is required to be es-tablished pursuant to this section;

1	''(E) ensure compliance with this Act (in
2	cluding regulations), including each rule pre
3	scribed by the Commission under this section;
4	''(F) establish procedures for the remedi
5	ation of noncompliance issues identified by the
6	chief compliance officer through any—
7	''(i) compliance office review;
8	''(ii) look-back;
9	''(iii) internal or external audit find
10	ing;
11	''(iv) self-reported error; or
12	''(v) validated complaint; and
13	''(G) establish and follow appropriate pro
14	cedures for the handling, management response,
15	remediation, retesting, and closing of non
16	compliance issues.
17	''(3) ANNUAL REPORTS.—
18	''(A) IN GENERAL.—In accordance with
19	rules prescribed by the Commission, the chief
20	compliance officer shall annually prepare and
21	sign a report that contains a description of—
22	''(i) the compliance of the registered
23	digital commodity broker or registered dig
24	ital commodity dealer with this Act (in
25	cluding regulations); and

1	''(ii) each policy and procedure of the
2	registered digital commodity broker or reg
3	istered digital commodity dealer followed
4	by the chief compliance officer (including
5	the code of ethics and conflict of interest
6	policies).
7	''(B) REQUIREMENTS.—The chief compli
8	ance officer shall ensure that a compliance re
9	port under subparagraph (A)—
10	''(i) accompanies each appropriate fi
11	nancial report of the registered digital
12	commodity broker or registered digital
13	commodity dealer that is required to be
14	furnished to the Commission pursuant to
15	this section; and
16	''(ii) includes a certification that,
17	under penalty of law, the compliance re
18	port is accurate and complete.
19	''(j) SEGREGATION DIGITAL COMMODITIES.— OF
20	''(1) HOLDING OF CUSTOMER ASSETS.—
21	''(A) IN GENERAL.—Each digital com
22	modity broker and digital commodity dealer
23	shall hold customer money, assets, and property
24	in a manner to minimize the risk of loss to the
25	customer or unreasonable delay in customer ac-

1	cess to the money, assets, and property of the
2	customer.
3	''(B) QUALIFIED CUSTO DIGITAL ASSET
4	DIAN.—Each digital commodity broker and dig
5	ital commodity dealer shall hold in a qualified
6	digital asset custodian each unit of a digital
7	asset that is—
8	''(i) the property of a customer or
9	counterparty of the digital commodity
10	broker or digital commodity dealer, respec
11	tively;
12	''(ii) required to be held by the digital
13	commodity broker or digital commodity
14	dealer under subsection (e); or
15	''(iii) otherwise so required by the
16	Commission to reasonably protect cus
17	tomers or promote the public interest.
18	''(2) SEGREGATION OF FUNDS.—
19	''(A) IN GENERAL.—Each digital com
20	modity broker and digital commodity dealer
21	shall treat and deal with all money, assets, and
22	property that is received by the digital com
23	modity broker or digital commodity dealer, or
24	accrues to a customer as the result of trading

in digital commodities, as belonging to the cus-tomer.

3	''(B) COMMINGLING PROHIBITED.—
4	''(i) IN GENERAL.—Except as pro
5	vided in clause (ii), each digital commodity
6	broker and digital commodity dealer shall
7	separately account for money, assets, and
8	property of a digital commodity customer,
9	and shall not commingle any such money,
10	assets, or property with the funds of the
11	digital commodity broker or digital com
12	modity dealer, respectively, or use any such
13	money, assets, or property to margin, se
14	cure, or guarantee any trades or accounts
15	of any customer or person other than the
16	person for whom the money, assets, or
17	property are held.
18	''(ii) EXCEPTIONS.—
19	''(I) USE OF FUNDS.—
20	''(aa) IN GENERAL.—A dig
21	ital commodity broker or digital
22	commodity dealer may, for con
23	venience, commingle and deposit
24	in the same account or accounts

with any bank, trust company,

1	derivatives clearing organization,
2	or qualified digital asset custo
3	dian money, assets, and property
4	of customers.
5	''(bb) WITHDRAWAL.—The
6	share of the money, assets, and
7	property described in item (aa)
8	as in the normal course of busi
9	ness shall be necessary to mar
10	gin, guarantee, secure, transfer,
11	adjust, or settle a contract of sale
12	of a digital commodity with a
13	registered entity may be with
14	drawn and applied to such pur
15	poses, including the payment of
16	commissions, brokerage, interest,
17	taxes, storage, and other charges,
18	lawfully accruing in connection

with the contract. ''(II) COMMISSION ACTION.—In accordance with such terms and con-

ditions as the Commission may pre- scribe by rule, regulation, or order, any money, assets, or property of the customers of a digital commodity

1	broker or digital commodity dealer
2	may be commingled and deposited in
3	customer accounts with any other
4	money, assets, or property received by
5	the digital commodity broker or dig
6	ital commodity dealer, respectively,
7	and required by the Commission to be
8	separately accounted for and treated
9	and dealt with as belonging to the
10	customer of the digital commodity
11	broker or digital commodity dealer,
12	respectively.
13	''(3) PERMITTED INVESTMENTS.—Money de
14	scribed in paragraph (2) may be invested in obliga
15	tions of the United States, in general obligations of
16	any State or of any political subdivision of a State,
17	in obligations fully guaranteed as to principal and
18	interest by the United States, or in any other invest
19	ment that the Commission may by rule or regulation
20	allow.
21	''(4) CUSTOMER BANK PROTECTION DURING
22	RUPTCY.—
23	''(A) CUSTOMER PROPERTY.—All money,
24	assets, or property described in paragraph (2)
25	shall be considered customer property for pur-

poses of section 761 of title 11, United States Code.

''(B) TRANSACTIONS.—A transaction in- volving a unit of a digital commodity occurring with a digital commodity broker or digital com- modity dealer shall be considered a contract for the purchase or sale of a commodity for future delivery, on or subject to the rules of, a con- tract market or board of trade for purposes of the definition of a 'commodity contract' in sec-tion 761 of title 11, United States Code.

''(C) BROKERS AND DEALERS.—A digital commodity broker and a digital commodity dealer shall be considered a futures commission merchant for purposes of section 761 of title 11, United States Code.

''(D) ASSETS REMOVED FROM SEGREGA- TION.—Assets removed from segregation due to a customer election under paragraph (6) shall not be considered customer property for pur- poses of section 761 of title 11, United States Code.

''(5) MISUSE OF CUSTOMER PROPERTY.— ''(A) IN GENERAL.—It shall be unlawful—

1	''(i) for any digital commodity broker
2	or digital commodity dealer that has re
3	ceived any customer money, assets, or
4	property for custody to dispose of, or use
5	any such money, assets, or property as be
6	longing to the digital commodity broker or
7	digital commodity dealer, respectively, or
8	any person other than a customer of the
9	digital commodity broker or digital com
10	modity dealer, respectively; or
11	''(ii) for any other person, including
12	any depository, digital commodity ex
13	change, other digital commodity broker,
14	other digital commodity dealer, or digital
15	commodity custodian that has received any
16	customer money, assets, or property for
17	deposit, to hold, dispose of, or use any
18	such money, assets, or property, as belong
19	ing to the depositing digital commodity
20	broker or digital commodity dealer or any
21	person other than the customers of the
22	digital commodity broker or digital com
23	modity dealer, respectively.
24	''(B) USE DEFINED.—For pur FURTHER

poses of this section, 'use' of a digital com-

1	modity includes utilizing any unit of a digital
2	asset to participate in a blockchain service de
3	fined in paragraph (6) or a decentralized gov
4	ernance system associated with the digital com
5	modity or the blockchain system to which the
6	digital commodity relates in any manner other
7	than that expressly directed by the customer
8	from whom the unit of a digital commodity was
9	received.
10	''(6) PARTICIPATION SERV IN BLOCKCHAIN
11	ICES.—
12	''(A) USE FUNDS.—A digital com OF
13	modity broker or digital commodity dealer (or a
14	designee of a digital commodity broker or a dig
15	ital commodity dealer) may use a unit of a dig
16	ital commodity belonging to a customer to pro
17	vide a blockchain service for a blockchain sys
18	tem to which the unit of the digital commodity
19	relates if—
20	''(i) the customer expressly permits
21	the use, in writing to the digital commodity
22	broker or digital commodity dealer, as the
23	case may be; and

''(ii) the digital commodity broker or the digital commodity dealer, as the case may be, complies with subparagraph (B). ''(B) LIMITATIONS.— ''(i) IN GENERAL.—The Commission shall, by rule, establish notice and disclo- sure requirements, and may, by rule, es- tablish any other limitations and rules re- lated to a permission provided under sub- paragraph (A) that are reasonably nec- essary to protect customers, including eligi- ble contract participants, non-eligible con- tract participants, or any other class of customers.

''(ii) CUSTOMER CHOICE.—A digital commodity broker or digital commodity dealer may not require a customer to pro- vide the permission referred to in subpara- graph (A) as a condition of doing business with the broker or dealer.

''(C) REQUIREMENTS.—The Commission may, by rule, waive or modify the requirements of paragraph (2) or subsection (h), to facilitate the use of a unit of a digital commodity belong-

ing to a customer to provide a blockchain serv-ice.

''(D) BLOCKCHAIN SERVICE DEFINED.—In this paragraph, the term 'blockchain service' means any activity relating to validating trans- actions on a blockchain system, providing secu- rity for a blockchain system, or other similar activity, including protocol consensus participa- tion activities described in section 2(a)(30)(B) of the Securities Act of 1933, required for the ongoing operation of a blockchain system.

''(k) FEDERAL PREEMPTION.—Notwithstanding any other provision of law, the Commission shall have exclusive jurisdiction over any digital commodity broker or digital commodity dealer registered under this section with re-spect to activities subject to this Act.

''(l) EXEMPTIONS.—In order to promote responsible innovation and fair competition, or protect customers, the Commission may (on its own initiative or on application of the digital commodity broker or digital commodity deal- er) exempt, unconditionally or on stated terms or condi- tions, or for stated periods, and retroactively or prospec- tively, or both, a digital commodity broker or digital com- modity dealer from the requirements of this Act, if the Commission determines that—

1	''(1)(A) the exemption would be consistent with
2	the public interest and the purposes of this Act; and
3	''(B) the exemption will not have a material ad
4	verse effect on the ability of the Commission to dis
5	charge regulatory duties under this Act; or
6	''(2) the digital commodity broker or digital
7	commodity dealer is subject to comparable, com
8	prehensive supervision and regulation by the appro
9	priate government authorities in the home country
10	of the digital commodity broker or digital commodity
11	dealer, respectively.''.
12	SEC. 407. REGISTRATION OF ASSOCIATED PERSONS.
13	(a) IN GENERAL.—Section 4k of the Commodity Ex
14	change Act (7 U.S.C. 6k) is amended—
15	(1) by redesignating subsections (4) through
16	(6) as subsections (5) through (7), respectively;
17	(2) by inserting after subsection (3) the fol
18	lowing:
19	''(4) It shall be unlawful for any person to act as an
20	associated person of a digital commodity broker or an as
21	sociated person of a digital commodity dealer unless the
22	person is registered with the Commission under this Act
23	and such registration shall not have expired, been sus
24	pended (and the period of suspension has not expired),
25	or been revoked. It shall be unlawful for a digital com-

modity broker or a digital commodity dealer to permit such a person to become or remain associated with the digital commodity broker or digital commodity dealer if the digital commodity broker or digital commodity dealer knew or should have known that the person was not so registered or that the registration had expired, been sus- pended (and the period of suspension has not expired), or been revoked.''; and

(3) in subsection (5) (as so redesignated), by striking ''or of a commodity trading advisor'' and in- serting ''of a commodity trading advisor, of a digital commodity broker, or of a digital commodity deal-er''.

(b) CONFORMING AMENDMENTS.—The Commodity Exchange Act (7 U.S.C. 1a et seq.) is amended by striking ''section 4k(6)'' each place it appears and inserting ''sec-tion 4k(7)''.

SEC. 408. REGISTRATION OF COMMODITY POOL OPERA- TORS AND COMMODITY TRADING ADVISORS. (a) IN GENERAL.—Section 4m(3) of the Commodity Exchange Act (7 U.S.C. 6m(3)) is amended—

(1) in subparagraph (A)—

(A) by striking ''any commodity trading advisor'' and inserting ''a commodity pool oper-ator or commodity trading advisor''; and

(B) by striking ''acting as a commodity trading advisor'' and inserting ''acting as a commodity pool operator or commodity trading advisor''; and

(2) in subparagraph (C), by inserting ''digital commodities,'' after ''physical commodities,''.

(b) EXEMPTIVE AUTHORITY.—Section 4m of such Act (7 U.S.C. 6m) is amended by adding at the end the following:

''(4) EXEMPTIVE AUTHORITY.—The Commission shall promulgate rules to provide appropriate exemptions for commodity pool operators and commodity trading advi- sors, to provide relief from duplicative, conflicting, or un- duly burdensome requirements or to promote responsible innovation, to the extent the exemptions foster the devel- opment of fair and orderly cash or spot digital commodity markets, are necessary or appropriate in the public inter- est, and are consistent with the protection of customers.''. SEC. 409. EXCLUSION FOR DECENTRALIZED FINANCE AC-

TIVITIES.

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

''(a) IN GENERAL.—Notwithstanding any other pro- vision of this Act, a person shall not be subject to this Act and the regulations promulgated under this Act based on the person directly or indirectly engaging in any of the following activities, whether singly or in combination, in relation to the operation of a blockchain system or in rela-tion to decentralized finance trading protocol:

''(1) Compiling network transactions or relay- ing, searching, sequencing, validating, or acting in a similar capacity.

''(2) Providing computational work, operating a node or oracle service, or procuring, offering, or uti- lizing network bandwidth, or other similar incidental services.

''(3) Providing a user-interface that enables a user to read, and access data about a blockchain system.

''(4) Developing, publishing, or otherwise dis- tributing a blockchain system or a decentralized fi-nance messaging system.

• HR 3633 EH ''(5) Constituting, administering, or maintain- ing a decentralized finance messaging system or de- centralized finance trading protocol, or operating or participating in a liquidity pool with respect thereto,

1	for the purpose of executing a spot transaction for
2	the purchase or sale of a digital commodity.
3	''(6) Developing, publishing, constituting, ad
4	ministering, maintaining, or otherwise distributing
5	software or systems that create or deploy hardware
6	or software, including wallets or other systems, fa
7	cilitating an individual user's own personal ability to
8	keep, safeguard, or custody the user's digital assets
9	or related private keys.
10	''(b) EXCEPTIONS.—Subsection (a) shall not be inter
11	preted to apply to the anti-fraud, anti-manipulation, or
12	false reporting enforcement authorities of the Commis
13	sion.''.
14	SEC. 410. RESOURCES FOR IMPLEMENTATION AND EN
15	FORCEMENT.
16	(a) COLLECTION FEES.— OF
17	(1) IN GENERAL.—The Commodity Futures
18	Trading Commission (in this section referred to as
19	the ''Commission'') shall charge and collect a fee
20	from each person in provisional status registered
21	with the Commission pursuant to section 106, on—
22	(A) the filing of the initial application for
23	registration; and
24	(B) an annual basis thereafter for main

(3) AUTHORITY TO ADJUST FEES.—Notwith- standing the preceding provisions of this subsection, to promote fair competition or innovation, the Com- mission, in its sole discretion, may reduce or elimi- nate any fee otherwise required to be paid by a small or medium filer under this subsection.

(b) FEE SCHEDULE.—

appropriation Act.

(1) IN GENERAL.—The Commission shall pub- lish in the Federal Register a schedule of the fees to be charged and collected under this section.

(2) CONTENT.—The fee schedule for a fiscal year shall include a written analysis of the estimate of the Commission of the total costs of carrying out the functions of the Commission under this Act dur-ing the fiscal year.

(3) SUBMISSION TO CONGRESS.—Before pub- lishing the fee schedule for a fiscal year, the Com- mission shall submit a copy of the fee schedule to the Committees on Agriculture and on Appropria-tions of the House of Representatives and the Com-

1	mittees on Agriculture, Nutrition, and Forestry and
2	on Appropriations of the Senate.
3	(4) TIMING.—
4	(A) 1ST YEAR.—The Commission FISCAL
5	shall publish the fee schedule for the fiscal year
6	in which this Act is enacted, within 30 days
7	after the date of the enactment of this Act.
8	(B) SUBSEQUENT YEARS.—The FISCAL
9	Commission shall publish the fee schedule for
10	each subsequent fiscal year, not less than 90
11	days before the due date prescribed by the
12	Commission for payment of the annual fee for
13	the fiscal year.
14	(c) LATE PAYMENT PENALTY.—
15	(1) IN GENERAL.—The Commission may im
16	pose a penalty against a person that fails to pay an
17	annual fee charged under this section, within 30
18	days after the due date prescribed by the Commis
19	sion for payment of the fee.
20	(2) AMOUNT.—The amount of the penalty shall
21	be—
22	(A) 5 percent of the amount of the fee due,
23	multiplied by

(B) the whole number of consecutive 30- day periods that have elapsed since the due date.

(d) REIMBURSEMENT OF EXCESS FEES.—To the ex- tent that the total amount of fees collected under this sec- tion during a fiscal year that begins after the date of the enactment of this Act exceeds the amount provided under subsection (a)(2) with respect to the fiscal year, the Com- mission shall reimburse the excess amount to the persons who have timely paid their annual fees, on a pro-rata basis that excludes penalties, and shall do so within 60 days after the end of the fiscal year.

(e) DEPOSIT OF FEES INTO THE TREASURY.—All amounts collected under this section shall be credited to the currently applicable appropriation, account, or fund of the Commission as discretionary offsetting collections, and shall be available for the purposes authorized in subsection (f) only to the extent and in the amounts provided in ad-vance in appropriations Acts.

(f) AUTHORIZATION OF APPROPRIATIONS.—In addi- tion to amounts otherwise authorized to be appropriated to the Commission, there is authorized to be appropriated to the Commission amounts collected under this section to cover the costs of carrying out the functions of the Commission under this Act.

1	(g) EXPEDITED HIRING AUTHORITY.—
2	(1) APPOINTMENT AUTHORITY.—The Chair
3	man, pursuant to section 6(a), may appoint individ
4	uals to a position described in paragraph (2) of this
5	subsection—
6	(A) in accordance with the statutes, rules,
7	and regulations governing appointments to posi
8	tions in the excepted service (as defined in sec
9	tion 2103 of title 5, United States Code); and
10	(B) without regard to any statute, rule, or
11	regulation governing appointments to positions
12	in the competitive service (as defined in section
13	2102 of such title).
14	(2) POSITION DESCRIBED.—A position referred
15	to in subparagraph (1) is a position at the Commis
16	sion that—
17	(A) is in the competitive service (as defined
18	in section 2102 of such title); and
19	(B) requires specialized knowledge of dig
20	ital commodities markets, financial and capital
21	market formation or regulation, financial mar
22	ket structures or surveillance, data collection or
23	analysis, or information technology, cybersecu
24	rity, or system safeguards.

(3) RULE OF CONSTRUCTION.—The appoint- ment of a candidate to a position under this sub- section shall not be considered to cause the position to be converted from the competitive service to the excepted service.

(h) SUNSET.—The authorities provided by this sec- tion shall expire at the end of the 4th fiscal year that be-gins after the date of the enactment of this Act.

SEC. 411. REQUIREMENTS RELATED TO CONTROL PER-SONS.

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

''SEC. 4w. LIMITATION ON TRANSACTIONS BY BLOCKCHAIN

CONTROL PERSONS.

''(a) LIMITATION.—It shall be unlawful for a blockchain control person with respect to a blockchain sys- tem certified as a mature blockchain system in accordance with section 42 of the Securities Exchange Act of 1934 to sell a unit of a digital commodity related to the blockchain system unless the person files notice with the Commission, in a form and manner determined by the Commission, that the person has or intends to obtain an authority described in subsection (b)(1) with respect to the

1	blockchain system, and complies with rules adopted by the
2	Commission that require—
3	''(1) disclosure of information to the Commis
4	sion and the public about the material activities, as
5	determined by the Commission, of the blockchain
6	control person; and
7	''(2)(A) the use of a digital commodity broker
8	to effect the sale; or
9	''(B) such other sales restrictions applicable to
10	the blockchain control person, or any affiliated
11	blockchain control person, to prevent manipulation
12	and distortion of the value of the digital commodity
13	and promote further maturity of the blockchain sys
14	tem to which the digital commodity relates.
15	''(b) DEFINITIONS.—In this section:
16	''(1) BLOCKCHAIN PERSON.—The CONTROL
17	term 'blockchain control person' means, with respect
18	to a blockchain system, any person or group of per
19	sons under common control, other than a decentral
20	ized governance system, who—
21	''(A) has the unilateral authority, directly
22	or indirectly, through any contract, arrange
23	ment, understanding, relationship, or otherwise,
24	to control or materially alter the functionality,
25	operation, or rules of consensus or agreement of

the blockchain system or its related digital com-modity; or

''(B) has the unilateral authority to direct the voting, in the aggregate, of 20 percent or more of the outstanding voting power of the blockchain system by means of a related digital commodity, nodes or validators, a decentralized governance system, or otherwise, in a blockchain system which can be altered by a voting system.

''(2) AFFILIATED BLOCKCHAIN CONTROL PER- SON.—The term 'affiliated blockchain control per- son' means any person directly or indirectly control- ling, controlled by, or under common control with a blockchain control person, as the Commission by rule or regulation, may determine will effectuate the purposes of this section.''.

SEC. 412. OTHER TRADABLE ASSETS.

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

(1) by inserting after section 4w the following:

''(a) LIMITATION.—A contract of sale of a tradable asset shall not be offered, solicited, traded, facilitated, exe- cuted, cleared, reported, or otherwise dealt in, on or sub- ject to the rules of a registered entity, or by any other entity registered with the Commission, except in accord-ance with subsection (b).

''(b) REQUIREMENTS.—

''(1) TREATMENT OF TRADABLE ASSETS.—A contract of sale of a tradable asset that is offered, solicited, traded, facilitated, executed, cleared, re- ported, or otherwise dealt in on or subject to the rules of a registered entity, or by any other entity registered with the Commission, shall be treated as a digital commodity for purposes of this Act.

''(2) ADDITIONAL RULEMAKING AUTHORITY.— In addition to the other requirements of this Act, the Commission may, by rule or regulation, impose additional obligations on any person registered under this Act offering, soliciting, trading, facili- tating, executing, clearing, reporting, or otherwise dealing in a contract of sale of a tradable asset, or class thereof, pursuant to paragraph (1) as are nec- essary for the protection of customers, the pro-motion of innovation, and the maintenance of fair,

• HR 3633 EH

1	orderly, and efficient markets, including additional
2	obligations related to—
3	''(A) disclosure;
4	''(B) recordkeeping;
5	''(C) capital;
6	''(D) reporting;
7	''(E) business conduct;
8	''(F) documentation;
9	''(G) supervision of employees; and
10	''(H) segregation.
11	''(c) TRADABLE ASSET DEFINED.—In this section,
12	the term 'tradable asset' means a digital asset other
13	than—
14	''(1) a digital commodity that is treated as such
15	other than by reason of subsection (b)(1) of this sec
16	tion; or
17	''(2) a digital asset excluded from the definition
18	of digital commodity pursuant to subclause (I)
19	through (VII) of section 1a(16)(F)(iii).''; and
20	(2) by inserting after section 6d the following:
21	''SEC. 6e. PROHIBITION ON TRADING CERTAIN DIGITAL AS
22	SETS.
23	''(a) IN GENERAL.—A contract of sale of a digital
24	commodity or tradable asset (as defined in section 4x)
25	shall not be offered, solicited, traded, facilitated, executed,

cleared, reported, or otherwise dealt in on or subject to the rules of a registered entity, or by any other entity reg- istered with the Commission, if the primary purpose of the digital commodity or tradable asset is to be used to— ''(1) commit fraud or market manipulation; ''(2) further a scheme found in a final action by

a court of competent jurisdiction to be in violation of campaign finance or government ethics laws; or

''(3) engage in any other conduct that would re- sult in abusive practices or be disruptive to market integrity.

''(b) GUIDANCE ON FRAUDULENT, MANIPULATIVE, OR DISRUPTIVE TRADABLE ASSETS.—The Commission may, after public notice and comment, issue guidance es- tablishing criteria for determining if the primary purpose of a digital commodity or tradable asset (as so defined) is to be used to commit fraud or market manipulation, or engage in any other conduct that would result in abu-sive practices or be disruptive to market integrity.''.

SEC. 413. CONFLICT OF INTEREST RULEMAKING.

Not later than 360 days after the date of the enact- ment of this Act, the Commodity Futures Trading Com- mission shall issue rules establishing requirements for the identification, mitigation, and resolution of conflicts of in-terest among and across registered entities (within the

meaning of the Commodity Exchange Act) and persons required to be registered with the Commission, including conflicts of interest related to vertically integrated market structures and their varying responsibilities.

SEC. 414. EFFECTIVE DATE.

Unless otherwise provided in this title, this title and the amendments made by this title shall take effect 270 days after the date of the enactment of this Act.

SEC. 415. SENSE OF CONGRESS.

It is the sense of Congress that nothing in this Act or any amendment made by this Act should be interpreted to authorize any entity to regulate any commodity, other than a digital commodity, on any spot market.

TITLE V—INNOVATION AND

TECHNOLOGY IMPROVEMENTS

SEC. 501. FINDINGS; SENSE OF CONGRESS.

(a) FINDINGS.—Congress finds the following:

(1) Entrepreneurs and innovators are building and deploying this next generation of the internet.

(2) Digital commodity networks represent a new way for people to join together and cooperate with one another to undertake certain activities.

(3) Digital commodities have the potential to be the foundational building blocks of these systems, aligning the economic incentive for individuals to co-

operate with one another to achieve a common pur-pose.

(4) The digital commodity ecosystem has the potential to grow our economy and improve everyday lives of Americans by facilitating collaboration through the use of technology to manage activities, allocate resources, and facilitate decision making.

(5) Blockchain systems and the digital commod- ities they empower provide control, enhance trans- parency, reduce transaction costs, and increase effi- ciency if proper protections are put in place for in- vestors, consumers, our financial system, and our national security.

(6) Blockchain technology facilitates new types of network participation which businesses in the United States may utilize in innovative ways.

(7) Other digital commodity companies are set- ting up their operations outside of the United States, where countries are establishing frameworks to embrace the potential of blockchain technology and digital commodities and provide safeguards for consumers.

(8) Digital commodities, despite the purported anonymity, provide law enforcement with an excep-

tional tracing tool to identify illicit activity and bring criminals to justice.

(9) The Financial Services Committee of the House of Representatives has held multiple hearings highlighting various risks that digital commodities can pose to the financial markets, consumers, and investors that must be addressed as we seek to har-ness the benefits of these innovations.

(b) SENSE OF CONGRESS.—It is the sense of Con-gress that—

(1) the United States should seek to prioritize understanding the potential opportunities of the next generation of the internet;

(2) the United States should seek to foster ad- vances in technology that have robust evidence indi- cating they can improve our financial system and create more fair and equitable access to financial services for everyday Americans while protecting our financial system, investors, and consumers;

(3) the United States must support the respon- sible development of digital commodities and the un- derlying technology in the United States or risk the shifting of the development of such assets and tech- nology outside of the United States, to less regulated countries;

(4) Congress should consult with public and private sector stakeholders to understand how to enact a functional framework tailored to the specific risks and unique benefits of different digital com- modity-related activities, distributed ledger tech- nology, distributed networks, and mature blockchain systems; (5) Congress should enact a functional frame-work tailored to the specific risks of different digital

commodity-related activities and unique benefits of distributed ledger technology, distributed networks, and mature blockchain systems; and

(6) consumers and market participants will ben- efit from a framework for digital commodities con- sistent with longstanding investor protections in se- curities and commodities markets, yet tailored to the unique benefits and risks of the digital commodity ecosystem.

SEC. 502. STRATEGIC HUB FOR INNOVATION AND FINAN-CIAL TECHNOLOGY.

Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is amended by adding at the end the fol-lowing:

''(k) STRATEGIC HUB FOR INNOVATION AND FINAN-CIAL TECHNOLOGY.—

''(1) ESTABLISHMENT.—Not later than 180 days after the date of the enactment of this sub- section, the Securities and Exchange Commission shall establish a committee to be known as the Stra- tegic Hub for Innovation and Financial Technology (referred to in this subsection as the 'FinHub') to support engagement on emerging technologies in the financial sector. ''(2) MEMBERS.—The composition of FinHub shall be determined by the Commission, drawing from relevant divisions as appropriate, including the Division of Trading and Markets, Division of Cor- porate Finance, and Division of Investment Manage- ment. ''(3) RESPONSIBILITIES.—FinHub shall— ''(A) serve as a resource for the Commis- sion on emerging financial technology advance- ments; ''(B) engage with market participants working on emerging financial technologies; and ''(C) facilitate communication between the Commission and businesses working in emerg- ing financial technology fields with information on the Commission, its rules, and regulations.

''(4) REPORT TO THE COMMISSION.—

1	''(A) IN GENERAL.—Not later than Octo
2	ber 31 of each year after 2025, FinHub shall
3	provide an annual summary of its engagement
4	activities to the Commission, which shall be in
5	cluded in the Commission's annual report to
6	Congress.
7	''(B) CONFIDENTIALITY.—Each report
8	submitted under this paragraph shall not con
9	tain confidential information.''.
10	SEC. 503. CODIFICATION OF LABCFTC.
11	(a) IN GENERAL.—Section 18 of the Commodity Ex
12	change Act (7 U.S.C. 22) is amended by adding at the
13	end the following:
14	''(c) LABCFTC.—
15	''(1) ESTABLISHMENT.—There is established in
16	the Commission LabCFTC.
17	''(2) PURPOSE.—The purposes of LabCFTC
18	are to—
19	''(A) promote responsible financial tech
20	nology innovation and fair competition for the
21	benefit of the American public;
22	''(B) serve as an information platform to
23	inform the Commission about new financial
24	technology innovation; and

1	''(C) provide outreach to financial tech
2	nology innovators to discuss their innovations
3	and the regulatory framework established by
4	this Act and the regulations promulgated there
5	under.
6	''(3) DIRECTOR.—LabCFTC shall have a Direc
7	tor, who shall be appointed by the Commission and
8	serve at the pleasure of the Commission. Notwith
9	standing section 2(a)(6)(A), the Director shall re
10	port directly to the Commission and perform such
11	functions and duties as the Commission may pre
12	scribe.
13	''(4) DUTIES.—LabCFTC shall—
14	''(A) advise the Commission with respect
15	to rulemakings or other agency or staff action
16	regarding financial technology;
17	''(B) provide internal education and train
18	ing to the Commission regarding financial tech
19	nology;
20	''(C) advise the Commission regarding fi
21	nancial technology that would bolster the Com
22	mission's oversight functions;
23	''(D) engage with academia, students, and

1	ideas, and technology relevant to activities
2	under this Act;
3	''(E) provide persons working in emerging
4	technology fields with information on the Com
5	mission, its rules and regulations, and the role
6	of a registered futures association; and
7	''(F) encourage persons working in emerg
8	ing technology fields to engage with the Com
9	mission and obtain feedback from the Commis
10	sion on potential regulatory issues.
11	''(5) REPORT TO CONGRESS.—
12	''(A) IN GENERAL.—Not later than Octo
13	ber 31 of each year after 2025, LabCFTC shall
14	submit to the Committee on Agriculture of the
15	House of Representatives and the Committee
16	on Agriculture, Nutrition, and Forestry of the
17	Senate a report on its activities.
18	''(B) CONTENTS.—Each report required
19	under paragraph (1) shall include—
20	''(i) the total number of persons that
21	met with LabCFTC;
22	''(ii) a summary of general issues dis
23	cussed during meetings with the person;
24	''(iii) information on steps LabCFTC
25	has taken to improve Commission services,

1	including responsiveness to the concerns of
2	persons;
3	''(iv) recommendations made to the
4	Commission with respect to the regula
5	tions, guidance, and orders of the Commis
6	sion and such legislative actions as may be
7	appropriate; and
8	''(v) any other information determined
9	appropriate by the Director of LabCFTC.
10	''(C) CONFIDENTIALITY.—A report under
11	paragraph (A) shall abide by the confidentiality
12	requirements in section 8.
13	''(6) RECORDS ENGAGEMENT.—The Com AND
14	mission shall—
15	''(A) maintain systems of records to track
16	engagements with the public through
17	LabCFTC;
18	''(B) store communications and materials
19	received in connection with any such engage
20	ment in accordance with Commission policies
21	and procedures on data retention and confiden
22	tiality; and
23	''(C) take reasonable steps to protect any
24	confidential or proprietary information received
25	through LabCFTC engagement.''.

(b) CONFORMING AMENDMENTS.—Section 2(a)(6)(A) of such Act (7 U.S.C. 2(a)(6)(A)) is amend-ed—

(1) by striking ''paragraph and in'' and insert-ing ''paragraph,''; and

(2) by inserting ''and section 18(c)(3),'' before ''the executive''.

(c) EFFECTIVE DATE.—The Commodity Futures Trading Commission shall implement the amendments made by this section (including complying with section 18(c)(7) of the Commodity Exchange Act) within 180 days after the date of the enactment of this Act.

SEC. 504. STUDY ON DECENTRALIZED FINANCE.

(a) IN GENERAL.—The Commodity Futures Trading Commission, the Securities and Exchange Commission, and the Secretary of the Treasury shall jointly carry out a study on decentralized finance that analyzes—

(1) the nature, size, role, and use of decentral-ized finance blockchain applications;

(2) the operation of blockchain applications that comprise decentralized finance;

(3) the interoperability of blockchain applica-tions and other blockchain systems;

1	(4) the interoperability of blockchain applica
2	tions and software-based systems, including websites
3	and wallets;
4	(5) the decentralized governance systems
5	through which blockchain applications may be devel
6	oped, published, constituted, administered, main
7	tained, or otherwise distributed, including—
8	(A) whether the systems enhance or de
9	tract from—
10	(i) the decentralization of the decen
11	tralized finance; and
12	(ii) the inherent benefits and risks of
13	the decentralized governance system; and
14	(B) any procedures, requirements, or best
15	practices that would mitigate the risks identi
16	fied in subparagraph (A)(ii);
17	(6) the benefits of decentralized finance, includ
18	ing—
19	(A) operational resilience and availability
20	of blockchain systems;
21	(B) interoperability of blockchain systems;
22	(C) market competition and innovation;
23	(D) transaction efficiency;
24	(E) transparency and traceability of trans
25	actions; and

1	(F) disintermediation;
2	(7) the risks of decentralized finance, includ
3	ing—
4	(A) pseudonymity of users and trans
5	actions;
6	(B) disintermediation; and
7	(C) cybersecurity vulnerabilities;
8	(8) the extent to which decentralized finance
9	has integrated with the traditional financial markets
10	and any potential risks or improvements to the sta
11	bility of the markets;
12	(9) how the levels of illicit activity in decentral
13	ized finance compare with the levels of illicit activity
14	in traditional financial markets;
15	(10) methods for addressing illicit activity in
16	decentralized finance and traditional markets that
17	are tailored to the unique attributes of each;
18	(11) how decentralized finance may increase the
19	accessibility of cross-border transactions; and
20	(12) the feasibility of embedding self-executing
21	compliance and risk controls into decentralized fi
22	nance.
23	(b) CONSULTATION.—In carrying out the study re
24	quired under subsection (a), the Commodity Futures
25	Trading Commission and the Securities and Exchange

Commission shall consult with the Secretary of the Treas- ury on the factors described under paragraphs (7) through (10) of subsection (a).

(c) REPORT.—Not later than 1 year after the date of enactment of this Act, the Commodity Futures Trading Commission and the Securities and Exchange Commission shall jointly submit to the relevant congressional commit- tees a report that includes the results of the study re-quired by subsection (a).

(d) GAO STUDY.—The Comptroller General of the United States shall—

(1) carry out a study on decentralized finance that analyzes the information described under para-graphs (1) through (12) of subsection (a); and

(2) not later than 1 year after the date of en- actment of this Act, submit to the relevant congres- sional committees a report that includes the results of the study required by paragraph (1).

(e) DEFINITIONS.—In this section:

(1) DECENTRALIZED FINANCE.—

(A) IN GENERAL.—The term ''decentral- ized finance'' means blockchain applications (in- cluding decentralized finance trading protocols and related decentralized finance messaging systems) that allow users to engage in financial

1	transactions in a self-directed manner so that a
2	third-party intermediary does not effectuate the
3	transactions or take custody of digital commod
4	ities of a user during any part of the trans
5	actions.
6	(B) RELATIONSHIP ACTIVI TO EXCLUDED
7	TIES.—The term ''decentralized finance'' shall
8	not be interpreted to limit or exclude any activ
9	ity from the activities described in section
10	15I(a) of the Securities Exchange Act of 1934
11	or section 4v(a) of the Commodity Exchange
12	Act.
13	(2) RELEVANT COMMIT CONGRESSIONAL
14	TEES.—The term ''relevant congressional commit
15	tees'' means—
16	(A) the Committees on Financial Services
17	and Agriculture of the House of Representa
18	tives; and
19	(B) the Committees on Banking, Housing,
20	and Urban Affairs and Agriculture, Nutrition,
21	and Forestry of the Senate.
22	SEC. 505. STUDY ON NON-FUNGIBLE TOKENS.
23	(a) IN GENERAL.—The Comptroller General of the
24	United States shall carry out a study of non-fungible to
25	kens that analyzes—

1	(1) the nature, size, role, purpose, and use of
2	non-fungible tokens;
3	(2) the similarities and differences between non
4	fungible tokens and other digital commodities, in
5	cluding digital commodities and permitted payment
6	stablecoins, and how the markets for those digital
7	commodities intersect with each other;
8	(3) how non-fungible tokens are minted by
9	issuers and subsequently administered to purchasers;
10	(4) how non-fungible tokens are stored after
11	being purchased by a consumer;
12	(5) the interoperability of non-fungible tokens
13	between different blockchain systems;
14	(6) the scalability of different non-fungible to
15	kens marketplaces;
16	(7) the benefits of non-fungible tokens, includ
17	ing verifiable digital ownership;
18	(8) the risks of non-fungible tokens, including—
19	(A) intellectual property rights;
20	(B) cybersecurity risks; and
21	(C) market risks;
22	(9) whether and how non-fungible tokens have
23	integrated with traditional marketplaces, including
24	those for music, real estate, gaming, events, and
25	travel;

1	(10) whether and how non-fungible tokens can
2	be used to facilitate commerce or other activities
3	through the representation of documents, identifica
4	tion, contracts, licenses, and other commercial, gov
5	ernment, or personal records;
6	(11) any potential risks to traditional markets
7	from such integration; and
8	(12) the levels and types of illicit activity in
9	non-fungible tokens markets.
10	(b) REPORT.—Not later than 1 year after the date
11	of the enactment of this Act, the Comptroller General,
12	shall make publicly available a report that includes the re
13	sults of the study required by subsection (a).
14	SEC. 506. STUDY ON EXPANDING FINANCIAL LITERACY
15	AMONGST DIGITAL COMMODITY HOLDERS.
16	(a) IN GENERAL.—The Commodity Futures Trading
17	Commission with the Securities and Exchange Commis
18	sion shall jointly conduct a study to identify—
19	(1) the existing level of financial literacy among
20	retail digital commodity holders, including subgroups
21
22	of investors identified by the Commodity Futures Trading Commission with the Securities and Ex
23	change Commission;
24	(2) methods to improve the timing, content, and

ital commodities provided by the Commodity Fu- tures Trading Commission and the Securities and Exchange Commission;

(3) methods to improve coordination between the Securities and Exchange Commission and the Commodity Futures Trading Commission with other agencies, including the Financial Literacy and Edu- cation Commission as well as nonprofit organizations and State and local jurisdictions, to better dissemi-nate financial literacy materials;

(4) the efficacy of current financial literacy ef- forts with a focus on rural communities and commu-nities with majority minority populations;

(5) the most useful and understandable relevant information, including clear disclosures, that retail digital commodity holders need to make informed fi- nancial decisions before engaging with or purchasing a digital commodity or service that is typically sold to retail investors of digital commodities;

(6) the most effective public-private partner- ships in providing financial literacy regarding digital commodities to consumers;

(7) the most relevant metrics to measure suc-cessful improvement of the financial literacy of an

individual after engaging with financial literacy ef-forts; and

(8) in consultation with the Financial Literacy and Education Commission, a strategy (including to the extent practicable, measurable goals and objec- tives) to increase financial literacy of investors re-garding digital commodities.

(b) REPORT.—Not later than 1 year after the date of the enactment of this Act, the Commodity Futures Trading Commission and the Securities and Exchange Commission shall jointly submit a written report on the study required by subsection (a) to the Committees on Fi- nancial Services and on Agriculture of the House of Rep- resentatives and the Committees on Banking, Housing, and Urban Affairs and on Agriculture, Nutrition, and Forestry of the Senate.

SEC. 507. STUDY ON FINANCIAL MARKET INFRASTRUCTURE IMPROVEMENTS.

(a) IN GENERAL.—The Commodity Futures Trading Commission and the Securities and Exchange Commission shall jointly conduct a study to assess whether additional guidance or rules are necessary to facilitate the develop- ment of tokenized securities and derivatives products, and to the extent such guidance or rules would foster the devel-opment of fair and orderly financial markets, be necessary

or appropriate in the public interest, and be consistent with the protection of investors and customers.

(b) REPORT.—

(1) TIME LIMIT.—Not later than 1 year after the date of enactment of this Act, the Commodity Futures Trading Commission and the Securities and Exchange Commission shall jointly submit to the rel- evant congressional committees a report that in- cludes the results of the study required by sub-section (a).

(2) RELEVANT CONGRESSIONAL COMMITTEES DEFINED.—In this section, the term ''relevant con-gressional committees'' means—

(A) the Committees on Financial Services and on Agriculture of the House of Representa-tives; and

(B) the Committees on Banking, Housing, and Urban Affairs and on Agriculture, Nutri-tion, and Forestry of the Senate.

SEC. 508. STUDY ON BLOCKCHAIN IN PAYMENTS.

(a) STUDY REQUIRED.—The Secretary of the Treas- ury shall conduct a study on the potential use of blockchain technology by the domestic private sector to ad-dress—

(1) fraud in payments;

1	(2) transaction costs and transaction times;
2	(3) automated payments; and
3	(4) efficiency in commercial transactions.
4	(b) REPORT CONGRESS.—Not later than one year TO
5	after the date of enactment of this Act, the Secretary shall
6	submit a report to the Committee on Financial Services
7	of the House of Representatives and the Committee on
8	Banking, Housing, and Urban Affairs of the Senate that
9	summarizes the findings of the study required under sub
10	section (a).

(c) RULE OF CONSTRUCTION.—Nothing in this sec- tion shall be construed to mandate the use of blockchain technology by any public or private entity.

SEC. 509. STUDY ON ILLICIT USE OF DIGITAL ASSETS.

(a) IN GENERAL.—One year after the date of the en- actment of this Act, the Secretary of the Treasury, in con- sultation with the Securities and Exchange Commission and the Commodity Futures Trading Commission, shall conduct a comprehensive review of how Foreign Terrorist Organizations and Transnational Criminal Syndicates uti-lize digital assets in connection with illicit activities.

(b) REPORT.—Not later than 180 days after com- pleting the review under subsection (a), the Secretary of the Treasury shall issue a report to the Committees on Agriculture and on Financial Services of the House of

Representatives and the Committees on Agriculture, Nu- trition, and Forestry and on Banking, Housing, and Urban Affairs of the Senate on the findings of the Sec-retary, including—

(1) an assessment of how Foreign Terrorist Or- ganizations and Transnational Criminal Syndicates utilize digital assets in connection with illicit activi-ties; and

(2) recommendations to assist the Securities and Exchange Commission and the Commodity Fu- tures Trading Commission in strengthening compli- ance and enforcement of digital assets-related enti-ties registered with their respective agencies.

SEC. 510. GAO STUDY ON CERTAIN CENTRALIZED INTER-

MEDIARIES THAT ARE PRIMARILY LOCATED IN FOREIGN JURISDICTIONS.

(a) IN GENERAL.—The Comptroller General of the United States, in consultation with the Secretary of the Treasury, shall conduct a study to—

(1) assess the risks posed by centralized inter- mediaries that are primarily located in foreign juris- dictions that provide services to U.S. persons with- out regulatory requirements that are substantially similar to the requirements of the Bank Secrecy Act; and

(2) provide any regulatory or legislative rec- ommendations to address these risks under para-graph (1).

(b) REPORT.—Not later than 1 year after the date of enactment of this Act, the Comptroller General shall issue a report to Congress containing all findings and de- terminations made in carrying out the study required under subsection (a).

SEC. 511. STUDIES ON FOREIGN ADVERSARY PARTICIPA-TION.

(a) IN GENERAL.—The Secretary of the Treasury, in consultation with the Commodity Futures Trading Com- mission and the Securities and Exchange Commission, shall, not later than 1 year after date of the enactment of this section, conduct a study and submit a report to the relevant congressional committees that—

(1) identifies any digital commodity registrants which are owned by governments of foreign adver-saries;

(2) determines whether any governments of for- eign adversaries are collecting trading data about United States persons in the digital commodity mar-kets; and

(3) evaluates whether any proprietary intellec-tual property of digital commodity registrants is

1	being misused or stolen by any governments of for
2	eign adversaries.
3	(b) GAO STUDY REPORT.— AND
4	(1) IN GENERAL.—The Comptroller General
5	shall, not later than 1 year after date of the enact
6	ment of this section, conduct a study and submit a
7	report to the relevant congressional committees
8	that—
9	(A) identifies any digital commodity reg
10	istrants which are owned by governments of
11	foreign adversaries;
12	(B) determines whether any governments
13	of foreign adversaries are collecting trading
14	data about United States persons in the digital
15	commodity markets; and
16	(C) evaluates whether any proprietary in
17	tellectual property of digital commodity reg
18	istrants is being misused or stolen by any gov
19	ernments of foreign adversaries.
20	(c) DEFINITIONS.—In this section:
21	(1) DIGITAL REGISTRANT.—The COMMODITY
22	term ''digital commodity registrant'' means any per
23	son required to register as a digital commodity ex
24	change, digital commodity broker, or digital com
25	modity dealer under the Commodity Exchange Act.

1	(2) FOREIGN ADVERSARIES.—The term ''for
2	eign adversaries'' means the foreign governments
3	and foreign non-government persons determined by
4	the Secretary of Commerce to be foreign adversaries
5	under section 7.4(a) of title 15, Code of Federal
6	Regulations.
7	(3) RELEVANT COMMIT CONGRESSIONAL
8	TEES.—The term ''relevant congressional commit
9	tees'' means—
10	(A) the Committees on Financial Services
11	and Agriculture of the House of Representa
12	tives; and
13	(B) the Committees on Banking, Housing,
14	and Urban Affairs and Agriculture, Nutrition,
15	and Forestry of the Senate.
16	SEC. 512. CONFORMING AMENDMENTS.
17	The GENIUS Act is amended—
18	(1) in section 2, by amending paragraph (7) to
19	read as follows:
20	''(7) DIGITAL ASSET SERVICE PROVIDER.—The
21	term 'digital asset service provider' means any entity
22	registered or required to be registered with the Secu
23	rities and Exchange Commission or the Commodity
24	Futures Trading Commission.'';
25	(2) in section 4(a)—

1	(A) by amending paragraph (3) to read as
2	follows:
3	''(3) MONTHLY CERTIFICATION; EXAMINATION
4	OF REPORTS BY REGISTERED PUBLIC ACCOUNTING
5	FIRM.—
6	''(A) IN GENERAL.—A permitted payment
7	stablecoin issuer shall, each month, have the in
8	formation disclosed in the previous month-end
9	report required under paragraph (1)(C) exam
10	ined by a registered public accounting firm and
11	such examination shall be performed in accord
12	ance with standards for attestation engage
13	ments issued or adopted by the primary Federal
14	payment stablecoin regulator or, in the case of
15	a State qualified payment stablecoin issuer, the
16	State payment stablecoin regulator.
17	''(B) CERTIFICATION.—Each month, the
18	Chief Executive Officer and Chief Financial Of
19	ficer of a permitted payment stablecoin issuer
20	shall submit to, as applicable, the primary Fed
21	eral payment stablecoin regulator or, in the
22	case of a State qualified payment stablecoin
23	issuer, the State payment stablecoin regulator,

a certification that, based on such officers'

1	knowledge, the previous monthly report re
2	quired under paragraph (1)(C)—
3	''(i) does not contain any untrue
4	statement of material fact or omit to state
5	a material fact necessary in order to make
6	the statements made, in light of the cir
7	cumstances under which such statements
8	were made, not misleading; and
9	''(ii) fairly presented in all material
10	respects the information required under
11	paragraph (1)(C) for the period presented
12	in such report.
13	''(C) CRIMINAL PENALTY.—Any person
14	who submits a certification required under sub
15	paragraph (B) knowing that such certification
16	is false shall be subject to the same criminal
17	penalties as those set forth under section
18	1350(c) of title 18, United States Code.
19	''(D) INTERNAL PER CONTROLS OVER
20	ISSUER'S RE MITTED PAYMENT STABLECOIN
21	QUIREMENTS.—
22	''(i) IN GENERAL.—Management of a
23	permitted payment stablecoin issuer shall
24	establish and maintain an adequate inter
25	nal control structure and procedures for

1	the requirements under this paragraph and
2	paragraphs (1) and (2) in accordance with
3	a framework determined acceptable by the
4	primary Federal payment stablecoin regu
5	lator or, in the case of a State qualified
6	payment stablecoin issuer, the State pay
7	ment stablecoin regulator.
8	''(ii) ATTESTATION REPORT.—A per
9	mitted payment stablecoin issuer shall ob
10	tain an annual attestation report by an
11	independent registered public accounting
12	firm attesting to management's assertions
13	concerning the effectiveness of the internal
14	control structure and procedures for com
15	pliance with the requirements described in
16	this paragraph and paragraphs (1) and
17	(2). Such attestation shall be made in ac
18	cordance with standards for attestation en
19	gagements issued or adopted by the pri
20	mary Federal payment stablecoin regulator
21	or, in the case of a State qualified payment
22	stablecoin issuer, the State payment
23	stablecoin regulator.''; and
24	(B) by amending paragraph (12) to read
25	as follows:

1	''(12) NON-FINANCIAL COMPANIES.—
2	''(A) PROHIBITION NON-FINANCIAL ON
3	COMPANY OWNERSHIP.—It shall be unlawful for
4	a company that derives a majority of its reve
5	nues from activities that are not financial ac
6	tivities to retain or acquire control of a
7	nonbank entity that is—
8	''(i) a Federal qualified payment
9	stablecoin issuer; or
10	''(ii) a State qualified payment
11	stablecoin issuer.
12	''(B) FINANCIAL ACTIVITIES DEFINED.—
13	''(i) IN GENERAL.—In this paragraph,
14	the term 'financial activities' means—
15	''(I) a financial activity, within
16	the meaning of section 4(k) of the
17	Bank Holding Company Act of 1956
18	(12 U.S.C. 1843(k));
19	''(II) issuing, redeeming, pro
20	viding custodial or safekeeping serv
21	ices for, buying, selling, making a
22	market in, or managing a reserve for
23	payment stablecoins;
24	''(III) providing electronic wallet
25	services for payment stablecoins; or

• ''(IV) an activity determined by the Board to be a financial activity pursuant to clause (ii). ''(ii) ESTABLISHING ADDITIONAL FI- NANCIAL ACTIVITIES.—Not later than 180 days after the date of enactment of the CLARITY Act of 2025, the Board, in con- sultation with the Secretary of the Treas- ury and the Comptroller, shall issue rules, consistent with the purposes of this Act, to establish— ''(I) a list of additional activities
• that are financial activities for pur- poses of clause (i), including applica- ble digital asset activities that are fi-nancial activities; and

''(II) a streamlined procedure for a nonbank entity to submit an activity to the Board for purposes of the Board determining whether such ac- tivity should be added to the list of additional activities that are financial activities for purposes of clause (i).''; and

(3) by adding at the end the following:

''SEC. 21. COMMODITY-BACKED PAYMENT STABLECOINS.

''(a) RULE OF CONSTRUCTION.—Nothing in this Act shall be construed to prohibit or limit a commodity-backed payment stablecoin issuer from issuing a commodity- backed payment stablecoin in accordance with regulations established by a State commodity-backed payment stablecoin regulator.

''(b) PRESERVATION OF FEDERAL AUTHORITY.— Nothing in this section shall be construed to alter or limit the jurisdiction of the Commodity Futures Trading Com- mission over any matter within the Commission's author-ity under applicable law.

''(c) DEFINITIONS.—For purposes of this section:

''(1) COMMODITY-BACKED PAYMENT STABLECOIN.—The term 'commodity-backed pay-ment stablecoin' means a digital asset—

''(A) that is, or is designed to be, used as a means of payment or settlement;

''(B) that is denominated in a highly liq- uid, publicly traded physical commodity, such as gold;

''(C) the issuer of which is obligated to— ''(i) convert, redeem, or repurchase for a fixed amount of the denominated highly liquid, publicly traded physical com-modity; and

1	''(ii) custody or cause to be custodied,
2	for the benefit of the holders of the pay
3	ment stablecoin, an amount of the physical
4	commodity equal to or greater than the
5	total amount of outstanding payment
6	stablecoins, for the purpose of converting,
7	redeeming, or repurchasing the digital
8	asset; and
9	''(D) that is not—
10	''(i) a security issued by—
11	''(I) an investment company reg
12	istered under section 8(a) of the In
13	vestment Company Act of 1940 (15
14	U.S.C. 80a–8(a)); or
15	''(II) a person that would be an
16	investment company under the Invest
17	ment Company Act of 1940 but for
18	paragraphs (1) and (7) of section 3(c)
19	of that Act (15 U.S.C. 80a-3(c));
20	''(ii) a deposit (as defined under sec
21	tion 3 of the Federal Deposit Insurance
22	Act (12 U.S.C. 1813)), regardless of the
23	technology used to record such deposit;
24	''(iii) an account (as defined in section
25	101 of the Federal Credit Union Act (12

1	U.S.C. 1752)), regardless of the technology
2	used to record such account; or
3	''(iv) an interest or participation in a
4	commodity pool (as defined in section
5	1a(10) of the Commodity Exchange Act (7
6	U.S.C. 1a)).
7	''(2) COMMODITY-BACKED PAYMENT
8	ISSUER.—The term 'commodity-backed STABLECOIN
9	payment stablecoin issuer' means—
10	''(A) an entity that issues a commodity
11	backed payment stablecoin; and
12	''(B) an entity that is approved to issue
13	such commodity-backed payment stablecoins by
14	a State commodity-backed payment stablecoin
15	regulator.
16	''(3) PHYSICAL COMMODITY.—The term 'phys
17	ical commodity' means any exempt commodity (as
18	defined in section 1a(21) of the Commodity Ex
19	change Act (7 U.S.C. 1a)) which can be physically
20	delivered.
21	''(4) STATE COMMODITY-BACKED PAYMENT
22	REGULATOR.—The term 'State com STABLECOIN
23	modity-backed payment stablecoin regulator' means
24	a State agency that has primary regulatory and su-

1	pervisory authority over entities that issue com
2	modity-backed payment stablecoins in such State.
3	''SEC. 22. PROTECTION OF SELF-CUSTODY.
4	''(a) IN GENERAL.—A United States individual shall
5	retain the right to—
6	''(1) maintain a hardware wallet or software
7	wallet for the purpose of facilitating the individual's
8	own lawful custody of digital assets; and
9	''(2) engage in direct, peer-to-peer transactions
10	in digital assets with another individual or entity for
11	the individual's own lawful purposes using a hard
12	ware wallet or software wallet, if—
13	''(A) such other individual or entity is not
14	a financial institution (as defined in section
15	5312 of title 31, United States Code); and
16	''(B) the transactions do not involve any
17	property or interests in property that are
18	blocked pursuant to, or are otherwise prohibited
19	by, United States sanctions.
20	''(b) APPLICATION.—This section—
21	''(1) applies solely to personal use by individ
22	uals; and
23	''(2) does not apply to individuals acting in a
24	custodial or fiduciary capacity for others.

''(c) RULE OF CONSTRUCTION.—Nothing in this sec- tion shall be construed to limit the authority of the Sec- retary of the Treasury, the Securities and Exchange Com- mission, the Commodity Futures Trading Commission, or the primary Federal payment stablecoin regulators to carry out any enforcement action or special measure au-thorized under applicable law, including—

''(1) the Bank Secrecy Act, section 9714 of the Combating Russian Money Laundering Act (31 U.S.C. 5318A note), and section 7213A of the Fentanyl Sanctions Act (21 U.S.C. 2313a); or

''(2) any other law relating to illicit finance, money laundering, terrorism financing, or United States sanctions.''.

Passed the House of Representatives July 17, 2025. Attest:

Clerk.

119TH CONGRESS 1ST SESSION H. R. 3633

AN ACT

To provide for a system of regulation of the offer poses. Futures Trading Commission, and for other purand Exchange Commission and the Commodity and sale of digital commodities by the Securities