,,ib ,union ,calendar ,no4 #dja #aahth ,,congress #b;d ,session ,h4 ,r4 #dgfc ,report ,no4 #aah-dhd1 ,parts ,i and ,,ii ,,in ,,the ,,house ,,of ,,representatives ,july #bj1 #bjbc ,mr4 ,thompson of ,pennsylvania 7for himself1 ,mr4 ,hill1 ,mr4 ,johnson of ,south ,dakota1 ,mr4 ,davidson1 and ,mr4 ,emmer7 introduced the following bill2 which was referred to the ,committee on ,financial ,services1 and in addition to the ,committee on ,agriculture1 for a period to be subsequently determined by the ,speaker1 in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned ,may #f1 #bjbd ,additional sponsors3 ,mr4 ,molinaro1 ,mr4 ,cuellar1 ,mr4 ,nickel1 ,mr4 ,curtis1 ,mr4 ,banks1 ,mr4 ,mc,henry1 and ,mr4 ,torres of ,new ,york ,may #f1 #bjbd ,reported from the ,committee on ,agriculture with an amendment ,strike out all after the enacting clause and insert the part printed in italic ,may #f1 #bjbd ,reported from the ,committee on ,financial ,services with an amendment2 committed to the ,committee of the ,whole ,house on the ,state of the ,union and ordered to be printed ,strike out all after the enacting clause and insert the part printed in boldface roman ,for text of introduced bill1 see copy of bill as introduced on ,july #bj1 #bjbc ,a ,,bill ,to provide for a system of regulation of digital assets by the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission1 and for other purposes4 #a4 ,short title2 table of contents 7a7 ,short title ,this ,act may be cited as the ,financial ,innovation and ,technology for the #bast ,century ,act4 7b7 ,table of contents ,the table of contents for this ,act is as follows3 ,sec4 #a4 ,short title2 table of contents4 ,title ,i--,definitions2 ,rulemaking2 ,notice of ,intent to ,register ,sec4 #aja4 ,definitions under the ,securities ,act of #aicc4 ,sec4 #ajb4 ,definitions under the ,commodity ,exchange ,act4 ,sec4 #ajc4 ,definitions under this ,act4 ,sec4 #ajd4 ,joint rulemakings4 ,sec4 #aje4 ,notice of intent to register for digital commodity exchanges1 brokers1 and dealers4 ,sec4 #ajf4 ,notice of intent to register for digital asset brokers1 dealers1 and trading systems4 ,sec4 #ajg4 ,commodity ,exchange ,act savings provisions4 ,sec4 #ajh4 ,international harmonization4 ,sec4 #aji4 ,implementation4 ,title ,,ii--,digital ,asset ,exemptions ,sec4 #bja4 ,exempted transactions in digital assets4 ,sec4 #bjb4 ,requirements to transact in certain digital assets4 ,sec4 #bjc4 ,enhanced disclosure requirements4 ,sec4 #bjd4 ,certification of certain digital assets4 ,sec4 #bje4 ,effective date4 ,title ,,iii--,registration for ,digital ,asset ,intermediaries at the ,securities and ,exchange ,commission ,sec4 #cja4 ,treatment of digital commodities and other digital assets4 ,sec4 #cjb4 ,antifraud authority over permitted payment stablecoins4 ,sec4 #cjc4 ,registration of digital asset trading systems4 ,sec4 #cjd4 ,requirements for digital asset trading systems4 ,sec4 #cje4 ,registration of digital asset brokers and digital asset dealers4 ,sec4 #cjf4 ,requirements of digital asset brokers and digital asset dealers4 ,sec4 #cjg4 ,rules related to conflicts of interest4 ,sec4 #cjh4 ,treatment of certain digital assets in connection with federally regulated intermediaries4 ,sec4 #cji4 ,dual registration4 ,sec4 #caj4 ,exclusion for ancillary activities4 ,sec4 #caa4 ,registration and requirements for notice-registered digital asset clearing agencies4 ,sec4 #cab4 ,treatment of custody activities by banking institutions4 ,title ,,iv--,registration for ,digital ,asset ,intermediaries at the ,commodity ,futures ,trading ,commission ,sec4 #dja4 ,commission jurisdiction over digital commodity transactions4 ,sec4 #djb4 ,requiring futures commission merchants to use qualified digital commodity custodians4 ,sec4 #djc4 ,trading certification and approval for digital commodities4 ,sec4 #djd4 ,registration of digital commodity exchanges4 ,sec4 #dje4 ,qualified digital commodity custodians4 ,sec4 #djf4 ,registration and regulation of digital commodity brokers and dealers4 ,sec4 #djg4 ,registration of associated persons4 ,sec4 #djh4 ,registration of commodity pool operators and commodity trading advisors4 ,sec4 #dji4 ,exclusion for ancillary activities4 ,sec4 #daj4 ,funding for implementation1 administration1 and enforcement4 ,sec4 #daa4 ,effective date4 ,title ,v--,innovation and ,technology ,improvements ,sec4 #eja4 ,codification of the ,,sec ,strategic ,hub for ,innovation and ,financial ,technology4 ,sec4 #ejb4 ,codification of ,lab,c,f,t,c4 ,sec4 #ejc4 ,,cftc-,,sec ,joint ,advisory ,committee on ,digital ,assets4 ,sec4 #ejd4 ,modernization of the ,securities and ,exchange ,commission mission4 ,sec4 #eje4 ,study on decentralized finance4 ,sec4 #ejf4 ,study on non-fungible digital assets4 ,sec4 #ejg4 ,study on financial market infrastructure improvements4 ,i4 ,definitions2 ,rulemaking2 ,notice of ,intent to ,register #aja4 ,definitions under the ,securities ,act of #aicc ,section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a77 is amended by adding at the end the following3 7#bj7 ,affiliated persons ,the term affiliated person means a person 7including a related person7 that-- 7,a7 with respect to a digital asset issuer-- 7i7 directly1 or indirectly through one or more intermediaries1 controls1 or is controlled by1 or is under common control with1 such digital asset issuer2 and 7ii7 was described under clause 7i7 at any point in the previous #c-month period2 or 7,b7 with respect to any digital asset-- 7i7 beneficially owns #e percent or more of the units of such digital asset that are then outstanding2 and 7ii7 was described under clause 7i7 at any point in the previous #c-month period4 7#ba7 ,blockchain ,the term blockchain means any technology-- 7,a7 where data is-- 7i7 shared across a network to create a public ledger of verified transactions or information among network participants2 7ii7 linked using cryptography to maintain the integrity of the public ledger and to execute other functions2 and 7iii7 distributed among network participants in an automated fashion to concurrently update network participants on the state of the public ledger and any other functions2 and 7,b7 composed of source code that is publicly available4 7#bb7 ,blockchain protocol ,the term blockchain protocol means any executable software deployed to a blockchain composed of source code that is publicly available and accessible1 including a smart contract or any network of smart contracts4 7#bc7 ,blockchain system ,the term blockchain system means any blockchain or blockchain protocol4 7#bd7 ,decentralized network ,with respect to a blockchain system to which a digital asset relates1 the term decentralized network means the following conditions are met3 7,a7 ,during the previous #ab-month period1 no person-- 7i7 had the unilateral authority1 directly or indirectly1 through any contract1 arrangement1 understanding1 relationship1 or otherwise1 to control or materially alter the functionality or operation of the blockchain system2 or 7ii7 had the unilateral authority to restrict or prohibit any person who is not a digital asset issuer1 related person1 or an affiliated person from-- 7,i7 using1 earning1 or transmitting the digital asset2 7,,ii7 deploying software that uses or integrates with the blockchain system2 7,,iii7 participating in a decentralized governance system with respect to the blockchain system2 or 7,,iv7 operating a node1 validator1 or other form of computational infrastructure with respect to the blockchain system4 7,b7 ,during the previous #ab-month period-- 7i7 no digital asset issuer or affiliated person beneficially owned1 in the aggregate1 #bj percent or more of the total amount of units of such digital asset that-- 7,i7 can be created1 issued1 or distributed in such blockchain system2 and 7,,ii7 were freely transferrable or otherwise used or available to be used for the purposes of such blockchain network2 7ii7 no digital asset issuer or affiliated person had the unilateral authority to direct the voting1 in the aggregate1 of #bj percent or more of the outstanding voting power of such digital asset or related decentralized governance system2 or 7iii7 the digital asset did not include voting power4 7,c7 ,during the previous #c-month period1 the digital asset issuer1 any affiliated person1 or any related person has not implemented or contributed any intellectual property to the source code of the blockchain system that materially alters the functionality or operation of the blockchain system1 unless such implementation or contribution to the source code-- 7i7 addressed vulnerabilities1 errors1 regular maintenance1 cybersecurity risks1 or other technical improvements to the blockchain system2 or 7ii7 were adopted through the consensus or agreement of a decentralized governance system4 7,d7 ,during the previous #c-month period1 neither any digital asset issuer nor any affiliated person described under paragraph 7#bj77;,a7 has marketed to the public the digital assets as an investment4 7,e7 ,during the previous #ab-month period1 all issuances of units of such digital asset were end user distributions made through the programmatic functioning of the blockchain system4 7#be7 ,decentralized governance system 7,a7 ,in general ,the term decentralized governance system means1 with respect to a blockchain system1 any rules-based system permitting persons using the blockchain system or the digital assets related to such blockchain system to form consensus or reach agreement in the development1 provision1 publication1 management1 or administration of such blockchain system4 7,b7 ,relationship of persons to decentralized governance systems ,persons acting through a decentralized governance system shall be treated as separate persons unless such persons are under common control4 7,c7 ,exclusion ,the term decentralized governance system does not include a system in which-- 7i7 a person or group of persons under common control have the ability to-- 7,i7 unilaterally alter the rules of consensus or agreement for the blockchain system2 or 7,,ii7 determine the final outcome of decisions related to the development1 provision1 publication1 management1 or administration of such blockchain system2 7ii7 a person or group of persons is directly engaging in an activity that requires registration with the ,commission or the ,commodity ,futures ,trading ,commission other than-- 7,i7 developing1 providing1 publishing1 managing1 or administering a blockchain system2 or 7,,ii7 an activity with respect to which the organization is exempt from such registration2 or 7iii7 a person or group of persons seeking to knowingly evade the requirements imposed on a digital asset issuer1 a related person1 an affiliated person1 or any other person registered 7or required to be registered7 under this ,act1 the ,financial ,innovation and ,technology for the #bast ,century ,act1 or the ,commodity ,exchange ,act4 7#bf7 ,digital asset 7,a7 ,in general ,the term digital asset means any fungible digital representation of value that can be exclusively possessed and transferred1 person to person1 without necessary reliance on an intermediary1 and is recorded on a cryptographically secured public distributed ledger4 7,b7 ,exclusions ,the term digital asset does not include-- 7i7 any note1 stock1 treasury stock1 security future1 security-based swap1 bond1 debenture1 evidence of indebtedness1 certificate of interest or participation in any profit-sharing agreement1 collateral-trust certificate1 preorganization certificate or subscription1 or transferable share2 or 7ii7 any asset which represents1 operates as the functional equivalent of1 or otherwise has embedded functionality or characteristics which make it an agreement1 contract1 or transaction that is-- 7,i7 a contract of sale of a commodity 7as defined under section #a;a of the ,commodity ,exchange ,act7 for future delivery or an option thereon2 7,,ii7 a security futures product2 7,,iii7 a swap2 7,,iv7 an agreement1 contract1 or transaction described in section #b7;c77#b77;,c77i7 or #b7;c77#b77;,d77i7 of the ,commodity ,exchange ,act2 7,v7 a commodity option authorized under section #d;c of the ,commodity ,exchange ,act2 or 7,,vi7 a leverage transaction authorized under section #ai of the ,commodity ,exchange ,act4 7,c7 ,relationship to a blockchain system ,a digital asset is considered to relate to a blockchain system if the digital asset is intrinsically linked to the blockchain system1 including-- 7i7 where the digital asset's value is reasonably expected to be generated by the programmatic functioning of the blockchain system2 7ii7 where the asset has voting rights with respect to the blockchain system2 or 7iii7 where the digital asset is issued through the programmatic functioning of the blockchain system4 7,d7 ,treatment of certain digital assets sold pursuant to an investment contract ,a digital asset sold or transferred or intended to be sold or transferred pursuant to an investment contract is not and does not become a security as a result of being sold or otherwise transferred pursuant to that investment contract4 7#bg7 ,digital asset issuer ,with respect to a digital asset1 the term digital asset issuer-- 7,a7 means-- 7i7 any person that1 in exchange for any consideration-- 7,i7 issues or causes to be issued a unit of such digital asset to a person2 or 7,,ii7 offers or sells a right to a future issuance of a unit of such digital asset to a person2 or 7ii7 any person who seeks to knowingly evade classification as a digital asset issuer and facilitate an arrangement for the primary purpose of effecting a sale1 distribution1 or other issuance of such digital asset1 by-- 7,i7 the granting of a license or assignment of intellectual property2 7,,ii7 the making available of free software or open source licenses2 or 7,,iii7 the granting of other rights or transfer of assets material to execution of such sale1 distribution1 or other issuance2 and 7,b7 does not include any person solely because such person1 for the purpose of such person participating in operations of a blockchain system1 deploys source code to create units of a digital asset which are incentive-based rewards-- 7i7 to users of the digital asset or any blockchain system to which the digital asset relates2 or 7ii7 for activities directly related to the operation of the blockchain system1 such as mining1 validating1 staking1 or other activity directly tied to the operation of the blockchain system4 7#bh7 ,digital asset maturity date ,the term digital asset maturity date means1 with respect to any units of a digital asset1 the first date on which #bj percent or more of the total units of such digital asset that are then outstanding as of such date are-- 7,a7 digital commodities2 or 7,b7 digital assets that have been registered with the ,commission4 7#bi7 ,digital commodity ,the term digital commodity has the meaning given that term under section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a74 7#cj7 ,end user distribution ,the term end user distribution means an issuance of a unit of a digital asset that-- 7,a7 does not involve an exchange of more than a nominal value of cash1 property1 or other assets2 and 7,b7 is distributed in a broad1 equitable1 and non-discretionary manner based on conditions capable of being satisfied by any participant in the blockchain system1 including1 as incentive-based rewards-- 7i7 to users of the digital asset or any blockchain system to which the digital asset relates2 7ii7 for activities directly related to the operation of the blockchain system1 such as mining1 validating1 staking1 or other activity directly tied to the operation of the blockchain system2 or 7iii7 to the existing holders of another digital asset1 in proportion to the total units of such other digital asset as are held by each person4 7#ca7 ,functional network ,with respect to a blockchain system to which a digital asset relates1 the term functional network means the network allows network participants to use such digital asset for-- 7,a7 the transmission and storage of value on the blockchain system2 7,b7 the participation in services provided by or an application running on the blockchain system2 or 7,c7 the participation in governance of the blockchain system4 7#cb7 ,permitted payment stablecoin ,the term permitted payment stablecoin-- 7,a7 means a digital asset-- 7i7 that is or is designed to be used as a means of payment or settlement2 7ii7 the issuer of which-- 7,i7 is obligated to convert1 redeem1 or repurchase for a fixed amount of monetary value2 and 7,,ii7 represents will maintain or creates the reasonable expectation that it will maintain a stable value relative to the value of a fixed amount of monetary value2 and 7iii7 that is subject to regulation by a ,federal or ,state regulator with authority over entities that issue payment stablecoins2 and 7,b7 that is not-- 7i7 a national currency2 or 7ii7 a security issued by an investment company registered under section #h7;a7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#h7;a774 7#cc7 ,related person ,with respect to a digital asset issuer1 the term related person means-- 7,a7 a founder1 promoter1 employee1 consultant1 advisor1 or person serving in a similar capacity2 7,b7 any person that is or was in the previous #f-month period an executive officer1 director1 trustee1 general partner1 advisory board member1 or person serving in a similar capacity2 7,c7 any equity holder or other security holder of a digital asset issuer2 or 7,d7 any other person that received a unit of digital asset from such digital asset issuer through-- 7i7 an exempt offering1 other than an offering made in reliance on section #d7;a77#h72 or 7ii7 a distribution that is not an end user distribution described under section #db7;d77#a7 of the ,securities ,exchange ,act of #aicd4 7#cd7 ,restricted digital asset 7,a7 ,in general ,the term restricted digital asset means-- 7i7 any unit of a digital asset held by a person1 other than a digital asset issuer1 a related person1 or an affiliated person1 prior to the first date on which each blockchain system to which the digital asset relates is a functional network and certified to be a decentralized network under section #dd of the ,securities ,exchange ,act of #aicd1 that was-- 7,i7 issued to such person through a distribution1 other than an end user distribution described under section #db7;d77#a7 of the ,securities ,exchange ,act of #aicd2 or 7,,ii7 acquired by such person in a transaction that was not executed on a digital commodity exchange2 7ii7 any digital asset held by a related person or an affiliated person during any period when any blockchain system to which the digital asset relates is not a functional network or not certified to be a decentralized network under section #dd of the ,securities ,exchange ,act of #aicd2 or 7iii7 any unit of a digital asset held by the digital asset issuer4 7,b7 ,exclusion ,the term restricted digital asset does not include a permitted payment stablecoin4 7#ce7 ,securities laws ,the term securities laws has the meaning given that term under section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a774 7#cf7 ,source code ,with respect to a blockchain system1 the term source code means a listing of commands to be compiled or assembled into an executable computer program4 4 #ajb4 ,definitions under the ,commodity ,exchange ,act ,section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a7 is amended-- 7#a7 in paragraph 7#aj77;,a7-- 7,a7 by redesignating clauses 7iii7 and 7iv7 as clauses 7iv7 and 7v71 respectively2 and 7,b7 by inserting after clause 7ii7 the following3 7iii7 digital commodity2 2 7#b7 in paragraph 7#aa7-- 7,a7 in subparagraph 7,a77i7-- 7i7 by redesignating subclauses 7,,iii7 and 7,,iv7 as subclauses 7,,iv7 and 7,v71 respectively2 and 7ii7 by inserting after subclause 7,,ii7 the following3 7,,iii7 digital commodity2 2 and 7,b7 by redesignating subparagraph 7,b7 as subparagraph 7,c7 and inserting after subparagraph 7,a7 the following3 7,b7 ,exclusion ,the term commodity pool operator does not include-- 7i7 a decentralized governance system2 or 7ii7 ancillary activities1 as defined in section #dv4 2 7#c7 in paragraph 7#ab77;,a77i7-- 7,a7 in subclause 7,,ii71 by adding at the end a semicolon2 7,b7 by redesignating subclauses 7,,iii7 and 7,,iv7 as subclauses 7,,iv7 and 7,v71 respectively2 and 7,c7 by inserting after subclause 7,,ii7 the following3 7,,iii7 a digital commodity2 2 7#d7 in paragraph 7#dj7-- 7,a7 by striking and at the end of subparagraph 7,e72 7,b7 by striking the period at the end of subparagraph 7,f7 and inserting 2 and2 and 7,c7 by adding at the end the following3 7,g7 a digital commodity exchange registered under section #e;i4 2 and 7#e7 by adding at the end the following3 7#eb7 ,associated person of a digital commodity broker 7,a7 ,in general ,except as provided in subparagraph 7,b71 the term associated person of a digital commodity broker means a person who is associated with a digital commodity broker as a partner1 officer1 employee1 or agent 7or any person occupying a similar status or performing similar functions7 in any capacity that involves-- 7i7 the solicitation or acceptance of a contract of sale of a digital commodity2 or 7ii7 the supervision of any person engaged in the solicitation or acceptance of a contract of sale of a digital commodity4 7,b7 ,exclusion ,the term associated person of a digital commodity broker does not include any person associated with a digital commodity broker the functions of which are solely clerical or ministerial4 7#ec7 ,associated person of a digital commodity dealer 7,a7 ,in general ,except as provided in subparagraph 7,b71 the term associated person of a digital commodity dealer means a person who is associated with a digital commodity dealer as a partner1 officer1 employee1 or agent 7or any person occupying a similar status or performing similar functions7 in any capacity that involves-- 7i7 the solicitation or acceptance of a contract of sale of a digital commodity2 or 7ii7 the supervision of any person engaged in the solicitation or acceptance of a contract of sale of a digital commodity4 7,b7 ,exclusion ,the term associated person of a digital commodity dealer does not include any person associated with a digital commodity dealer the functions of which are solely clerical or ministerial4 7#ed7 ,bank ,secrecy ,act ,the term ,bank ,secrecy ,act means-- 7,a7 section #ba of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahbi;b72 7,b7 chapter #b of title ,i of ,public ,law #ia-ejh 7#ab ,u4,s4,c4 #aiea et seq472 and 7,c7 subchapter ,,ii of chapter #ec of title #ca1 ,united ,states ,code4 7#ee7 ,digital commodity 7,a7 ,in general ,the term digital commodity means-- 7i7 any unit of a digital asset held by a person1 other than the digital asset issuer1 a related person1 or an affiliated person1 before the first date on which each blockchain system to which the digital asset relates is a functional network and certified to be a decentralized network under section #dd of the ,securities ,exchange ,act of #aicd1 that was-- 7,i7 issued to the person through an end user distribution described under section #db7;d77#a7 of the ,securities ,exchange ,act of #aicd2 or 7,,ii7 acquired by such person in a transaction that was executed on a digital commodity exchange2 or 7ii7 any unit of a digital asset held by a person1 other than the digital asset issuer1 a related person1 or an affiliated person1 after the first date on which each blockchain system to which the digital asset relates is a functional network and certified to be a decentralized network under section #dd of the ,securities ,exchange ,act of #aicd2 and 7iii7 any unit of a digital asset held by a related person or an affiliated person during any period when any blockchain system to which the digital asset relates is a functional network and certified to be a decentralized network under section #dd of the ,securities ,exchange ,act of #aicd4 7,b7 ,exclusion ,the term digital commodity does not include a permitted payment stablecoin4 7#ef7 ,digital commodity broker 7,a7 ,in general ,the term digital commodity broker means any person who1 in a digital commodity cash or spot market1 is-- 7i7 engaged in soliciting or accepting orders for the purchase or sale of a unit of a digital commodity from a person that is not an eligible contract participant2 7ii7 engaged in soliciting or accepting orders for the purchase or sale of a unit of a digital commodity from a person on or subject to the rules of a registered entity2 or 7iii7 registered with the ,commission as a digital commodity broker4 7,b7 ,exceptions ,the term digital commodity broker does not include a person solely because the person-- 7i7 enters into a digital commodity transaction the primary purpose of which is to make1 send1 receive1 or facilitate payments1 whether involving a payment service provider or on a peer-to-peer basis2 or 7ii7 validates a digital commodity transaction1 operates a node1 or engages in similar activity to participate in facilitating1 operating1 or securing a blockchain system4 7#eg7 ,digital commodity custodian ,the term digital commodity custodian means an entity in the business of holding1 maintaining1 or safeguarding digital commodities4 7#eh7 ,digital commodity dealer 7,a7 ,in general ,the term digital commodity dealer means any person who-- 7i7 in digital commodity cash or spot markets-- 7,i7 holds itself out as a dealer in a digital commodity2 7,,ii7 makes a market in a digital commodity2 7,,iii7 regularly enters into digital commodity transactions with counterparties as an ordinary course of business for its own account2 or 7,,iv7 engages in any activity causing the person to be commonly known in the trade as a dealer or market maker in a digital commodity2 7ii7 regularly enters into any agreement1 contract1 or transaction described in subsection 7c77#b77;,d77i7 involving a digital commodity2 or 7iii7 is registered with the ,commission as a digital commodity dealer4 7,b7 ,exception ,the term digital commodity dealer does not include a person solely because the person-- 7i7 enters into a digital commodity transaction with an eligible contract participant2 7ii7 enters into a digital commodity transaction on or through a registered digital commodity exchange2 7iii7 enters into a digital commodity transaction for the person's own account1 either individually or in a fiduciary capacity1 but not as a part of a regular business2 7iv7 enters into a digital commodity transaction the primary purpose of which is to make1 send1 receive1 or facilitate payments1 whether involving a payment service provider or on a peer-to-peer basis2 or 7v7 validates a digital commodity transaction1 operates a node1 or engages in similar activity to participate in facilitating1 operating1 or securing a blockchain system4 7#ei7 ,digital commodity exchange ,the term digital commodity exchange means a trading facility that offers or seeks to offer a cash or spot market in at least #a digital commodity4 7#fj7 ,digital asset-related definitions 7,a7 ,securities ,act of #aicc ,the terms affiliated person1 blockchain system1 decentralized governance systemdecentralized network1 digital asset1 digital asset issuer1 end user distribution1 functional network1 permitted payment stablecoin1 related person1 and restricted digital asset have the meaning given the terms1 respectively1 under section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a774 7,b7 ,securities ,exchange ,act of #aicd ,the terms digital asset broker and digital asset dealer have the meaning given those terms1 respectively1 under section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a774 7#fa7 ,mixed digital asset transaction ,the term mixed digital asset transaction has the meaning given that term under section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a774 4 #ajc4 ,definitions under this ,act ,in this ,act3 7#a7 ,definitions under the ,commodity ,exchange ,act ,the terms digital commodity1 digital commodity broker1 digital commodity dealer1 and digital commodity exchange have the meaning given those terms1 respectively1 under section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a74 7#b7 ,definitions under the ,securities ,act of #aicc ,the terms affiliated person1 blockchain1 blockchain system1 blockchain protocol1 decentralized network1 digital asset1 digital asset issuer1 digital asset maturity date1 digital asset trading system1 end user distribution1 functional network1 permitted payment stablecoin1 restricted digital asset1 securities laws1 and source code have the meaning given those terms1 respectively1 under section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a774 7#c7 ,definitions under the ,securities ,exchange ,act of #aicd ,the terms ,bank ,secrecy ,act1 digital asset broker1 digital asset dealer1 digital asset trading system1 mixed digital asset transaction1 and self-regulatory organization have the meaning given those terms1 respectively1 under section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a774 #ajd4 ,joint rulemakings 7a7 ,definitions ,the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall1 jointly1 issue rules to further define the following terms3 7#a7 ,the terms affiliated person1 blockchain1 blockchain system1 blockchain protocol1 decentralized network1 decentralized governance system1 digital asset1 digital asset issuer1 digital asset maturity date1 end user distribution1 functional network1 related person1 restricted digital asset1 and source code1 as defined under section #b7;a7 of the ,securities ,act of #aicc4 7#b7 ,the term mixed digital asset transaction1 as defined under section #c7;a7 of the ,securities ,exchange ,act of #aicd4 7#c7 ,the term digital commodity1 as defined under section #a;a of the ,commodity ,exchange ,act4 7b7 ,joint rulemaking for exchanges ,the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall1 jointly1 issue rules to exempt persons dually registered with the ,commodity ,futures ,trading ,commission as a digital commodity exchange and with the ,securities and ,exchange ,commission as a digital asset trading system from duplicative1 conflicting1 or unduly burdensome provisions of this ,act1 the securities laws1 and the ,commodity ,exchange ,act and the rules thereunder1 to the extent such exemption would foster the development of fair and orderly markets in digital assets1 be necessary or appropriate in the public interest1 and be consistent with the protection of investors4 7c7 ,joint rulemaking for mixed digital asset transactions ,the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall1 jointly1 issue rules applicable to mixed digital asset transactions under this ,act and the amendments made by this ,act4 7d7 ,protection of self-custody 7#a7 ,in general ,the ,financial ,crimes ,enforcement ,network may not issue any rule or order that would prohibit a ,u4,s4 individual from-- 7,a7 maintaining a hardware wallet1 software wallet1 or other means to facilitate such individual's own custody of digital assets2 or 7,b7 conducting transactions and self-custody of digital assets for any lawful purpose4 7#b7 ,rule of construction ,paragraph 7#a7 may not be construed to limit the ability of ,financial ,crimes ,enforcement ,network to carry out any enforcement authority4 #aje4 ,notice of intent to register for digital commodity exchanges1 brokers1 and dealers 7a7 ,in general 7#a7 ,notice of intent to register ,any person may file a notice of intent to register with the ,commodity ,futures ,trading ,commission 7in this subsection referred to as the ,commission7 as a-- 7,a7 digital commodity exchange1 for a person intending to register as a digital commodity exchange under section #e;i of the ,commodity ,exchange ,act2 7,b7 digital commodity broker1 for a person intending to register as a digital commodity broker under section #du of such ,act2 7,c7 digital commodity dealer1 for a person intending to register as a digital commodity dealer under section #du of such ,act2 or 7,d7 associated person1 for a person intending to register under section #dk7#d7 of such ,act4 7#b7 ,filing ,a person1 other than a person described in paragraph 7#a77;,d71 desiring to file a notice of intent to register under paragraph 7#a7 shall be in compliance with this section if the person submits to the ,commission-- 7,a7 a statement of the nature of the registrations the filer intends to pursue2 7,b7 the information required by subsections 7b7 and 7c74 7b7 ,disclosure of general information ,a person filing a notice of intent to register under subsection 7a7 shall disclose to the ,commission the following3 7#a7 ,information concerning the management of the person1 including information describing-- 7,a7 the ownership and management of the person2 7,b7 the financial condition of the person2 7,c7 affiliated entities2 7,d7 potential conflicts of interest2 and 7,e7 the physical address of the person4 7#b7 ,information concerning the operations of the person1 including-- 7,a7 any rulebook or other customer order fulfilment rules2 7,b7 risk management procedures2 and 7,c7 a description of the product listing process4 7c7 ,asset and listing information ,a person filing a notice of intent to register under subsection7a7 shall provide to the ,commission and the ,securities and ,exchange ,commission a detailed description of--4 7#a7 the specific characteristics of each asset listed or offered for trading by the person1 including information regarding the assets market activity1 token distribution1 and functional use2 7#b7 the product listing determination made by the person for each asset listed or offered for trading by the person4 7d7 ,requirements ,a person filing a notice of intent to register under subsection 7a7 shall comply with the following requirements3 7#a7 ,registered futures association ,the person shall be a member of a futures association registered under section #ag of the ,commodity ,exchange ,act1 and shall comply with the rules of the association1 including the rules of the association pertaining to customer disclosures and protection of customer assets4 7#b7 ,books and records ,the person shall keep their books and records open to inspection and examination by the ,commission4 7#c7 ,customer disclosures ,the person shall disclose to customers-- 7,a7 information about the material risks and characteristics of the assets listed for trading on the person2 7,b7 information about the material risks and characteristics of the transactions facilitated by the person2 7,c7 information about the location and manner in which the digital assets of the customer will be and are custodied2 and 7,d7 in their disclosure documents1 offering documents1 and promotional material-- 7i7 in a prominent manner1 that they are not registered with or regulated by the ,commission2 and 7ii7 the contact information for the whistleblower1 complaint1 and reparation programs of the ,commission4 7#d7 ,customer assets 7,a7 ,in general ,the person shall-- 7i7 hold customer money1 assets1 and property in a manner to minimize the risk of loss to the customer or unreasonable delay in customer access to money1 assets1 and property of the customer2 7ii7 treat and deal with all money1 assets1 and property1 including any rights associated with any such money1 assets1 or property1 of any customer received as belonging to the customer2 7iii7 calculate the total digital asset obligations of the person1 and at all times hold money1 assets1 or property equal to or in excess of the total digital asset obligations2 and 7iv7 not commingle such money1 assets and property held to meet the total commodity obligation with the funds of the person or use the money1 assets1 or property to margin1 secure1 or guarantee any trade or contract1 or to secure or extend the credit1 of any customer or person other than the one for whom the same are held1 except that-- 7,i7 the money1 assets1 and property of any customer may be commingled with that of any other customer1 if separately accounted for2 and 7,,ii7 the share of the money1 assets1 and property1 as in the normal course of business are necessary to margin1 guarantee1 secure1 transfer1 adjust1 or settle a contract of sale of a commodity asset1 may be withdrawn and applied to do so1 including the payment of commissions1 brokerage1 interest1 taxes1 storage1 and other charges lawfully accruing in connection with the contract of sale of a digital commodity4 7,b7 ,additional resources 7i7 ,in general ,this section shall not prevent or be construed to prevent the person from adding to the customer money1 assets1 and property required to be segregated under subparagraph 7,a71 additional amounts of money1 assets1 or property from the account of the person as the person determines necessary to hold money1 assets1 or property equal to or in excess of the total digital asset obligations of the person4 7ii7 ,treatment as customer funds ,any money1 assets1 or property deposited pursuant to clause 7i7 shall be considered customer property within the meaning of this subsection4 7e7 ,compliance 7#a7 ,in general ,a person who has filed a notice of intent to register under this section and is in compliance with this section shall be exempt from ,securities and ,exchange ,commission rules and regulations pertaining to registering as a national securities exchange1 broker1 dealer1 or clearing agency1 for activities related to a digital asset deemed a security4 7#b7 ,noncompliance ,paragraph 7#a7 shall not apply if1 after notice from the ,commission and a reasonable opportunity to correct the deficiency1 a person who has submitted a notice of intent to register is not in compliance with this section4 7#c7 ,anti-fraud and anti-manipulation ,paragraph 7#a7 shall not be construed to limit any anti-fraud1 anti-manipulation1 or false reporting enforcement authority of the ,commission or the ,securities and ,exchange ,commission4 7#d7 ,delisting ,paragraph 7#a7 shall not be construed to limit the authority of the ,commission and the ,securities and ,exchange ,commission to jointly require a person to delist an asset for trading if the ,commission and the ,securities and ,exchange ,commission determines that the listing is inconsistent with the ,commodity ,exchange ,act1 the securities laws 7including regulations under those laws71 or this ,act4 7f7 ,final registration 7#a7 ,in general ,a person may not file a notice of intent to register with the ,commission after the ,commission has finalized its rules for the registration of digital commodity exchanges1 digital commodity brokers1 or digital commodity dealers1 as appropriate4 7#b7 ,transition to final registration ,subsection 7e77#a7 shall not apply to a person who has submitted a notice of intent to register if-- 7,a7 the ,commission-- 7i7 determines that the person has failed to comply with the requirements of this section2 or 7ii7 denies the application of the person to register2 or 7,b7 the digital commodity exchange1 digital commodity broker1 or digital commodity dealer that filed a notice of intent to register failed to apply for registration as such with the ,commission within #ahj days after the effective date of the final rules of the ,commission for the registration of digital commodity exchanges1 digital commodity brokers1 or digital commodity dealers1 as appropriate4 7g7 ,liability of the filer ,it shall be unlawful for any person to provide false information in support of a filing under this section if the person knew or reasonably should have known that the information was false4 7h7 ,registered futures association ,within #ahj days after the date of the enactment of this ,act1 a registered futures association shall adopt rules for membership in the association for persons required to be members of the association under subsection 7d77#a74 #ajf4 ,notice of intent to register for digital asset brokers1 dealers1 and trading systems 7a7 ,in general 7#a7 ,notice of intent to register ,any person may file a notice of intent to register with the ,securities and ,exchange ,commission 7in this subsection referred to as the ,commission7 as a-- 7,a7 digital asset trading system1 for a person intending to register as a digital asset trading system under section #f7m7 of the ,securities ,exchange ,act of #aicd2 7,b7 digital asset broker1 for a person intending to register as a digital asset broker under section #ae;,h of the ,securities ,exchange ,act of #aicd2 or 7,c7 digital asset dealer1 for a person intending to register as a digital asset dealer under section #ae;,h of the ,securities ,exchange ,act of #aicd4 7#b7 ,filing ,a person desiring to file a notice of intent to register under paragraph 7#a7 shall be in compliance with this section if the person submits to the ,commission-- 7,a7 a statement of the nature of the registrations the filer intends to pursue2 7,b7 the information required by subsections 7b7 and 7c74 7b7 ,disclosure of general information ,a person filing a notice of intent to register under subsection 7a7 shall disclose to the ,commission the following3 7#a7 ,information concerning the management of the person1 including information describing-- 7,a7 the ownership and management of the person2 7,b7 the financial condition of the person2 7,c7 affiliated entities2 and 7,d7 potential conflicts of interest4 7#b7 ,information concerning the operations of the person1 including-- 7,a7 any rulebook or other customer order fulfilment rules2 7,b7 risk management procedures2 and 7,c7 a description of the product listing process4 7c7 ,listing information ,a person filing a notice of intent to register under subsection 7a7 shall provide to the ,commission and the ,commodity ,futures ,trading ,commission a detailed description of the product listing determination made by the person for each asset listed or offered for trading by the person4 7d7 ,requirements ,a person filing a notice of intent to register under subsection 7a7 shall comply with the following requirements3 7#a7 ,books and records ,the person shall keep their books and records open to inspection and examination by the ,commission4 7#b7 ,customer disclosures ,the person shall disclose to consumers-- 7,a7 information about the material risks and characteristics of the assets listed for trading on the person2 and 7,b7 information about the material risks and characteristics of the transactions facilitated by the person4 7#c7 ,customer assets 7,a7 ,in general ,the person shall-- 7i7 hold customer money1 assets1 and property in a manner to minimize the risk of loss to the customer or unreasonable delay in customer access to money1 assets1 and property of the customer2 7ii7 treat and deal with all money1 assets1 and property1 including any rights associated with any such money1 assets1 or property1 of any customer received as belonging to the customer2 7iii7 segregate all money1 assets1 and property received from any customer of the person from the funds of the person1 except that-- 7,i7 the money1 assets1 and property of any customer may be commingled with that of any other customer1 if separately accounted for2 and 7,,ii7 the share of the money1 assets1 and property1 as in the normal course of business are necessary to margin1 guarantee1 secure1 transfer1 adjust1 or settle a contract of sale of a commodity asset1 may be withdrawn and applied to do so1 including the payment of commissions1 brokerage1 interest1 taxes1 storage1 and other charges lawfully accruing in connection with the contract of sale of a digital commodity4 7,b7 ,additional resources 7i7 ,in general ,this section shall not prevent or be construed to prevent the person from adding to the customer money1 assets1 and property required to be segregated under subparagraph 7,a7 additional amounts of money1 assets1 or property from the account of the person as the person determines necessary to prevent the account of a customer from becoming under-segregated4 7ii7 ,treatment as customer funds ,any money1 assets1 or property deposited pursuant to clause 7i7 shall be considered customer property within the meaning of this subsection4 7e7 ,compliance and enforcement 7#a7 ,in general ,a person who has filed a notice of intent to register under this section and is in compliance with this section shall not be subject to an enforcement action by the ,commission for-- 7,a7 listing or offering a digital asset deemed a security2 or 7,b7 failing to register as a national securities exchange1 alternative trading system1 broker1 dealer1 or clearing agency1 for activities related to digital assets deemed a security4 7#b7 ,noncompliance ,paragraph 7#a7 shall not apply if1 after notice from the ,commission and a reasonable opportunity to correct the deficiency1 a person who has submitted a notice of intent to register is not in compliance with this section4 7#c7 ,antifraud and antimanipulation ,paragraph 7#a7 shall not be construed to limit any antimanipulation1 antifraud1 or false reporting enforcement authority of the ,commission or the ,commodity ,futures ,trading ,commission4 7#d7 ,delisting ,paragraph 7#a7 shall not be construed to limit the authority of the ,commission or the ,commodity ,futures ,trading ,commission to require a person to delist an asset for trading if the ,commission or the ,commodity ,futures ,trading ,commission determines that the listing is inconsistent with the ,commodity ,exchange ,act1 the securities laws 7including regulations under those laws71 or this ,act4 7f7 ,final registration 7#a7 ,in general ,a person may not file a notice of intent to register with the ,commission after the ,commission has finalized its rules for the registration of digital asset brokers1 digital asset dealers1 and digital asset trading systems1 as appropriate4 7#b7 ,transition to final registration 7,a7 ,ongoing deferral for entities registered with the ,commission ,subsection 7e77#a7 shall continue to apply to a person who has submitted a notice of intent to register while the person is registered with the ,commission as a digital asset broker1 digital asset dealer1 or digital asset trading system1 as appropriate4 7,b7 ,end of deferral ,subsection 7e77#a7 shall not apply to a person who has submitted a notice of intent to register if-- 7i7 the ,commission-- 7,i7 determines that the person has failed to comply with the requirements of this section2 or 7,,ii7 denies the application of the person to register2 or 7ii7 the digital asset broker1 digital asset dealer1 or digital asset trading system that filed a notice of intent to register failed to register as such with the ,commission within #ahj days after the ,commission finalized the rules of the ,commission for the registration of digital asset brokers1 digital asset dealers1 and digital asset trading systems1 as appropriate4 7g7 ,liability of the filer ,it shall be unlawful for any person to provide false information in support of a filing under this section if the person knowingly or reasonably should have known that the information was false4 #ajg4 ,commodity ,exchange ,act savings provisions 7a7 ,in general ,nothing in this ,act shall affect or apply to1 or be interpreted to affect or apply to-- 7#a7 any agreement1 contract1 or transaction that is subject to the ,commodity ,exchange ,act as-- 7,a7 a contract of sale of a commodity for future delivery or an option on such a contract2 7,b7 a swap2 7,c7 a security futures product2 7,d7 an option authorized under section #d;c of such ,act2 7,e7 an agreement1 contract1 or transaction described in section #b7;c77#b77;,c77i7 of such ,act2 or 7,f7 a leverage transaction authorized under section #ai of such ,act2 or 7#b7 the activities of any person with respect to any such agreement1 contract1 or transaction4 7b7 ,prohibitions on spot digital commodity entities ,nothing in this ,act authorizes1 or shall be interpreted to authorize1 a digital commodity exchange1 digital commodity broker1 or digital commodity dealer to engage in any activities involving any transaction1 contract1 or agreement described in subsection 7a77#a71 solely by virtue of being registered or filing notice of intent to register as a digital commodity exchange1 digital commodity broker1 or digital commodity dealer4 7c7 ,definitions ,in this section1 each term shall have the meaning provided in the ,commodity ,exchange ,act or the regulations prescribed under such ,act4 #ajh4 ,international harmonization ,in order to promote effective and consistent global regulation of digital assets1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission1 as appropriate-- 7#a7 shall consult and coordinate with foreign regulatory authorities on the establishment of consistent international standards with respect to the regulation of digital assets1 restricted digital assets1 and digital commodities2 and 7#b7 may agree to such information-sharing arrangements as may be deemed to be necessary or appropriate in the public interest or for the protection of investors1 customers1 and users of digital assets4 #aji4 ,implementation 7a7 ,global rulemaking timeframe ,unless otherwise provided in this ,act or an amendment made by this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission1 or both1 shall individually1 and jointly where required1 promulgate rules and regulations required of each ,commission under this ,act or an amendment made by this ,act not later than #cfj days after the date of enactment of this ,act4 7b7 ,rules and registration before final effective dates 7#a7 ,in general ,in order to prepare for the implementation of this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission may1 before any effective date provided in this ,act-- 7,a7 promulgate rules1 regulations1 or orders permitted or required by this ,act2 7,b7 conduct studies and prepare reports and recommendations required by this ,act2 7,c7 register persons under this ,act2 and 7,d7 exempt persons1 agreements1 contracts1 or transactions from provisions of this ,act1 under the terms contained in this ,act4 7#b7 ,limitation on effectiveness ,an action by the ,commodity ,futures ,trading ,commission or the ,securities and ,exchange ,commission under paragraph 7#a7 shall not become effective before the effective date otherwise applicable to the action under this ,act4 ,,ii4 ,digital ,asset ,exemptions #bja4 ,exempted transactions in digital assets 7a7 ,in general ,the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;a et seq47 is amended-- 7#a7 in section #d7;a71 by adding at the end the following3 7#h7 transactions involving the offer or sale of units of a digital asset by a digital asset issuer1 if-- 7,a7 the aggregate amount of units of the digital asset sold by the digital asset issuer in reliance on the exemption provided under this paragraph1 during the #ab-month period preceding the date of such transaction1 including the amount sold in such transaction1 is not more than #ge1jjj1jjj 7as such amount is annually adjusted by the ,commission to reflect the change in the ,consumer ,price ,index for ,all ,urban ,consumers published by the ,bureau of ,labor ,statistics of the ,department of ,labor72 7,b7 with respect to a transaction involving the purchase of units of a digital asset by a person who is not an accredited investor1 the aggregate amount of all units of digital assets purchased by such person during the #ab-month period preceding the date of such transaction1 including the unit of a digital asset purchased in such transaction1 does not exceed the greater of-- 7i7 #aj percent of the person's annual income or joint income with that person's spouse or spousal equivalent2 or 7ii7 #aj percent of the person's net worth or joint net worth with the person's spouse or spousal equivalent2 7,c7 after the completion of the transaction1 the purchaser does not own more than #aj percent of the total amount of the units of the digital asset sold in reliance on the exemption under this paragraph2 7,d7 the transaction does not involve the offer or sale of any digital asset not offered as part of an investment contract2 7,e7 the transaction does not involve the offer or sale of a unit of a digital asset by a digital asset issuer that-- 7i7 is not organized under the laws of a ,state1 a territory of the ,united ,states or the ,district of ,columbia2 7ii7 is a development stage company that either-- 7,i7 has no specific business plan or purpose2 or 7,,ii7 has indicated that the business plan of the company is to merge with or acquire an unidentified company2 7iii7 is an investment company1 as defined in section #c of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#c71 or is excluded from the definition of investment company by section #c7;b7 or section #c7;c7 of that ,act 7#ae ,u4,s4,c4 #hj;a-#c7;b7 or #hj;a-#c7;c772 7iv7 is issuing fractional undivided interests in oil or gas rights1 or a similar interest in other mineral rights2 7v7 is1 or has been1 subject to any order of the ,commission entered pursuant to section #ab7;j7 of the ,securities ,exchange ,act of #aicd during the #e-year period before the filing of the offering statement2 or 7vi7 is disqualified pursuant to section #bcj4bfb of title #ag1 ,code of ,federal ,regulations2 and 7,f7 the issuer meets the requirements of section #d;,b7a74 2 and 7#b7 by inserting after section #d;,a the following3 #d;,b4 ,requirements with respect to certain digital asset transactions 7a7 ,requirements for digital asset issuers 7#a7 ,information required in statement ,a digital asset issuer offering or selling a unit of digital asset in reliance on section #d7;a77#h7 shall file with the ,commission a statement containing the following information3 7,a7 ,the name1 legal status 7including the jurisdiction in which the issuer is organized and the date of organization71 and website of the digital asset issuer4 7,b7 ,a certification that the digital asset issuer meets the relevant requirements described under section #d7;a77#h74 7,c7 ,an overview of the material aspects of the offering4 7,d7 ,a description of the purpose and intended use of the offering proceeds4 7,e7 ,a description of the plan of distribution of any unit of a digital asset that is to be offered4 7,f7 ,a description of the material risks surrounding ownership of a unit of a digital asset4 7,g7 ,a description of exempt offerings conducted within the past three years by the digital asset issuer4 7,h7 ,a description of the digital asset issuer and the current number of employees of the digital asset issuer4 7,i7 ,a description of any material transactions or relationships between the digital asset issuer and affiliated persons4 7,j7 ,a description of exempt offerings conducted within the past three years4 7#b7 ,information required for purchasers ,a digital asset issuer shall disclose the information described under section #dc of the ,securities ,exchange ,act of #aicd on a freely accessible public website4 7#c7 ,ongoing disclosure requirements ,a digital asset issuer that has filed a statement under paragraph 7#a7 to offer and sell a unit of a digital asset in reliance on section #d7;a77#h7 shall file the following with the ,commission3 7,a7 ,annual reports ,an annual report that includes any material changes to the information described under paragraph 7#b7 for the current fiscal year and for any fiscal year thereafter1 unless the issuer is no longer obligated to file such annual report pursuant to paragraph 7#d74 7,b7 ,semiannual reports ,along with each annual report required under subparagraph 7,a71 and separately six months thereafter1 a report containing-- 7i7 an updated description of the current state and timeline for the development of the blockchain system to which the digital asset relates1 showing how and when the blockchain system intends or intended to be considered a functional network and a decentralized network2 7ii7 the amount of money raised by the digital asset issuer in reliance on section #d7;a77#h71 how much of that money has been spent1 and the general categories and amounts on which that money has been spent2 and 7iii7 any material changes to the information in the most recent annual report4 7,c7 ,current reports ,a current report shall be filed with the ,commission reflecting any material changes to the information previously reported to the ,commission by the digital asset issuer4 7#d7 ,termination of reporting requirements 7,a7 ,in general ,the ongoing reporting requirements under paragraph 7#c7 shall not apply to a digital asset issuer #ahj days after the end of the covered fiscal year4 7,b7 ,covered fiscal year defined ,in this paragraph1 the term covered fiscal year means the first fiscal year of an issuer in which the blockchain system to which the digital asset relates is a functional network and certified to be a decentralized network under section #dd of the ,securities ,exchange ,act of #aicd4 7b7 ,requirements for intermediaries 7#a7 ,in general ,a person acting as an intermediary in a transaction involving the offer or sale of a unit of a digital asset in reliance on section #d7;a77#h7 shall-- 7,a7 register with the ,commission as a broker under section #ae7;b7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho7b772 and 7,b7 be a member of a national securities association registered under section #ae;,a of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#c74 7#b7 ,purchaser qualification 7,a7 ,in general ,each time1 before accepting any commitment 7including any additional commitment from the same person71 an intermediary or digital asset issuer shall have a reasonable basis for believing that the purchaser satisfies the requirements of section #d7;a77#h74 7,b7 ,reliance on purchaser's representations ,for purposes of subparagraph 7,a71 an intermediary or digital asset issuer may rely on a purchaser's representations concerning the purchaser's annual income and net worth and the amount of the purchaser's other investments made1 unless the intermediary or digital asset issuer has reason to question the reliability of the representation4 7,c7 ,reliance on intermediary ,for purposes of determining whether a transaction meets the requirements described under subparagraph 7,a7 through 7,c7 of section #d7;a77#h71 a digital asset issuer may rely on the efforts of an intermediary4 7c7 ,additional provisions 7#a7 ,acceptance of written offers2 sales ,after an issuer files a statement under paragraph 7#a7 to offer and sell a digital asset in reliance on section #d7;a77#h7-- 7,a7 written offers of the digital asset may be made2 and 7,b7 the issuer may sell the digital assets in reliance on section #d7;a77#h71 if such sales meet all other requirements4 7#b7 ,solicitation of interest 7,a7 ,in general ,at any time before the filing of a statement under paragraph 7#a71 a digital asset issuer may communicate orally or in writing to determine whether there is any interest in a contemplated offering4 ,such communications are deemed to be an offer of a unit of a digital asset for sale for purposes of the antifraud provisions of the ,federal securities laws4 ,no solicitation or acceptance of money or other consideration1 nor of any commitment1 binding or otherwise1 from any person is permitted until the statement is filed4 7,b7 ,conditions ,in any communication described under subparagraph 7,a71 the digital asset issuer shall-- 7i7 state that no money or other consideration is being solicited1 and if sent in response1 will not be accepted2 7ii7 state that no offer to buy a unit of a digital asset can be accepted and no part of the purchase price can be received until the statement is filed and then only through an intermediary2 and 7iii7 state that a person's indication of interest involves no obligation or commitment of any kind4 7,c7 ,indications of interest ,any written communication described under subparagraph 7,a7 may include a means by which a person may indicate to the digital asset issuer that such person is interested in a potential offering4 ,a digital asset issuer may require a name1 address1 telephone number1 or email address in any response form included with a communication described under subparagraph 7,a74 7#c7 ,disqualification provisions ,the ,commission shall issue rules to apply the disqualification provisions under section #bcj4bfb of title #ag1 ,code of ,federal ,regulations1 to the exemption provided under section #d7;a77#h74 7#d7 ,digital assets deemed restricted digital asset ,a unit of a digital asset acquired directly or indirectly from the digital asset issuer in reliance on the exemption provided under section #d7;a77#h7 is deemed a restricted digital asset4 4 7b7 ,additional exemptions 7#a7 ,certain registration requirements ,section #ab7;g77#f7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghl7g77#f77 is amended by striking under section #d7f7 and inserting under section #d7;a77#f7 or #d7;a77#h74 7#b7 ,exemption from ,state regulation ,section #ah7;b77#d7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggr7b77#d77 is amended-- 7,a7 in section 7,b71 by striking section #d7d7 and inserting section #d7;a77#d72 7,b7 in section 7,c71 by striking section #d7f7 and inserting section #d7;a77#f72 7,c7 in subparagraph 7,f7-- 7i7 by striking section #d7b7 each place such term appears and inserting section #d7;a77#b72 7ii7 by striking or at the end2 7,d7 in subparagraph 7,g71 by striking the period and inserting 2 or2 and 7,e7 by adding at the end the following3 7,h7 section #d7;a77#h74 4 #bjb4 ,requirements to transact in certain digital assets ,title ,i of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 is amended by adding at the end the following3 #db4 ,requirements to transact in certain digital assets 7a7 ,transactions in certain restricted digital assets 7#a7 ,in general ,notwithstanding any other provision of law1 subject to paragraph 7#b71 a restricted digital asset may be offered and sold on an alternative trading system by any person other than a digital asset issuer if1 at the time of such offer or sale1 any blockchain system to which the restricted digital asset relates is a functional network and the information described in section #dc has been certified and made publicly available for any blockchain system to which the restricted digital asset relates4 7#b7 ,additional rules for related and affiliated persons ,a restricted digital asset owned by a related person or an affiliated person may only be offered or sold after #ab months after the later of-- 7,a7 the date on which such restricted digital asset was acquired2 or 7,b7 the digital asset maturity date4 7b7 ,transactions in certain digital commodities 7#a7 ,in general ,subject to paragraph 7#b71 a digital commodity may be offered and sold by any person other than a digital asset issuer4 7#b7 ,rules for related and affiliated persons ,a digital commodity may only be offered or sold by a related person or an affiliated person if-- 7,a7 the holder of the digital commodity owned the digital commodity while it was a restricted digital asset for #ab months after the later of-- 7i7 the date on which such restricted digital asset was acquired2 or 7ii7 the digital asset maturity date2 7,b7 any blockchain system to which the digital commodity relates is certified to be a decentralized network under section #dd2 and 7,c7 the digital commodity is offered or sold on or subject to the rules of a digital commodity exchange registered under section #e;i of the ,commodity ,exchange ,act4 7#c7 ,not a security 7,a7 ,in general ,except as provided under subparagraph 7,b71 for purposes of the securities laws1 a transaction in a digital commodity made in compliance with paragraph 7#a7 or 7#b7 shall not be a transaction in a security4 7,b7 ,exception ,subparagraph 7,a7 does not apply to a transaction in a digital commodity if the transaction-- 7i7 is a mixed digital asset transaction2 or 7ii7 is made pursuant to an investment contract or in conjunction with any other security4 7c7 ,sales restrictions for affiliated persons ,a digital asset may be offered or sold by an affiliated person under subsection 7a7 or 7b7 if-- 7#a7 the aggregate amount of such digital assets sold in any #c-month period by the affiliated person is not greater than one percent of the digital assets then outstanding2 or 7#b7 the affiliated person promptly1 following the placement of an order to sell one percent of the digital assets then outstanding during any #c-month period1 reports the sale to-- 7,a7 the ,commodity ,futures ,trading ,commission1 in the case of an order to sell a digital commodity on or subject to the rules of a digital commodity exchange2 or 7,b7 the ,securities and ,exchange ,commission1 in the case of a sell order for a restricted digital asset placed with an alternative trading system4 7d7 ,treatment of certain end user distributions under the securities laws 7#a7 ,in general ,with respect to a digital asset1 an end user distribution is described under this paragraph if-- 7,a7 each blockchain system to which such digital asset relates is a functional network2 and 7,b7 with respect to the digital asset and each blockchain system to which such digital asset relates1 the information described in section #dc has been certified and made publicly available4 7#b7 ,not a security ,for purposes of the securities laws1 an end user distribution described under paragraph 7#a7 shall not be a transaction in a security4 7#c7 ,exemption ,section #e of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;e7 shall not apply to an end user distribution described under paragraph 7#a7 or a transaction in a unit of digital asset issued in such a distribution4 4 #bjc4 ,enhanced disclosure requirements ,title ,i of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq471 as amended by section #bjb1 is further amended by adding at the end the following3 #dc4 ,enhanced disclosure requirements with respect to digital assets 7a7 ,disclosure information ,with respect to a digital asset and any blockchain system to which the digital asset relates1 the information described under this section is as follows3 7#a7 ,source code ,the source code for any blockchain system to which the digital asset relates4 7#b7 ,transaction history ,a description of the steps necessary to independently access1 search1 and verify the transaction history of any blockchain system to which the digital asset relates4 7#c7 ,digital asset economics ,a description of the purpose of any blockchain system to which the digital asset relates and the operation of any such blockchain system1 including-- 7,a7 information explaining the launch and supply process1 including the number of digital assets to be issued in an initial allocation1 the total number of digital assets to be created1 the release schedule for the digital assets1 and the total number of digital assets then outstanding2 7,b7 information on any applicable consensus mechanism or process for validating transactions1 method of generating or mining digital assets1 and any process for burning or destroying digital assets on the blockchain system2 7,c7 an explanation of governance mechanisms for implementing changes to the blockchain system or forming consensus among holders of such digital assets2 and 7,d7 sufficient information for a third party to create a tool for verifying the transaction history of the digital asset4 7#d7 ,plan of development ,the current state and timeline for the development of any blockchain system to which the digital asset relates1 showing how and when the blockchain system intends or intended to be considered a functional network and decentralized network4 7#e7 ,development disclosures ,a list of all persons who are related persons or affiliated persons who have been issued a unit of a digital asset by a digital asset issuer or have a right to a unit of a digital asset from a digital asset issuer4 7#f7 ,risk factor disclosures ,where appropriate1 provide under the caption ,risk ,factors a description of the material risks surrounding ownership of a unit of a digital asset4 ,this discussion shall be organized logically with relevant headings and each risk factor shall be set forth under a subcaption that adequately describes the risk4 7b7 ,certification ,with respect to a digital asset and any blockchain system to which the digital asset relates1 the information required to be made available under this section has been certified if the digital asset issuer1 an affiliated person1 a decentralized governance system1 or a digital commodity exchange certifies on a quarterly basis to the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission that the information is true and correct4 4 #bjd4 ,certification of certain digital assets ,title ,i of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq471 as amended by section #bjc1 is further amended by adding at the end the following3 #dd4 ,certification of certain digital assets 7a7 ,certification ,any person may certify to the ,securities and ,exchange ,commission that the blockchain system to which a digital asset relates is a decentralized network4 7b7 ,filing requirements ,a certification described under subsection 7a7 shall be filed with the ,commission1 and include-- 7#a7 information regarding the person making the certification2 7#b7 a description of the blockchain system and the digital asset which relates to such blockchain system1 including-- 7,a7 the operation of the blockchain system2 7,b7 the functionality of the related digital asset2 7,c7 any decentralized governance system which relates to the blockchain system2 and 7,d7 the process to develop consensus or agreement within such decentralized governance system2 7#c7 a description of the development of the blockchain system and the digital asset which relates to the blockchain system1 including-- 7,a7 a history of the development of the blockchain system and the digital asset which relates to such blockchain system2 7,b7 a description of the issuance process for the digital asset which relates to the blockchain system2 7,c7 information identifying the digital asset issuer of the digital asset which relates to the blockchain system2 and 7,d7 a list of any affiliated person related to the digital asset issuer2 7#d7 an analysis of the factors on which such person based the certification that the blockchain system is a decentralized network1 including-- 7,a7 an explanation of the protections and prohibitions available during the previous #ab months against any one person being able to-- 7i7 control or materially alter the blockchain system2 7ii7 exclude any other person from using or participating on the blockchain system2 and 7iii7 exclude any other person from participating in a decentralized governance system2 7,b7 information regarding the beneficial ownership of the digital asset which relates to such blockchain system and the distribution of voting power in any decentralized governance system during the previous #ab months2 7,c7 information regarding the history of upgrades to the source code for such blockchain system during the previous #c months1 including-- 7i7 a description of any consensus or agreement process utilized to process or approve changes to the source code2 7ii7 a list of any material changes to the source code1 the purpose and effect of the changes1 and the contributor of the changes1 if known2 and 7iii7 any changes to the source code made by the digital asset issuer1 a related person1 or an affiliated person2 7,d7 information regarding any activities conducted to market the digital asset which relates to the blockchain system during the previous #c months by the digital asset issuer or an affiliated person of the digital asset issuer2 and 7,e7 information regarding any issuance of a unit of the digital asset which relates to such blockchain system during the previous #ab months2 and 7#e7 with respect to a blockchain system for which a certification has previously been rebutted under this section or withdrawn under section #e;i7m7 of the ,commodity ,exchange ,act1 specific information relating to the analysis provided in subsection 7f77#b7 in connection with such rebuttal or such section #e;i7m77#a77;,c7 in connection with such withdrawal4 7c7 ,rebuttable presumption ,the ,commission may rebut a certification described under subsection 7a7 with respect to a blockchain system if the ,commission1 within #cj days of receiving such certification1 determines that the blockchain system is not a decentralized network4 7d7 ,certification review 7#a7 ,in general ,any blockchain system that relates to a digital asset for which a certification has been made under subsection 7a7 shall be considered a decentralized network #cj days after the date on which the ,commission receives a certification under subsection 7a71 unless the ,commission notifies the person who made the certification within such time that the ,commission is staying the certification due to-- 7,a7 an inadequate explanation by the person making the certification2 or 7,b7 any novel or complex issues which require additional time to consider4 7#b7 ,public notice ,the ,commission shall make the following available to the public and provide a copy to the ,commodity ,futures ,trading ,commission3 7,a7 ,each certification received under subsection 7a74 7,b7 ,each stay of the ,commission under this section1 and the reasons therefore4 7,c7 ,any response from a person making a certification under subsection 7a7 to a stay of the certification by the ,commission4 7#c7 ,consolidation ,the ,commission may consolidate and treat as one submission multiple certifications made under subsection 7a7 for the same blockchain system which relates to a digital asset which are received during the review period provided under this subsection4 7e7 ,stay of certification 7#a7 ,in general ,a notification by the ,commission pursuant to subsection 7d77#a7 shall stay the certification once for up to an additional #abj days from the date of the notification4 7#b7 ,public comment period ,before the end of the #cj-;day period described under subsection 7d77#a71 the ,commission may begin a public comment period of at least #cj days in conjunction with a stay under this section4 7f7 ,disposition of certification 7#a7 ,in general ,a certification made under subsection 7a7 shall-- 7,a7 become effective-- 7i7 upon the publication of a notification from the ,commission to the person who made the certification that the ,commission does not object to the certification2 or 7ii7 at the expiration of the certification review period2 and 7,b7 not become effective upon the publication of a notification from the ,commission to the person who made the certification that the ,commission has rebutted the certification4 7#b7 ,detailed analysis included with rebuttal ,the ,commission shall include1 with each publication of a notification of rebuttal described under paragraph 7#a77;,b71 a detailed analysis of the factors on which the decision was based4 7g7 ,recertification ,with respect to a blockchain system for which a certification has been rebutted under this section1 no person may make a certification under subsection 7a7 with respect to such blockchain system during the #ij-;day period beginning on the date of such rebuttal4 7h7 ,appeal of rebuttal 7#a7 ,in general ,if a certification is rebutted under this section1 the person making such certification may appeal the decision to the ,united ,states ,court of ,appeals for the ,district of ,columbia1 not later than #fj days after the notice of rebuttal is made4 7#b7 ,review ,in an appeal under paragraph 7#a71 the court shall have de novo review of the determination to rebut the certification4 7i7 ,liability for providing false information ,it shall be unlawful for any person to provide false information in support of a certification under this section if such person knew or reasonably should have known such information was false4 4 #bje4 ,effective date ,unless otherwise provided in this title1 this title and the amendments made by this title shall take effect #cfj days after the date of enactment of this ,act1 except that1 to the extent a provision of this title requires a rulemaking1 the provision shall take effect on the later of-- 7#a7 #cfj days after the date of enactment of this ,act2 or 7#b7 #fj days after the publication in the ,federal ,register of the final rule implementing the provision4 ,,iii4 ,registration for ,digital ,asset ,intermediaries at the ,securities and ,exchange ,commission #cja4 ,treatment of digital commodities and other digital assets 7a7 ,securities ,act of #aicc ,section #b7;a77#a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a77#a77 is amended by adding at the end the following3 ,the term does not include a digital commodity or permitted payment stablecoin44 7b7 ,securities ,exchange ,act of #aicd ,section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a77 is amended-- 7#a7 in paragraph 7#a71 by adding at the end the following3 ,the term exchange does not include a digital asset trading system1 blockchain protocol1 or any person or group of persons solely because of their development of a blockchain protocol42 7#b7 in paragraph 7#b71 by adding at the end the following3 ,a digital asset trading system is not a facility of an exchange42 7#c7 in paragraph 7#d77;,a71 by inserting 1 other than restricted digital assets1 after securities2 7#d7 in paragraph 7#e77;,a71 by inserting restricted digital assets or after not including2 7#e7 in paragraph 7#bf7 by inserting 7other than a notice-registered digital asset clearing agency7 after or registered clearing agency2 7#f7 in paragraph 7#bh7 by inserting 7other than a notice-registered digital asset clearing agency7 after registered clearing agency2 7#g7 in paragraph 7#aj71 by adding at the end the following3 ,subject to subsection 7i71 the term does not include a digital commodity or permitted payment stablecoin42 7#h7 by redesignating the second paragraph 7#hj7 7relating to funding portals7 as paragraph 7#ha72 and 7#i7 by adding at the end the following3 7#ha7 ,bank ,secrecy ,act ,the term ,bank ,secrecy ,act means-- 7,a7 section #ba of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahbi;b72 7,b7 chapter #b of title ,i of ,public ,law #ia-ejh 7#ab ,u4,s4,c4 #aiea et seq472 and 7,c7 subchapter ,,ii of chapter #ec of title #ca1 ,united ,states ,code4 7#hb7 ,digital asset broker ,the term digital asset broker-- 7,a7 means any person engaged in the business of effecting transactions in restricted digital assets for the account of others2 and 7,b7 does not include a blockchain protocol or a person or group of persons solely because of their development of a blockchain protocol4 7#hc7 ,digital asset dealer ,the term digital asset dealer-- 7,a7 means any person engaged in the business of buying and selling digital assets for such person's own account through a broker or otherwise2 and 7,b7 does not include-- 7i7 a person that buys or sells digital assets for such person's own account1 either individually or in a fiduciary capacity1 but not as a part of a regular business2 or 7ii7 a blockchain protocol or a person or group of persons solely because of their development of a blockchain protocol4 7#hd7 ,digital asset trading system ,the term digital asset trading system-- 7,a7 means any organization1 association1 person1 or group of persons1 whether incorporated or unincorporated1 that constitutes1 maintains1 or provides a market place or facilities for bringing together purchasers and sellers of restricted digital assets or for otherwise performing with respect to digital assets the functions commonly performed by a stock exchange within the meaning of section #bdj4c;b-#af of title #ag1 ,code of ,federal ,regulations1 as in effect on the date of enactment of this paragraph2 and 7,b7 does not include a blockchain protocol or a person or group of persons solely because of their development of a blockchain protocol4 7#he7 ,mixed digital asset transaction ,the term mixed digital asset transaction means an agreement1 contract1 or transaction involving a restricted digital asset and a digital commodity4 7#hf7 ,notice-registered digital asset clearing agency ,the term notice-registered digital asset clearing agency means a clearing agency that has registered with the ,commission pursuant to section #ag;,a7b77#i74 7#hg7 ,additional digital asset-related terms 7,a7 ,securities ,act of #aicc ,the terms affiliated person1 blockchain system1 decentralized governance system1 decentralized network1 digital asset1 digital asset issuer1 digital asset maturity date1 end user distribution1 functional network1 mixed digital asset transaction1 permitted payment stablecoin1 related person1 restricted digital asset1 and source code have the meaning given those terms1 respectively1 under section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a774 7,b7 ,commodity ,exchange ,act ,the terms digital commodity1 digital commodity broker1 digital commodity dealer1 and digital commodity exchange have the meaning given those terms1 respectively1 under section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a74 4 7c7 ,investment ,advisers ,act of #aidj ,section #bjb7;a7 of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#b7 is amended-- 7#a7 in paragraph 7#ah71 by adding at the end the following3 ,the term does not include a digital commodity or permitted payment stablecoin42 7#b7 by redesignating the second paragraph 7#bi7 7relating to commodity pools7 as paragraph 7#ca72 7#c7 by adding at the end1 the following3 7#cb7 ,digital asset-related terms ,the terms digital commodity and permitted payment stablecoin have the meaning given those terms1 respectively1 under section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a774 4 7d7 ,investment ,company ,act of #aidj ,section #b7;a7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#b7 is amended-- 7#a7 in paragraph 7#cf71 by adding at the end the following3 ,the term does not include a digital commodity or permitted payment stablecoin42 and 7#b7 by adding at the end the following3 7#ee7 ,digital asset-related terms ,the terms digital commodity and permitted payment stablecoin have the meaning given those terms1 respectively1 under section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a774 4 #cjb4 ,antifraud authority over permitted payment stablecoins ,section #aj of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;j7 is amended-- 7#a7 by moving subsection 7c7 so as to appear after subsection 7b72 7#b7 by designating the undesignated matter at the end of that section as subsection 7d72 and 7#c7 by adding at the end the following3 7e7 7#a7 ,rules promulgated under subsection 7b7 that prohibit fraud1 manipulation1 or insider trading 7but not rules imposing or specifying reporting or recordkeeping requirements1 procedures1 or standards as prophylactic measures against fraud1 manipulation1 or insider trading71 and judicial precedents decided under subsection 7b7 and rules promulgated thereunder that prohibit fraud1 manipulation1 or insider trading1 shall apply to permitted payment stablecoins with respect to those circumstances in which the permitted payment stablecoins are brokered1 traded1 or custodied by a broker1 dealer1 digital asset broker1 or digital asset dealer or through an alternative trading system or digital asset trading platform to the same extent as they apply to securities4 7#b7 ,judicial precedents decided under section #ag7;a7 of the ,securities ,act of #aicc and sections #i1 #ae1 #af1 #bj1 and #ba;,a of this title1 and judicial precedents decided under applicable rules promulgated under such sections1 shall apply to permitted payment stablecoins with respect to those circumstances in which the permitted payment stablecoins are brokered1 traded1 or custodied by a digital asset broker1 digital asset dealer1 or digital asset trading platform to the same extent as they apply to securities4 7#c7 ,nothing in this subsection may be construed to provide the ,commission authority to make any rule1 regulation1 requirement1 or obligation on a permitted payment stablecoin issuer regarding the operations of a permitted payment stablecoin issuer or a permitted payment stablecoin1 including requirements or obligations regarding-- 7,a7 design2 7,b7 structure2 7,c7 issuance2 7,d7 redemption2 7,e7 financial resources2 7,f7 collateral2 or 7,g7 any other aspect of the operation of a permitted payment stablecoin issuer or permitted payment stablecoin4 4 #cjc4 ,registration of digital asset trading systems ,section #f of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;f7 is amended by adding at the end the following3 7m7 ,digital asset trading system 7#a7 ,in general ,it shall be unlawful for any digital asset trading system to make use of the mails or any means or instrumentality of interstate commerce within or subject to the jurisdiction of the ,united ,states to effect any transaction in a digital asset1 unless such digital asset trading system is registered with the ,commission4 7#b7 ,application ,a person desiring to register as a digital asset trading system shall submit to the ,commission an application in such form and containing such information as the ,commission may require for the purpose of making the determinations required for approval4 7#c7 ,exemptions ,a digital asset trading system that offers or seeks to offer at least one digital asset shall not be required to register under this section 7and subparagraph 7,a7 shall not apply to such digital asset trading system7 if the trading system satisfies any of the exemptions set forth in section #bdj4c;b-#af7;b7 of title #ag1 ,code of ,federal ,regulations4 4 #cjd4 ,requirements for digital asset trading systems ,title ,i of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 is amended by inserting after section #f the following3 #f;,a4 ,requirements for digital asset trading systems 7a7 ,holding of customer assets 7#a7 ,in general ,subject to paragraph 7#b71 a digital asset trading system1 in its capacity as such1 may not hold custody of customer money1 assets1 or property4 7#b7 ,custody in other capacity ,nothing in this ,act shall prohibit a person registered as a digital asset trading system from holding custody of customer money1 assets1 or property in any other permitted capacity1 including as a digital asset broker or digital asset dealer1 in compliance with the requirements of section #ae;,h4 7b7 ,rulemaking ,the ,commission shall prescribe rules for digital asset trading systems relating to the following3 7#a7 ,notice ,notice to the ,commission of the initial operation of a digital asset trading system or any material change to the operation of the digital asset trading system4 7#b7 ,order display ,the thresholds at which a digital asset trading system is required to display the orders of the digital asset trading system1 and the manner of such display4 7#c7 ,fair access ,the thresholds at which a digital asset trading system is required to have policies regarding providing fair access to the digital asset trading system4 7#d7 ,capacity1 integrity1 and security of automated systems ,policies and procedures reasonably designed to ensure the capacity1 integrity1 and security of the digital asset trading system1 taking into account the particular nature of digital asset trading systems4 7#e7 ,examinations1 inspections1 and investigations ,the examination and inspection of the premises1 systems1 and records of the digital asset trading system by the ,commission or by a self-regulatory organization of which such digital asset trading system is a member4 7#f7 ,recordkeeping ,the making1 keeping current1 and preservation of records related to trading activity on the digital asset trading system4 7#g7 ,reporting ,the reporting of transactions in digital assets that occur through the digital asset trading system4 7#h7 ,procedures ,the establishment of adequate written safeguards and written procedures to protect confidential trading information4 7c7 ,name requirement ,a digital asset trading system may not use the word exchange in the name of the digital asset trading system1 unless the digital asset trading system-- 7#a7 is operated by a registered national securities exchange2 and 7#b7 is clearly indicated as being provided outside of the system's capacity as a national securities exchange4 7d7 ,treatment under the ,bank ,secrecy ,act ,a digital asset trading system shall be treated as a financial institution for purposes of the ,bank ,secrecy ,act4 4 #cje4 ,registration of digital asset brokers and digital asset dealers ,the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 is amended by inserting after section #ae;,g the following3 #ae;,h4 ,registration of digital asset brokers and digital asset dealers 7a7 ,registration 7#a7 ,in general ,it shall be unlawful for any digital asset broker or digital asset dealer 7other than a natural person associated with a digital asset broker or digital asset dealer1 and other than such a digital asset broker or digital asset dealer whose business is exclusively intrastate and who does not make use of any facility of a digital asset trading platform7 to make use of the mails or any means or instrumentality of interstate commerce to effect any transactions in1 or to induce or attempt to induce the purchase or sale of1 any digital asset unless such digital asset broker or digital asset dealer is registered in accordance with this section4 7#b7 ,application ,a person desiring to register as a digital asset broker or digital asset dealer shall submit to the ,commission an application in such form and containing such information as the ,commission may require for the purpose of making the determinations required for approval4 7b7 ,national securities association membership 7#a7 ,in general ,a digital asset broker or digital asset dealer may not register or maintain registration under this section unless such digital asset broker or digital asset dealer is a member of a national securities association registered under section #ae;,a4 7#b7 ,exception ,a digital asset broker or digital asset dealer may register under this section without obtaining membership in a national securities association until the end of the #cfj-;day period beginning on the date the first national securities association adopts rules to admit digital asset brokers or digital asset dealers as members4 7c7 ,additional registrations with the ,commodity ,futures ,trading ,commission ,a registered digital asset broker or digital asset dealer shall be permitted to maintain any other registration with the ,commodity ,futures ,trading ,commission relating to the other activities of the registered digital asset broker or registered digital asset dealer1 including as a digital commodity broker or digital commodity dealer1 to list or trade contracts of sale for digital commodities4 4 #cjf4 ,requirements of digital asset brokers and digital asset dealers ,section #ae;,h of the ,securities ,exchange ,act of #aicd1 as added by section #bje1 is amended by adding at the end the following3 7d7 ,antifraud ,no digital asset broker or digital asset dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in1 or to induce or attempt to induce the purchase or sale of1 any digital asset that is not a digital commodity by means of any manipulative1 deceptive1 or other fraudulent device or contrivance4 7e7 ,holding of customer assets 7#a7 ,in general ,a digital asset broker or digital asset dealer shall hold customer money1 assets1 and property in a manner to minimize the risk of loss to the customer or unreasonable delay in the access to the money1 assets1 and property of the customer4 7#b7 ,rulemaking ,not later than #ahj days after the date of enactment of this section1 the ,commission shall issue rules to provide that a registered digital asset broker or digital asset dealer will be considered to satisfy the requirements of paragraph 7#a71 with respect to digital assets1 so long as the digital asset broker or digital asset dealer-- 7,a7 holds such digital asset at a bank that-- 7i7 is recognized by the appropriate ,federal banking agency or ,state bank supervisor 7as such terms are defined1 respectively1 in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac77 as having custody over such assets2 7ii7 delivers the digital asset to the digital asset broker or digital asset dealer without requiring the payment of money or value2 and 7iii7 has acknowledged in writing that the digital asset in the custody or control of the bank is free of charge1 lien1 or claim of any kind in favor of such bank or any person claiming through the bank2 7,b7 establishes1 maintains1 and enforces written policies1 procedures1 and controls reasonably designed to demonstrate that the digital asset broker or digital asset dealer-- 7i7 has control over the digital asset that the digital asset broker or digital asset dealer holds in custody to protect against the theft1 loss1 or unauthorized use of the private keys necessary to access and transfer such digital asset2 7ii7 has identified the steps that will be taken in the wake of certain events that could affect the custody of the digital assets by the digital asset broker or digital asset dealer2 7iii7 can comply with a court-ordered freeze or seizure2 and 7iv7 has established arrangements to allow for the transfer of the digital asset held by such digital asset broker or digital asset dealer to another digital asset broker or digital asset dealer1 a trustee1 receiver1 liquidator1 or person performing a similar function1 or to another appropriate person1 in the event such digital asset broker or digital asset dealer can no longer continue as a going concern and self-liquidates or is subject to a formal bankruptcy1 receivership1 liquidation1 or similar proceeding2 or 7,c7 complies with such other requirements as the ,commission may permit4 7#c7 ,segregation of funds 7,a7 ,in general ,a digital asset broker or digital asset dealer shall treat and deal with all money1 assets1 and property held for a customer of the digital asset broker or digital asset dealer1 or that accrues to a customer as a result of trading in digital assets1 as belonging to the customer4 7,b7 ,commingling prohibited ,money1 assets1 and property of a customer described in subparagraph 7,a7 shall be separately accounted for and shall not be commingled with the funds of the digital asset broker or digital asset dealer or be used to margin1 secure1 or guarantee any trades of any person other than the customer of the digital asset broker or digital asset dealer for whom the same are held4 7#d7 ,exceptions 7,a7 ,use of funds 7i7 ,in general ,notwithstanding paragraph 7#c71 money1 assets1 and property of customers of a digital asset broker or digital asset dealer described in paragraph 7#c7 may be maintained and deposited in the same account or accounts with any bank1 trust company1 digital asset broker1 or digital asset dealer1 if the money1 assets1 and property remain segregated from the money1 assets1 and property of the digital asset broker or digital asset dealer4 7ii7 ,withdrawal ,notwithstanding paragraph 7#c71 such share of the money1 assets1 and property described in paragraph 7#c7 as in the normal course of business shall be necessary to transfer1 adjust1 or settle a digital asset transaction pursuant to a customer's instruction 7standing or otherwise7 may be withdrawn and applied to such purposes1 including the withdrawal and payment of commissions1 brokerage1 interest1 taxes1 storage1 and other charges lawfully accruing in connection with a digital asset transaction4 7iii7 ,commission action ,in accordance with such terms and conditions as the ,commission may prescribe by rule1 regulation1 or order1 any money1 assets1 or property of a customer of a digital asset broker or digital asset dealer described in paragraph 7#c7 may be commingled and deposited as provided in this section with any other money1 assets1 or property received by the digital asset broker or digital asset dealer and required by the ,commission to be separately accounted for and treated and dealt with as belonging to the customer of the digital asset broker or digital asset dealer4 7,b7 ,participation in blockchain services 7i7 ,in general ,a customer shall have the right to waive the restrictions in paragraph 7#c7 for any unit of a digital asset1 by affirmatively electing1 in writing to the digital asset broker or digital asset dealer1 to waive the restrictions4 7ii7 ,use of funds ,customer digital assets removed from segregation under clause 7i7 may be pooled and used by the digital asset broker or digital asset dealer or its designee to provide a blockchain service for a blockchain system to which the unit of the digital asset removed from segregation under clause 7i7 relates4 7iii7 ,limitations ,the ,commission may1 by rule1 establish notice and disclosure requirements1 and any other limitations and rules related to the waiving of any restrictions under this subparagraph that are reasonably necessary to protect customers4 7iv7 ,blockchain service defined ,in this subparagraph1 the term blockchain service means any activity relating to validating transactions on a blockchain system1 providing security for a blockchain system1 or other similar activity required for the ongoing operation of a blockchain system4 7#e7 ,further limitations ,no person shall treat or deal with a digital asset held on behalf of any customer pursuant to paragraph 7#c7 by utilizing any unit of such digital asset to participate in a blockchain service 7as defined in paragraph 7#d77;,b77iv77 or a decentralized governance system associated with the digital asset or the blockchain system to which the digital asset relates in any manner other than that which is expressly directed by the customer from which such unit of a digital asset was received4 7f7 ,capital requirements 7#a7 ,in general ,each registered digital asset broker and registered digital asset dealer shall meet such minimum requirements as the ,commission may prescribe to ensure that the digital asset broker or digital asset dealer is able to-- 7,a7 conduct an orderly wind-down of the activities of the digital asset broker or digital asset dealer2 and 7,b7 fulfill the customer obligations of the digital asset broker or digital asset dealer4 7#b7 ,calculation ,for purposes of any ,commission rule or order adopted under this section or any interpretation thereof regulating a digital asset broker or digital asset dealer's financial responsibility obligations and capital requirements1 a registered digital asset broker or digital asset dealer that maintains control of customer digital assets in a manner that satisfies the rules issued by the ,commission under subsection 7e77#b7 shall not be required to include the value of such digital assets as assets or liabilities of the digital asset broker or digital asset dealer4 7#c7 ,coordination of capital requirements 7,a7 ,commission rule ,the ,commission shall1 by rule1 provide appropriate offsets to any applicable capital requirement for a person with multiple registrations1 including as a broker1 dealer1 digital asset broker1 or digital asset dealer4 7,b7 ,joint rule ,the ,commission and the ,commodity ,futures ,trading ,commission shall jointly1 by rule1 provide appropriate offsets to any applicable capital requirement for a person with multiple registrations1 including as a digital asset broker1 digital asset dealer1 digital asset trading system1 digital commodity broker1 digital commodity dealer1 or digital commodity exchange4 7g7 ,reporting and recordkeeping ,each registered digital asset broker and digital asset dealer-- 7#a7 shall make such reports as are required by the ,commission by rule or regulation regarding the transactions1 positions1 and financial condition of the digital asset broker or digital asset dealer2 7#b7 shall keep books and records in such form and manner and for such period as may be prescribed by the ,commission by rule or regulation2 and 7#c7 shall keep the books and records open to inspection and examination by any representative of the ,commission4 7h7 ,treatment under the ,bank ,secrecy ,act ,a digital asset broker and a digital asset dealer shall be treated as a financial institution for purposes of the ,bank ,secrecy ,act4 4 #cjg4 ,rules related to conflicts of interest ,the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 is amended by inserting after section #aj;,d the following3 #aj;,e4 ,conflicts of interest related to digital assets ,each registered digital asset trading system1 registered digital asset broker1 registered digital asset dealer1 and notice-registered digital asset clearing agency shall establish1 maintain1 and enforce written policies and procedures reasonably designed1 taking into consideration the nature of such person's business1 to mitigate any conflicts of interest and transactions or arrangements with affiliates4 4 #cjh4 ,treatment of certain digital assets in connection with federally regulated intermediaries ,section #ah7;b7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggr7b77 is amended by adding at the end the following3 7#e7 ,exemption for certain digital assets in connection with federally regulated intermediaries ,a digital asset is a covered security with respect to a transaction that is exempt from registration under this ,act when-- 7,a7 it is brokered1 traded1 custodied1 or cleared by a digital asset broker or digital asset dealer registered under section #ae;,h of the ,securities ,exchange ,act of #aicd2 or 7,b7 traded through a digital asset trading system 7as defined under section #bdb4cja of title #ag1 ,code of ,federal ,regulations74 4 #cji4 ,dual registration ,any person that is registered with the ,securities and ,exchange ,commission as a digital asset broker1 digital asset dealer1 or digital asset trading system may register with the ,commodity ,futures ,trading ,commission1 as appropriate1 as-- 7#a7 a digital commodity exchange under section #e;i of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq471 as added by this ,act1 if the person offers or seeks to offer a cash or spot market in at least one digital commodity2 7#b7 a digital commodity broker under section #du of the ,commodity ,exchange ,act1 as added by this ,act1 if the person is engaged in soliciting or accepting orders in digital commodity cash or spot markets2 or 7#c7 a digital commodity dealer under section #du of the ,commodity ,exchange ,act1 as added by this ,act1 if the person holds themself out as a dealer in digital commodity cash or spot markets4 #caj4 ,exclusion for ancillary activities ,the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 is amended by inserting after section #ae;,g the following3 #ae;,h4 ,exclusion for ancillary activities 7a7 ,in general ,notwithstanding any other provision of this ,act1 a person shall not be subject to this ,act and the regulations thereunder solely based on the person undertaking any ancillary activities4 7b7 ,exceptions ,subsection 7a7 shall not be construed to apply to the antimanipulation and antifraud authorities of the ,commission4 7c7 ,ancillary activities defined ,in this section1 the term ancillary activities means any of the following activities related to the operation of a blockchain system3 7#a7 ,compiling network transactions1 operating a pool1 relaying1 searching1 sequencing1 validating1 or acting in a similar capacity with respect to a restricted digital asset4 7#b7 ,providing computational work1 operating a node1 or procuring1 offering1 or utilizing network bandwidth1 or other similar incidental services with respect to a restricted digital asset4 7#c7 ,providing a user interface that enables a user to read and access data about a blockchain system1 send messages1 or otherwise interact with a blockchain system4 7#d7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing a blockchain system4 7#e7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing software or systems that create or deploy a hardware or software wallet or other system facilitating an individual user's own personal ability to keep1 safeguard1 or custody the user's restricted digital assets or related private keys4 4 #caa4 ,registration and requirements for notice-registered digital asset clearing agencies ,section #ag;,a7b7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghq-#a7;b77 is amended-- 7#a7 in subsection 7#a71 by inserting 7other than a notice-registered digital asset clearing agency7 after unlawful for any clearing agency2 and 7#b7 by adding at the end1 the following3 7#i7 ,registration and requirements for notice-registered digital asset clearing agency 7,a7 ,eligibility ,a person may register with the ,commission as a notice-registered digital asset clearing agency if the person-- 7i7 is otherwise registered as a digital asset broker or digital asset dealer with the ,commission and is engaging in a business involving digital assets that are not digital commodities1 in compliance with ,commission rules pursuant to section #ae;,h7e72 or 7ii7 is a bank engaging in a business involving digital assets1 in compliance with applicable banking law and regulation relating to the custody and safekeeping of such assets4 7,b7 ,registration ,a person may register with the ,commission as a notice-registered digital asset clearing agency by providing the ,commission with notice of the activities of the person or planned activities in such form as the ,commission determines appropriate4 7,c7 ,rulemaking ,the ,commission may adopt rules1 which may not take effect until at least #cfj days following the date of enactment of this paragraph1 with regard to the activities of notice-registered digital asset clearing agencies1 taking into account the nature of digital assets4 4 #cab4 ,treatment of custody activities by banking institutions 7a7 ,treatment of custody activities ,the appropriate ,federal banking agency 7as defined under section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac771 the ,national ,credit ,union ,administration 7in the case of a credit union71 and the ,securities and ,exchange ,commission may not require a depository institution1 national bank1 ,federal credit union1 ,state credit union1 or trust company1 or any affiliate thereof-- 7#a7 to include assets held in custody as a liability on any financial statement or balance sheet1 including payment stablecoin custody or safekeeping activities2 7#b7 to hold additional regulatory capital against assets in custody or safekeeping1 except as necessary to mitigate against operational risks inherent with the custody or safekeeping services1 as determined by-- 7,a7 the appropriate ,federal banking agency2 7,b7 the ,national ,credit ,union ,administration 7in the case of a credit union72 7,c7 a ,state bank supervisor 7as defined under section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac772 or 7,d7 a ,state credit union supervisor 7as defined under section #fjjc of the ,anti-,money ,laundering ,act of #bjbj72 or 7#c7 to recognize a liability for any obligations related to activities or services performed for digital assets that the entity does not own if that liability would exceed the expense recognized in the income statement as a result of the corresponding obligation4 7b7 ,definitions ,in this section3 7#a7 ,depository institution ,the terms depository institution has the meaning given that term under section #c of the ,federal ,deposit ,insurance ,act4 7#b7 ,credit union terms ,the terms ,federal credit union and ,state credit union have the meaning given those terms1 respectively1 under section #aja of the ,federal ,credit ,union ,act4 ,,iv4 ,registration for ,digital ,asset ,intermediaries at the ,commodity ,futures ,trading ,commission #dja4 ,commission jurisdiction over digital commodity transactions 7a7 ,in general ,section #b7;a77#a7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;a77#a77 is amended by adding at the end the following3 7,j7 ,except as expressly provided in this ,act1 nothing in the ,financial ,innovation and ,technology for the #bast ,century ,act shall affect or apply to1 or be interpreted to affect or apply to-- 7i7 any agreement1 contract1 or transaction that is subject to this ,act as-- 7,i7 a contract of sale of a commodity for future delivery or an option on such a contract2 7,,ii7 a swap2 7,,iii7 a security futures product2 7,,iv7 an option authorized under section #d;c of this ,act2 7,v7 an agreement1 contract1 or transaction described in subparagraph 7,c77i7 or 7,d77i7 of subsection 7c77#b7 of this section2 or 7,,vi7 a leverage transaction authorized under section #ai of this ,act2 or 7ii7 the activities of any person with respect to any such an agreement1 contract1 or transaction4 4 7b7 ,in general ,section #b7;c77#a7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;c77#a77 is amended-- 7#a7 in subparagraph 7,f71 by striking or at the end2 7#b7 in subparagraph 7,g71 by striking the period and inserting 2 or2 and 7#c7 by adding at the end the following3 7,h7 permitted payment stablecoins4 4 7c7 ,in general ,section #b7;c77#b7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;c77#b77 is amended-- 7#a7 in subparagraph 7,d77ii7-- 7,a7 in subclause 7,,iii71 in the matter that precedes item 7aa71 by inserting of a commodity1 other than a digital commodity1 before that2 and 7,b7 by redesignating subclauses 7,,iv7 and 7,v7 as subclauses 7,v7 and 7,,vi7 and inserting after subclause 7,,iii7 the following3 7,,iv7 a contract of sale of a digital commodity that-- 7aa7 results in actual delivery1 as the ,commission shall by rule determine1 within #b days or such other period as the ,commission may determine by rule or regulation based upon the typical commercial practice in cash or spot markets for the digital commodity involved2 or 7bb7 is executed with a registered digital commodity dealer-- 7,,aa7 directly2 7,,bb7 through a registered digital commodity broker2 or 7,,cc7 on or subject to the rules of a registered digital commodity exchange2 2 and 7#b7 by adding at the end the following3 7,f7 ,commission jurisdiction with respect to digital commodity transactions 7i7 ,in general ,subject to sections #f;d and #ab7;e71 the ,commission shall have exclusive jurisdiction with respect to any account1 agreement1 contract1 or transaction involving a contract of sale of a digital commodity in interstate commerce1 including in a digital commodity cash or spot market1 that is offered1 solicited1 traded1 facilitated1 executed1 cleared1 reported1 or otherwise dealt in-- 7,i7 on or subject to the rules of a registered entity or an entity that is required to be registered as a registered entity2 or 7,,ii7 by any other entity registered1 or required to be registered1 with the ,commission4 7ii7 ,limitations ,clause 7i7 shall not apply with respect to custodial or depository activities for a digital commodity1 or custodial or depository activities for any promise or right to a future digital commodity1 of an entity regulated by an appropriate ,federal banking agency or a ,state bank supervisor 7within the meaning of section #c of the ,federal ,deposit ,insurance ,act74 7iii7 ,mixed digital asset transactions 7,i7 ,in general ,clause 7i7 shall not apply to a mixed digital asset transaction4 7,,ii7 ,oversight of mixed digital asset transactions ,a mixed digital asset transaction shall be subject to the exclusive jurisdiction of the ,securities and ,exchange ,commission4 7,,iii7 ,reports on mixed digital asset transactions ,a digital asset issuer1 related person1 affiliated person1 or other person registered with the ,securities and ,exchange ,commission that engages in a mixed digital asset transaction1 shall1 on request1 open to inspection and examination by the ,commodity ,futures ,trading ,commission all books and records relating to the mixed digital asset transaction1 subject to the confidentiality and disclosure requirements of section #h4 7,g7 ,agreements1 contracts1 and transactions in stablecoins 7i7 ,treatment of permitted payment stablecoins on commission-registered entities ,subject to clauses 7ii7 and 7iii71 the ,commission shall have jurisdiction over a cash or spot agreement1 contract1 or transaction in a permitted payment stablecoin that is offered1 offered to enter into1 entered into1 executed1 confirmed the execution of1 solicited1 or accepted-- 7,i7 on or subject to the rules of a registered entity2 or 7,,ii7 by any other entity registered with the ,commission4 7ii7 ,permitted payment stablecoin transaction rules ,this ,act shall apply to a transaction described in clause 7i7 only for the purpose of regulating the offer1 execution1 solicitation1 or acceptance of a cash or spot permitted payment stablecoin transaction on a registered entity or by any other entity registered with the ,commission1 as if the permitted payment stablecoin were a digital commodity4 7iii7 ,no authority over permitted payment stablecoins ,notwithstanding clause 7ii71 the ,commission shall not make a rule or regulation1 impose a requirement or obligation on a registered entity or other entity registered with the ,commission1 or impose a requirement or obligation on a permitted payment stablecoin issuer1 regarding the operation of a permitted payment stablecoin issuer or a permitted payment stablecoin1 including any aspect of such an operation or such a stablecoin4 4 7d7 ,conforming amendment ,section #b7;a77#a77;,a7 of such ,act 7#g ,u4,s4,c4 #b7;a77#a77;,a77 is amended in the #ast sentence by inserting subparagraphs 7,f7 and 7,g7 of subsection 7c77#b7 of this section or before section #ai4 #djb4 ,requiring futures commission merchants to use qualified digital commodity custodians ,section #d;d of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #f;d7 is amended-- 7#a7 in subsection 7a77#b7-- 7,a7 in the #ast proviso1 by striking any bank or trust company and inserting any bank1 trust company1 or qualified digital commodity custodian2 and 7,b7 by inserting 3 ,provided further1 ,that any such property that is a digital commodity shall be held in a qualified digital commodity custodian before the period at the end2 and 7#b7 in subsection 7f77#c77;,a77i71 by striking any bank or trust company and inserting any bank1 trust company1 or qualified digital commodity custodian4 #djc4 ,trading certification and approval for digital commodities ,section #e;c of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #g;a-#b7 is amended-- 7#a7 in subsection 7a71 by striking #e7;d7 and #e;b7c77#b7 and inserting #e7;d71 #e;b7c77#b71 and #e;i7c72 7#b7 in subsection 7b7-- 7,a7 in each of paragraphs 7#a7 and 7#b71 by inserting digital commodity exchange1 before derivatives2 and 7,b7 in paragraph 7#c71 by inserting digital commodity exchange1 before derivatives each place it appears2 7#c7 in subsection 7c7-- 7,a7 in paragraph 7#b71 by inserting or participants before 7in a2 7,b7 in paragraph 7#d77;,b71 by striking #a;a7#aj7 and inserting #a;a7#i72 and 7,c7 in paragraph 7#e71 by adding at the end the following3 7,d7 ,special rules for digital commodity contracts ,in certifying any new rule or rule amendment1 or listing any new contract or instrument1 in connection with a contract of sale of a commodity for future delivery1 option1 swap1 or other agreement1 contract1 or transaction1 that is based on or references a digital commodity1 a registered entity shall make or rely on a certification under subsection 7d7 for the digital commodity4 2 and 7#d7 by inserting after subsection 7c7 the following3 7d7 ,certifications for digital commodity trading 7#a7 ,in general ,notwithstanding subsection 7c71 for the purposes of listing or offering a digital commodity for trading in a digital commodity cash or spot market1 an eligible entity shall issue a written certification that the digital commodity meets the requirements of this ,act 7including regulations thereunder74 7#b7 ,contents of the certification 7,a7 ,in general ,in making a written certification under this paragraph1 the eligible entity shall furnish to the ,commission-- 7i7 an analysis of how the digital commodity meets the requirements of section #e;i7c77#c72 7ii7 information about the digital commodity regarding-- 7,i7 its purpose and use2 7,,ii7 its unit creation or release process2 7,,iii7 its consensus mechanism2 7,,iv7 its governance structure2 7,v7 its participation and distribution2 and 7,,vi7 its current and proposed functionality2 and 7iii7 any other information1 analysis1 or documentation the ,commission may1 by rule1 require4 7,b7 ,reliance on prior disclosures ,in making a certification under this subsection1 an eligible entity may rely on the records and disclosures of any relevant person registered with the ,securities and ,exchange ,commission or other ,state or ,federal agency4 7#c7 ,modifications 7,a7 ,in general ,an eligible entity shall modify a certification made under paragraph 7#a7 to-- 7i7 account for significant changes in any information provided to the ,commission under paragraph 7#b77;,a77ii72 or 7ii7 permit or restrict trading in units of a digital commodity asset held by a related person or an affiliated person4 7,b7 ,recertification ,modifications required by this subsection shall be subject to the same disapproval and review process as a new certification under paragraphs 7#d7 and 7#e74 7#d7 ,disapproval 7,a7 ,in general ,the written certification described in paragraph 7#a7 shall become effective unless the ,commission finds that the digital asset does not meet the requirements of this ,act or the rules and regulations thereunder4 7,b7 ,analysis required ,the ,commission shall include1 with any findings referred to in subparagraph 7,a71 a detailed analysis of the factors on which the decision was based4 7,c7 ,public findings ,the ,commission shall make public any disapproval decision1 and any related findings and analysis1 made under this paragraph4 7#e7 ,review 7,a7 ,in general ,unless the ,commission makes a disapproval decision under paragraph 7#d71 the written certification described in paragraph 7#a7 shall become effective1 pursuant to the certification by the eligible entity and notice of the certification to the public 7in a manner determined by the ,commission7 on the date that is-- 7i7 #bj business days after the date the ,commission receives the certification 7or such shorter period as determined by the ,commission by rule or regulation71 in the case of a digital commodity that has not been certified under this section or for which a certification is being modified under paragraph 7#c72 or 7ii7 #b business days after the date the ,commission receives the certification 7or such shorter period as determined by the ,commission by rule or regulation7 for any digital commodity that has been certified under this section4 7,b7 ,extensions ,the time for consideration under subparagraph 7,a7 may be extended through notice to the eligible entity that there are novel or complex issues that require additional time to analyze1 that the explanation by the submitting eligible entity is inadequate1 or of a potential inconsistency with this ,act-- 7i7 once1 for #cj business days1 through written notice to the eligible entity by the ,chairman2 and 7ii7 once1 for an additional #cj business days1 through written notice to the digital commodity exchange from the ,commission that includes a description of any deficiencies with the certification1 including any-- 7,i7 novel or complex issues which require additional time to analyze2 7,,ii7 missing information or inadequate explanations2 or 7,,iii7 potential inconsistencies with this ,act4 7#f7 ,certification required ,notwithstanding any other provision of this ,act1 a registered entity or other entity registered with the ,commission shall not list for trading1 accept for clearing1 offer to enter into1 enter into1 execute1 confirm the execution of1 or conduct any office or business anywhere in the ,united ,states1 its territories or possessions1 for the purpose of soliciting1 or accepting any order for1 or otherwise dealing in1 any transaction in1 or in connection with1 a digital commodity1 unless a certification has been made under this section for the digital commodity4 7#g7 ,prior approval 7,a7 ,new registrants ,a digital commodity exchange may only list1 as of the effective date of approval of the registration of the digital commodity exchange1 the digital commodity for which the digital commodity exchange has received prior approval under this subsection4 7,b7 ,deadline ,the ,commission shall take final action on a request for prior approval not later than #ij business days after submission of the request1 unless the person submitting the request agrees to an extension of the time limitation established under this subparagraph4 7,c7 ,disapproval ,the ,commission may disapprove a request for prior approval under subparagraph 7,b7 in accordance with criteria applicable to disapproval in paragraph 7#d74 7#h7 ,eligible entity defined ,in this subsection1 the term eligible entity means a registered entity or group of registered entities acting jointly4 4 #djd4 ,registration of digital commodity exchanges ,the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq47 is amended by inserting after section #e;h the following3 #e;i4 ,registration of digital commodity exchanges 7a7 ,in general 7#a7 ,registration 7,a7 ,in general ,a trading facility that offers or seeks to offer a cash or spot market in at least #a digital commodity shall register with the ,commission as a digital commodity exchange4 7,b7 ,application ,a person desiring to register as a digital commodity exchange shall submit to the ,commission an application in such form and containing such information as the ,commission may require for the purpose of making the determinations required for approval4 7,c7 ,exemptions ,a trading facility that offers or seeks to offer a cash or spot market in at least #a digital commodity shall not be required to register under this section if the trading facility-- 7i7 permits no more than a de minimis amount of trading activity2 or 7ii7 serves only customers in a single ,state or territory4 7#b7 ,additional registrations 7,a7 ,with the ,commission 7i7 ,in general ,a registered digital commodity exchange may also register as-- 7,i7 a designated contract market2 or 7,,ii7 a swap execution facility4 7ii7 ,rules ,for an entity with multiple registrations under clause 7i71 the ,commission-- 7,i7 shall prescribe rules to exempt the entity from duplicative1 conflicting1 or unduly burdensome provisions of this ,act and the rules under this ,act1 to the extent such an exemption would foster the development of fair and orderly cash or spot markets in digital commodities1 be necessary or appropriate in the public interest1 and be consistent with the protection of customers2 and 7,,ii7 may1 after an analysis of the risks and benefits1 prescribe rules to provide for portfolio margining1 as may be necessary to protect market participants1 promote fair and equitable trading in digital commodity markets1 and promote responsible economic or financial innovation4 7,b7 ,with the ,securities and ,exchange ,commission ,a registered digital commodity exchange may register with the ,securities and ,exchange ,commission as a digital asset trading system to list or trade contracts of sale for digital assets deemed securities4 7,c7 ,with a registered futures association 7i7 ,in general ,a registered digital commodity exchange shall also be a member of a registered futures association and comply with rules related to such activity1 if the registered digital commodity exchange accepts customer funds required to be segregated under subsection 7d74 7ii7 ,rulemaking required ,the ,commission shall require any registered futures association with a digital commodity exchange as a member to provide such rules as may be necessary to further compliance with subsection 7d71 protect customers1 and promote the public interest4 7,d7 ,registration required ,a person required to be registered as a digital commodity exchange under this section shall register with the ,commission as such regardless of whether the person is registered with another ,state or ,federal regulator4 7b7 ,trading 7#a7 ,prohibition on certain trading practices 7,a7 ,section #d;b shall apply to any agreement1 contract1 or transaction in a digital commodity as if the agreement1 contract1 or transaction were a contract of sale of a commodity for future delivery4 7,b7 ,section #d;c shall apply to any agreement1 contract1 or transaction in a digital commodity as if the agreement1 contract1 or transaction were a transaction involving the purchase or sale of a commodity for future delivery4 7#b7 ,prohibition on acting as a counterparty 7,a7 ,in general ,a digital commodity exchange or any affiliate of such an exchange shall not trade on or subject to the rules of the digital commodity exchange for its own account4 7,b7 ,exceptions ,the ,commission shall1 by rule1 permit a digital commodity exchange or any affiliate of a digital commodity exchange to engage in trading on an affiliated exchange so long as the trading is not solely for the purpose of the profit of the exchange1 including the following3 7i7 ,customer direction ,a transaction for1 or entered into at the direction of1 or for the benefit of1 an unaffiliated customer4 7ii7 ,risk management ,a transaction to manage the risks associated with the digital commodity business of the exchange4 7iii7 ,functional use ,a transaction related to the functional operation of a blockchain network4 7,c7 ,notice requirement ,in order for a digital commodity exchange or any affiliate of a digital commodity exchange to engage in trading on the affiliated exchange pursuant to subsection 7,b71 notice must be given to the ,commission that shall enumerate how any proposed activity is consistent with the exceptions in subsection 7,b7 and the principles of the ,act4 7,d7 ,delegation ,the ,commission may1 by rule1 delegate authority to the ,director of the ,division of ,market ,oversight1 or such other employee or employees as the ,director of the ,division of ,market ,oversight may designate from time to time1 to carry out these provisions4 7#c7 ,trading securities ,a registered digital commodity exchange that is also registered with the ,securities and ,exchange ,commission may offer a contract of sale of a digital asset deemed a security4 7#d7 ,rules for certain digital asset sales ,the digital commodity exchange shall have in place such rules as may be necessary to reasonably ensure the orderly sale of any unit of a digital commodity sold by a related person or an affiliated person4 7c7 ,core principles for digital commodity exchanges 7#a7 ,compliance with core principles 7,a7 ,in general ,to be registered1 and maintain registration1 as a digital commodity exchange1 a digital commodity exchange shall comply with-- 7i7 the core principles described in this subsection2 and 7ii7 any requirement that the ,commission may impose by rule or regulation pursuant to section #h;a7#e74 7,b7 ,reasonable discretion of a digital commodity exchange ,unless otherwise determined by the ,commission by rule or regulation1 a digital commodity exchange described in subparagraph 7,a7 shall have reasonable discretion in establishing the manner in which the digital commodity exchange complies with the core principles described in this subsection4 7#b7 ,compliance with rules ,a digital commodity exchange shall-- 7,a7 establish and enforce compliance with any rule of the digital commodity exchange1 including-- 7i7 the terms and conditions of the trades traded or processed on or through the digital commodity exchange2 and 7ii7 any limitation on access to the digital commodity exchange2 7,b7 establish and enforce trading1 trade processing1 and participation rules that will deter abuses and have the capacity to detect1 investigate1 and enforce those rules1 including means-- 7i7 to provide market participants with impartial access to the market2 and 7ii7 to capture information that may be used in establishing whether rule violations have occurred2 and 7,c7 establish rules governing the operation of the exchange1 including rules specifying trading procedures to be used in entering and executing orders traded or posted on the facility4 7#c7 ,listing standards for digital commodities 7,a7 ,in general ,a digital commodity exchange shall permit trading only in a digital commodity that is not readily susceptible to manipulation4 7,b7 ,public information requirements 7i7 ,in general ,a digital commodity exchange shall permit trading only in a digital commodity if the information required in clause 7ii7 is correct1 current1 and available to the public4 7ii7 ,required information ,with respect to a digital commodity and each blockchain system to which the digital commodity relates for which the digital commodity exchange will make the digital commodity available to the customers of the digital commodity exchange1 the information required in this clause is as follows3 7,i7 ,source code ,the source code for any blockchain system to which the digital commodity relates4 7,,ii7 ,transaction history ,a narrative description of the steps necessary to independently access1 search1 and verify the transaction history of any blockchain system to which the digital commodity relates4 7,,iii7 ,digital asset economics ,a narrative description of the purpose of any blockchain system to which the digital asset relates and the operation of any such blockchain system1 including-- 7aa7 information explaining the launch and supply process1 including the number of digital assets to be issued in an initial allocation1 the total number of digital assets to be created1 the release schedule for the digital assets1 and the total number of digital assets then outstanding2 7bb7 information detailing any applicable consensus mechanism or process for validating transactions1 method of generating or mining digital assets1 and any process for burning or destroying digital assets on the blockchain system2 7cc7 an explanation of governance mechanisms for implementing changes to the blockchain system or forming consensus among holders of the digital assets2 and 7dd7 sufficient information for a third party to create a tool for verifying the transaction history of the digital asset4 7,,iv7 ,trading volume and volatility ,the trading volume and volatility of the digital commodity4 7,v7 ,additional information ,such additional information as the ,commission may1 by rule1 determine to be necessary for a customer to understand the financial and operational risks of a digital commodity1 and to be in the public interest or in furtherance of the requirements of this ,act4 7iii7 ,format ,the ,commission shall prescribe rules and regulations for the standardization and simplification of disclosures under clause 7ii71 including requiring that disclosures-- 7,i7 be conspicuous2 7,,ii7 use plain language comprehensible to customers2 and 7,,iii7 succinctly explain the information that is required to be communicated to the customer4 7,c7 ,additional listing considerations ,in addition to the requirements of subparagraphs 7,a7 and 7,b71 a digital commodity exchange shall consider-- 7i7 if a sufficient percentage of the units of the digital asset are units of a digital commodity to permit robust price discovery2 7ii7 if it is reasonably unlikely that the transaction history can be fraudulently altered by any person or group of persons acting collectively2 7iii7 if the operating structure and system of the digital commodity is secure from cybersecurity threats2 7iv7 if the functionality of the digital commodity will protect holders from operational failures2 7v7 if sufficient public information about the operation1 functionality1 and use of the digital commodity is available2 and 7vi7 any other factor which the ,commission has1 by rule1 determined to be in the public interest or in furtherance of the requirements of this ,act4 7,d7 ,restricted digital assets ,a digital commodity exchange shall not permit the trading of a unit of a digital asset that is a restricted digital asset4 7#d7 ,treatment of customer assets ,a digital commodity exchange shall establish standards and procedures that are designed to protect and ensure the safety of customer money1 assets1 and property4 7#e7 ,monitoring of trading and trade processing 7,a7 ,in general ,a digital commodity exchange shall provide a competitive1 open1 and efficient market and mechanism for executing transactions that protects the price discovery process of trading on the exchange4 7,b7 ,protection of markets and market participants ,a digital commodity exchange shall establish and enforce rules-- 7i7 to protect markets and market participants from abusive practices committed by any party1 including abusive practices committed by a party acting as an agent for a participant2 and 7ii7 to promote fair and equitable trading on the exchange4 7,c7 ,trading procedures ,a digital commodity exchange shall-- 7i7 establish and enforce rules or terms and conditions defining1 or specifications detailing-- 7,i7 trading procedures to be used in entering and executing orders traded on or through the facilities of the digital commodity exchange2 and 7,,ii7 procedures for trade processing of digital commodities on or through the facilities of the digital commodity exchange2 and 7ii7 monitor trading in digital commodities to prevent manipulation1 price distortion1 and disruptions of the delivery or cash settlement process through surveillance1 compliance1 and disciplinary practices and procedures1 including methods for conducting real-time monitoring of trading and comprehensive and accurate trade reconstructions4 7#f7 ,ability to obtain information ,a digital commodity exchange shall-- 7,a7 establish and enforce rules that will allow the facility to obtain any necessary information to perform any of the functions described in this section2 7,b7 provide the information to the ,commission on request2 and 7,c7 have the capacity to carry out such international information-sharing agreements as the ,commission may require4 7#g7 ,emergency authority ,a digital commodity exchange shall adopt rules to provide for the exercise of emergency authority1 in consultation or cooperation with the ,commission or a registered entity1 as is necessary and appropriate1 including the authority to facilitate the liquidation or transfer of open positions in any digital commodity or to suspend or curtail trading in a digital commodity4 7#h7 ,timely publication of trading information 7,a7 ,in general ,a digital commodity exchange shall make public timely information on price1 trading volume1 and other trading data on digital commodities to the extent prescribed by the ,commission4 7,b7 ,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 exchange4 7#i7 ,recordkeeping and reporting 7,a7 ,in general ,a digital commodity exchange shall-- 7i7 maintain records of all activities relating to the business of the facility1 including a complete audit trail1 in a form and manner acceptable to the ,commission for a period of #e years2 7ii7 report to the ,commission1 in a form and manner acceptable to the ,commission1 such information as the ,commission determines to be necessary or appropriate for the ,commission to perform the duties of the ,commission under this ,act2 and 7iii7 keep any such records of digital commodities which relate to a security open to inspection and examination by the ,securities and ,exchange ,commission4 7,b7 ,information-sharing ,subject to section #h1 and on request1 the ,commission shall share information collected under subparagraph 7,a7 with-- 7i7 the ,board2 7ii7 the ,securities and ,exchange ,commission2 7iii7 each appropriate ,federal banking agency2 7iv7 each appropriate ,state bank supervisor 7within the meaning of section #c of the ,federal ,deposit ,insurance ,act72 7v7 the ,financial ,stability ,oversight ,council2 7vi7 the ,department of ,justice2 and 7vii7 any other person that the ,commission determines to be appropriate1 including-- 7,i7 foreign financial supervisors 7including foreign futures authorities72 7,,ii7 foreign central banks2 and 7,,iii7 foreign ministries4 7,c7 ,confidentiality agreement ,before the ,commission may share information with any entity described in subparagraph 7,b71 the ,commission shall receive a written agreement from the entity stating that the entity shall abide by the confidentiality requirements described in section #h relating to the information on digital commodities that is provided4 7,d7 ,providing information ,a digital commodity exchange shall provide to the ,commission 7including any designee of the ,commission7 information under subparagraph 7,a7 in such form and at such frequency as is required by the ,commission4 7#aj7 ,antitrust considerations ,unless necessary or appropriate to achieve the purposes of this ,act1 a digital commodity exchange shall not-- 7,a7 adopt any rules or take any actions that result in any unreasonable restraint of trade2 or 7,b7 impose any material anticompetitive burden on trading4 7#aa7 ,conflicts of interest ,a registered digital commodity exchange shall implement conflict-of-interest systems and procedures that-- 7,a7 establish structural and institutional safeguards-- 7i7 to minimize conflicts of interest that might potentially bias the judgment or supervision of the digital commodity exchange and contravene the principles of fair and equitable trading and the business conduct standards described in this ,act1 including conflicts arising out of transactions or arrangements with affiliates 7including affiliates engaging in digital commodity activities7 which may include information partitions and the legal separation of different persons or entities involved in digital commodity activities2 and 7ii7 to ensure that the activities of any person within the digital commodity exchange or any affiliated entity relating to research or analysis of the price or market for any digital commodity or acting in a role of providing dealing1 brokering1 or advising activities are separated by appropriate informational partitions within the digital commodity exchange or any affiliated entity from the review1 pressure1 or oversight of persons whose involvement in pricing1 trading1 exchange1 or clearing activities might potentially bias their judgment or supervision and contravene the core principles of open access and the business conduct standards described in this ,act2 and 7,b7 address such other issues as the ,commission determines to be appropriate4 7#ab7 ,financial resources 7,a7 ,in general ,a digital commodity exchange shall have adequate financial1 operational1 and managerial resources1 as determined by the ,commission1 to discharge each responsibility of the digital commodity exchange4 7,b7 ,minimum amount of financial resources ,a digital commodity exchange shall possess financial resources that1 at a minimum1 exceed the total amount that would enable the digital commodity exchange to conduct an orderly wind-down of its activities4 7#ac7 ,disciplinary procedures ,a digital commodity exchange shall establish and enforce disciplinary procedures that authorize the digital commodity exchange to discipline1 suspend1 or expel members or market participants that violate the rules of the digital commodity exchange1 or similar methods for performing the same functions1 including delegation of the functions to third parties4 7#ad7 ,governance fitness standards 7,a7 ,governance arrangements ,a digital commodity exchange shall establish governance arrangements that are transparent to fulfill public interest requirements4 7,b7 ,fitness standards ,a digital commodity exchange shall establish and enforce appropriate fitness standards for-- 7i7 directors2 and 7ii7 any individual or entity with direct access to1 or control of1 customer assets4 7#ae7 ,system safeguards ,a digital commodity exchange shall-- 7,a7 establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational and security risks1 through the development of appropriate controls and procedures1 and automated systems1 that-- 7i7 are reliable and secure2 and 7ii7 have adequate scalable capacity2 7,b7 establish and maintain emergency procedures1 backup facilities1 and a plan for disaster recovery that allow for-- 7i7 the timely recovery and resumption of operations2 and 7ii7 the fulfillment of the responsibilities and obligations of the digital commodity exchange2 and 7,c7 periodically conduct tests to verify that the backup resources of the digital commodity exchange are sufficient to ensure continued-- 7i7 order processing and trade matching2 7ii7 price reporting2 7iii7 market surveillance2 and 7iv7 maintenance of a comprehensive and accurate audit trail4 7d7 ,holding of customer assets 7#a7 ,in general ,a digital commodity exchange shall hold customer money1 assets1 and property in a manner to minimize the risk of loss to the customer or unreasonable delay in the access to the money1 assets1 and property of the customer4 7,a7 ,segregation of funds 7i7 ,in general ,a digital commodity exchange shall treat and deal with all money1 assets1 and property that is received by the digital commodity exchange1 or accrues to a customer as the result of trading in digital commodities1 as belonging to the customer4 7ii7 ,commingling prohibited ,money1 assets1 and property of a customer described in clause 7i7 shall be separately accounted for and shall not be commingled with the funds of the digital commodity exchange or be used to margin1 secure1 or guarantee any trades or accounts of any customer or person other than the person for whom the same are held4 7,b7 ,exceptions 7i7 ,use of funds 7,i7 ,in general ,notwithstanding subparagraph 7,a71 money1 assets1 and property of customers of a digital commodity exchange described in subparagraph 7,a7 may1 for convenience1 be commingled and deposited in the same account or accounts with any bank1 trust company1 derivatives clearing organization1 or qualified digital commodity custodian4 7,,ii7 ,withdrawal ,notwithstanding subparagraph 7,a71 such share of the money1 assets1 and property described in item 7aa7 as in the normal course of business shall be necessary to margin1 guarantee1 secure1 transfer1 adjust1 or settle a contract of sale of a digital commodity with a registered entity may be withdrawn and applied to such purposes1 including the payment of commissions1 brokerage1 interest1 taxes1 storage1 and other charges1 lawfully accruing in connection with the contract of sale of a digital commodity4 7ii7 ,commission action ,notwithstanding subparagraph 7,a71 in accordance with such terms and conditions as the ,commission may prescribe by rule1 regulation1 or order1 any money1 assets1 or property of the customers of a digital commodity exchange described in subparagraph 7,a7 may be commingled and deposited in customer accounts with any other money1 assets1 or property received by the digital commodity exchange and required by the ,commission to be separately accounted for and treated and dealt with as belonging to the customer of the digital commodity exchange4 7#b7 ,permitted investments ,money described in subparagraph 7,a7 may be invested in obligations of the ,united ,states1 in general obligations of any ,state or of any political subdivision of a ,state1 and in obligations fully guaranteed as to principal and interest by the ,united ,states1 or in any other investment that the ,commission may by rule or regulation prescribe1 and such investments shall be made in accordance with such rules and regulations and subject to such conditions as the ,commission may prescribe4 7#c7 ,customer protection during bankruptcy 7,a7 ,customer property ,all assets held on behalf of a customer by a digital commodity exchange1 and all money1 assets1 and property of any customer received by a digital commodity exchange for trading or custody1 or to facilitate1 margin1 guarantee1 or secure contracts of sale of a digital commodity 7including money1 assets1 or property accruing to the customer as the result of the transactions71 shall be considered customer property for purposes of section #gfa of title #aa1 ,united ,states ,code4 7,b7 ,transactions ,a transaction involving a unit of a digital commodity occurring on or subject to the rules of a digital commodity exchange shall be considered a contract for the purchase or sale of a commodity for future delivery1 on or subject to the rules of1 a contract market or board of trade for the purposes of the definition of a commodity contract in section #gfa of title #aa1 ,united ,states ,code4 7,c7 ,exchanges ,a digital commodity exchange shall be considered a futures commission merchant for purposes of section #gfa of title #aa1 ,united ,states ,code4 7#d7 ,misuse of customer property 7,a7 ,in general ,it shall be unlawful-- 7i7 for any digital commodity exchange that has received any customer money1 assets1 or property for custody to dispose of1 or use any such money1 assets1 or property as belonging to the digital commodity exchange2 or 7ii7 for any other person1 including any depository1 other digital commodity exchange1 or digital commodity custodian that has received any customer money1 assets1 or property for deposit1 to hold1 dispose of1 or use any such money1 assets1 or property1 or property1 as belonging to the depositing digital commodity exchange or any person other than the customers of the digital commodity exchange4 7,b7 ,use further defined ,for purposes of this section1 use of a digital commodity includes utilizing any unit of a digital asset to participate in a blockchain service defined in paragraph 7#e7 or a decentralized governance system associated with the digital commodity or the blockchain system to which the digital commodity relates in any manner other than that expressly directed by the customer from whom the unit of a digital commodity was received4 7#e7 ,participation in blockchain services 7,a7 ,in general ,a customer shall have the right to waive the restrictions in paragraph 7#a7 for any unit of a digital commodity to be used under subparagraph 7,b71 by affirmatively electing1 in writing to the digital commodity exchange1 to waive the restrictions4 7,b7 ,use of funds ,customer digital commodities removed from segregation under subparagraph 7,a7 may be pooled and used by the digital commodity exchange or its designee to provide a blockchain service for a blockchain system to which the unit of the digital asset removed from segregation in subparagraph 7,a7 relates4 7,c7 ,limitations 7i7 ,in general ,the ,commission may1 by rule1 establish notice and disclosure requirements1 and any other limitations and rules related to the waiving of any restrictions under this paragraph that are reasonably necessary to protect customers1 including eligible contract participants1 non-eligible contract participants1 or any other class of customers4 7ii7 ,customer choice ,a digital commodity exchange may not require a waiver from a customer described in subparagraph 7,a7 as a condition of doing business on the exchange4 7,d7 ,blockchain service defined ,in this subparagraph1 the term blockchain service means any activity relating to validating transactions on a blockchain system1 providing security for a blockchain system1 or other similar activity required for the ongoing operation of a blockchain system4 7e7 ,market access requirements 7#a7 ,in general ,a digital commodity exchange shall require any person who is not an eligible contract participant to access trading on the exchange through a digital commodity broker4 7#b7 ,affiliated commodity brokers ,a registered digital commodity exchange may allow an affiliated digital commodity broker to facilitate access to the digital commodity exchange1 if-- 7,a7 no other digital commodity brokers facilitate access to the exchange2 7,b7 the affiliated digital commodity cannot provide customer access to another digital commodity exchange2 and 7,c7 the affiliated digital commodity broker is not also registered as a digital commodity dealer4 7#c7 ,direct access for eligible contract participants ,nothing in this section shall prohibit a digital commodity exchange in compliance with this section from permitting direct access for eligible contract participants4 7#d7 ,additional requirements 7,a7 ,in general ,the ,commission may1 by rule1 impose any additional requirements related to the operations and activities of the digital commodity exchange and the affiliated digital commodity broker necessary to protect market participants1 promote fair and equitable trading on the digital commodity exchange1 and promote responsible economic or financial innovation4 7,b7 ,delegation of authority ,the ,commission may delegate to a registered futures association such oversight and regulatory requirements as the ,commission determines are necessary to-- 7i7 supervise the activities of the digital commodity exchange and an affiliated digital commodity broker2 and 7ii7 protect market participants1 promote fair and equitable trading on the digital commodity exchange1 and promote responsible economic or financial innovation4 7,c7 ,competitive access rule ,notwithstanding paragraph 7#b77;,a71 the ,commission shall1 by rule1 adopt standards that permit a digital commodity exchange to allow both affiliated and unaffiliated digital commodity brokers to facilitate access to the digital commodity exchange4 ,the ,commission rule shall address-- 7i7 additional requirements for independent governance arrangements and fitness standards of affiliated entities2 7ii7 open access2 7iii7 conflicts of interest2 7iv7 antitrust considerations2 and 7v7 any other factor that the ,commission determines is necessary or appropriate to foster an open and competitive market and is in the public interest4 7f7 ,designation of chief compliance officer 7#a7 ,in general ,a digital commodity exchange shall designate an individual to serve as a chief compliance officer4 7#b7 ,duties ,the chief compliance officer shall-- 7,a7 report directly to the board or to the senior officer of the exchange2 7,b7 review compliance with the core principles in this subsection2 7,c7 in consultation with the board of the exchange1 a body performing a function similar to that of a board1 or the senior officer of the exchange1 resolve any conflicts of interest that may arise2 7,d7 establish and administer the policies and procedures required to be established pursuant to this section2 7,e7 ensure compliance with this ,act and the rules and regulations issued under this ,act1 including rules prescribed by the ,commission pursuant to this section2 and 7,f7 establish procedures for the remediation of noncompliance issues found during compliance office reviews1 look backs1 internal or external audit findings1 self-reported errors1 or through validated complaints4 7#c7 ,requirements for procedures ,in establishing procedures under paragraph 7#b77;,f71 the chief compliance officer shall design the procedures to establish the handling1 management response1 remediation1 retesting1 and closing of noncompliance issues4 7#d7 ,annual reports 7,a7 ,in general ,in accordance with rules prescribed by the ,commission1 the chief compliance officer shall annually prepare and sign a report that contains a description of-- 7i7 the compliance of the digital commodity exchange with this ,act2 and 7ii7 the policies and procedures1 including the code of ethics and conflict of interest policies1 of the digital commodity exchange4 7,b7 ,requirements ,the chief compliance officer shall-- 7i7 submit each report described in subparagraph 7,a7 with the appropriate financial report of the digital commodity exchange that is required to be submitted to the ,commission pursuant to this section2 and 7ii7 include in the report a certification that1 under penalty of law1 the report is accurate and complete4 7g7 ,appointment of trustee 7#a7 ,in general ,if a proceeding under section #e;e results in the suspension or revocation of the registration of a digital commodity exchange1 or if a digital commodity exchange withdraws from registration1 the ,commission1 on notice to the digital commodity exchange1 may apply to the appropriate ,united ,states district court where the digital commodity exchange is located for the appointment of a trustee4 7#b7 ,assumption of jurisdiction ,if the ,commission applies for appointment of a trustee under paragraph 7#a7-- 7,a7 the court may take exclusive jurisdiction over the digital commodity exchange and the records and assets of the digital commodity exchange1 wherever located2 and 7,b7 if the court takes jurisdiction under subparagraph 7,a71 the court shall appoint the ,commission1 or a person designated by the ,commission1 as trustee with power to take possession and continue to operate or terminate the operations of the digital commodity exchange in an orderly manner for the protection of customers subject to such terms and conditions as the court may prescribe4 7h7 ,qualified digital commodity custodian ,a digital commodity exchange shall hold in a qualified digital commodity custodian each unit of a digital commodity that is-- 7#a7 the property of a customer of the digital commodity exchange2 7#b7 required to be held by the digital commodity exchange under subsection 7c77#ab7 of this section2 or 7#c7 otherwise so required by the ,commission to reasonably protect customers or promote the public interest4 7i7 ,exemptions 7#a7 ,in order to promote responsible economic or financial innovation and fair competition1 or protect customers1 the ,commission may 7on its own initiative or on application of the registered digital commodity exchange7 exempt1 either unconditionally or on stated terms or conditions or for stated periods and either retroactively or prospectively1 or both1 a registered digital commodity exchange from the requirements of this section1 if the ,commission determines that-- 7,a7 the exemption would be consistent with the public interest and the purposes of this ,act2 and 7,b7 the exemption will not have a material adverse effect on the ability of the ,commission or the digital commodity exchange to discharge regulatory or self-regulatory duties under this ,act4 7#b7 ,the ,commission may exempt1 conditionally or unconditionally1 a digital commodity exchange from registration under this section if the ,commission finds that the digital commodity exchange is subject to comparable1 comprehensive supervision and regulation on a consolidated basis by the appropriate governmental authorities in the home country of the facility4 7j7 ,customer defined ,in this section1 the term customer means any person that maintains an account for the trading of digital commodities directly with a digital commodity exchange 7other than a person that is owned or controlled1 directly or indirectly1 by the digital commodity exchange7 for its own behalf or on behalf of any other person4 7k7 ,federal preemption ,notwithstanding any other provision of law1 the ,commission shall have exclusive jurisdiction over any digital commodity exchange registered under this section4 7l7 ,treatment under the ,bank ,secrecy ,act ,a registered digital commodity exchange shall be treated as a financial institution for purposes of the ,bank ,secrecy ,act4 7m7 ,withdrawal of certification of a blockchain system 7#a7 ,in general 7,a7 ,determination by a digital commodity exchange ,with respect to a certification of a blockchain system that becomes effective pursuant to section #dd7;f7 of the ,securities ,exchange ,act of #aicd1 if a digital commodity exchange determines that the blockchain system may not be a decentralized network1 the digital commodity exchange shall notify the ,commission of such determination4 7,b7 ,withdrawal process ,with respect to each notification received under subparagraph 7,a71 the ,commission shall initiate a withdrawal process under which the ,commission shall-- 7i7 publish a notice announcing the proposed withdrawal2 7ii7 provide a #cj day comment period with respect to the proposed withdrawal2 and 7iii7 after the end of the #cj-;day comment required under clause 7ii71 publish either-- 7,i7 a notification of withdrawal of the applicable certification2 or 7,,ii7 a notice that the ,commission is not withdrawing the certification4 7,c7 ,detailed analysis required ,the ,commission shall include1 with each publication of a notification of withdrawal described under subparagraph 7,b77iii77,i71 a detailed analysis of the factors on which the decision was based4 7#b7 ,recertification ,with respect to a blockchain system for which a certification has been withdrawn under this subsection1 no person may make a certification under section #dd7;a7 of the ,securities ,exchange ,act of #aicd with respect to such blockchain system during the #ij-;day period beginning on the date of such withdrawal4 7#c7 ,appeal of withdrawal 7,a7 ,in general ,if a certification is withdrawn under this subsection1 a person making may appeal the decision to the ,united ,states ,court of ,appeals for the ,district of ,columbia1 not later than #fj days after the notice of withdrawal is made4 7,b7 ,review ,in an appeal under subparagraph 7,a71 the court shall have de novo review of the determination to withdraw the certification4 4 #dje4 ,qualified digital commodity custodians ,the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq471 as amended by the preceding provisions of this ,act1 is amended by inserting after section #e;i the following3 #e;j4 ,qualified digital commodity custodians 7a7 ,in general ,for purposes of this ,act1 a qualified digital commodity custodian is a digital commodity custodian who meets the following conditions3 7#a7 ,supervision ,the digital commodity custodian is subject to adequate supervision and appropriate regulation4 7#b7 ,no prohibition ,the digital commodity custodian is-- 7,a7 subject to the supervision of-- 7i7 an appropriate ,federal banking agency2 7ii7 a ,state bank supervisor 7within the meaning of section #c of the ,federal ,deposit ,insurance ,act72 7iii7 the ,commission or the ,securities and ,exchange ,commission2 or 7iv7 an appropriate foreign governmental authority in the home country of the digital commodity custodian2 and 7,b7 not prohibited by the applicable supervisor referred to in subparagraph 7,a7 from engaging in any activity with respect to the holding of digital commodities4 7#c7 ,information-sharing 7,a7 ,in general ,the digital commodity custodian agrees to such periodic sharing of information regarding customer accounts the digital commodity custodian holds on behalf of an entity registered with the ,commission1 as the ,commission determines by rule shall be reasonably necessary to effectuate any of the provisions1 or to accomplish any of the purposes1 of this ,act4 7,b7 ,provision of information ,any person that is subject to regulation and examination by an appropriate ,federal banking agency may satisfy any information request described in subparagraph 7,a71 by providing the ,commission with a detailed listing1 in writing1 of the digital commodities of a customer within the custody or use of the person4 7b7 ,adequate supervision and appropriate regulation further defined 7#a7 ,in general ,in subsection 7a71 the terms adequate supervision and appropriate regulation mean such minimum standards for supervision and regulation as are reasonably necessary to protect the digital commodities of customers of an entity registered with the ,commission1 including minimum standards relating to-- 7,a7 accessibility of customer assets2 7,b7 financial resources2 7,c7 risk management requirements2 7,d7 governance arrangements2 7,e7 fitness standards for officers and directors2 7,f7 recordkeeping2 7,g7 information-sharing2 and 7,h7 conflicts of interest4 7#b7 ,deemed compliance ,for purposes of subsection 7a71 a digital commodity custodian is deemed to be subject to adequate supervision and appropriate regulation1 if the digital commodity custodian is-- 7,a7 subject to the supervision of the ,commission2 or 7,b7 a bank subject to the supervision of an appropriate ,federal banking agency or a ,state bank supervisor 7within the meaning of section #c of the ,federal ,deposit ,insurance ,act74 7#c7 ,rulemaking authority ,for purposes of subsection 7a71 the ,commission may1 by rule1 further define the terms adequate supervision and appropriate regulation as necessary in the public interest1 as appropriate for the protection of customers1 and consistent with the purposes of this ,act4 7c7 ,authority to temporarily suspend standards ,the ,commission may1 by rule or order1 temporarily suspend1 in whole or in part1 any requirement imposed under1 or any standard referred to in1 this section if the ,commission determines that the suspension would be consistent with the public interest and the purposes of this ,act4 4 #djf4 ,registration and regulation of digital commodity brokers and dealers ,the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq471 as amended by the preceding provisions of this ,act1 is amended by inserting after section #dt the following3 #du4 ,registration and regulation of digital commodity brokers and dealers 7a7 ,registration ,it shall be unlawful for any person to act as a digital commodity broker or digital commodity dealer unless the person is registered as such with the ,commission4 7b7 ,requirements 7#a7 ,in general ,a person shall register as a digital commodity broker or digital commodity dealer by filing a registration application with the ,commission4 7#b7 ,contents 7,a7 ,in general ,the application shall be made in such form and manner as is prescribed by the ,commission1 and shall contain such information as the ,commission considers necessary concerning the business in which the applicant is or will be engaged4 7,b7 ,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 require4 7#c7 ,transition ,within #ahj days after the date of the enactment of this section1 the ,commission shall prescribe rules providing for the registration of digital commodity brokers and digital commodity dealers under this section4 7#d7 ,statutory disqualification ,except to the extent otherwise specifically provided by rule1 regulation1 or order1 it shall be unlawful for a digital commodity broker or digital commodity dealer to permit any person who is associated with a digital commodity broker or a digital commodity dealer and who is subject to a statutory disqualification to effect or be involved in effecting a contract of sale of a digital commodity on behalf of the digital commodity broker or the digital commodity dealer1 respectively1 if the digital commodity broker or digital commodity dealer1 respectively1 knew1 or in the exercise of reasonable care should have known1 of the statutory disqualification4 7#e7 ,limitations on certain assets ,a digital commodity broker or digital commodity dealer shall not offer1 offer to enter into1 enter into1 or facilitate any contract of sale of a digital commodity that has not been certified under section #e;c7d74 7c7 ,additional registrations 7#a7 ,with the ,commission ,any person required to be registered as a digital commodity broker or digital commodity dealer may also be registered as a futures commission merchant1 introducing broker1 or swap dealer4 7#b7 ,with the ,securities and ,exchange ,commission ,any person required to be registered as a digital commodity broker or digital commodity dealer under this section may register with the ,securities and ,exchange ,commission as a digital asset broker or digital asset dealer1 pursuant to section #ae7;b7 of the ,securities ,exchange ,act of #aicd1 as applicable1 if the digital asset broker or digital asset dealer limits its solicitation of orders1 acceptance of orders1 or execution of orders1 or placing of orders on behalf of others involving any contract of sale of digital assets4 7#c7 ,with membership in a registered futures association ,any person required to be registered as a digital commodity broker or digital commodity dealer under this section shall be a member of a registered futures association4 7#d7 ,registration required ,any person required to be registered as a digital commodity broker or digital commodity dealer under this section shall register with the ,commission as such regardless of whether the person is registered with another ,state or ,federal regulator4 7d7 ,rulemaking 7#a7 ,in general ,the ,commission shall prescribe such rules applicable to registered digital commodity brokers and registered digital commodity dealers as are appropriate to carry out this section1 including rules in the public interest that limit the activities of digital commodity brokers and digital commodity dealers4 7#b7 ,multiple registrants ,the ,commission shall prescribe rules or regulations permitting1 or may otherwise authorize1 exemptions or additional requirements applicable to persons with multiple registrations under this ,act1 including as futures commission merchants1 introducing brokers1 digital commodity brokers1 digital commodity dealers1 or swap dealers1 as may be in the public interest to reduce compliance costs and promote customer protection4 7e7 ,capital requirements 7#a7 ,in general ,each digital commodity broker and digital commodity dealer shall meet such minimum capital requirements as the ,commission may prescribe to address the risks associated with digital commodity trading and to ensure that the digital commodity broker or digital commodity dealer1 respectively1 is able to-- 7,a7 meet1 and continue to meet1 at all times1 the obligations of such registrant2 and 7,b7 in the case of a digital commodity dealer1 fulfill the counterparty obligations of the digital commodity dealer for any margined1 leveraged1 or financed transactions4 7#b7 ,rule of construction ,nothing in this section shall limit1 or be construed to limit1 the authority of the ,securities and ,exchange ,commission to set financial responsibility rules for a broker or dealer registered pursuant to section #ae7;b7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho7b77 7except for section #ae7;b77#aa7 of such ,act 7#ae ,u4,s4,c4 #gho7b77#aa77 in accordance with section #ae7;c77#c7 of such ,act 7#ae ,u4,s4,c4 #gho7c77#c774 7#c7 ,futures commission merchants and other dealers 7,a7 ,in general ,each futures commission merchant1 introducing broker1 digital commodity broker1 digital commodity dealer1 broker1 and dealer shall maintain sufficient capital to comply with the stricter of any applicable capital requirements to which the futures commission merchant1 introducing broker1 digital commodity broker1 digital commodity dealer1 broker1 or dealer1 respectively1 is subject under this ,act or the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq474 7,b7 ,coordination of capital requirements 7i7 ,commission rule ,the ,commission shall1 by rule1 provide appropriate offsets to any applicable capital requirement for a person with multiple registrations as a digital commodity dealer1 digital commodity broker1 futures commission merchant1 or introducing broker4 7ii7 ,joint rule ,the ,commission and the ,securities and ,exchange ,commission shall jointly1 by rule1 provide appropriate offsets to any applicable capital requirement for a person with multiple registrations as a digital commodity dealer1 digital commodity broker1 futures commission merchant1 introducing broker1 broker1 or dealer4 7f7 ,reporting and recordkeeping ,each digital commodity broker and digital commodity dealer-- 7#a7 shall make such reports as are required by the ,commission by rule or regulation regarding the transactions1 positions1 and financial condition of the digital commodity broker or digital commodity dealer1 respectively2 7#b7 shall keep books and records in such form and manner and for such period as may be prescribed by the ,commission by rule or regulation2 and 7#c7 shall keep the books and records open to inspection and examination by any representative of the ,commission4 7g7 ,daily trading records 7#a7 ,in general ,each digital commodity broker and digital commodity dealer shall maintain daily trading records of the transactions of the digital commodity broker or digital commodity dealer1 respectively1 and all related records 7including related forward or derivatives transactions7 and recorded communications1 including electronic mail1 instant messages1 and recordings of telephone calls1 for such period as the ,commission may require by rule or regulation4 7#b7 ,information requirements ,the daily trading records shall include such information as the ,commission shall require by rule or regulation4 7#c7 ,counterparty records ,each digital commodity broker and digital commodity dealer shall maintain daily trading records for each customer or counterparty in a manner and form that is identifiable with each digital commodity transaction4 7#d7 ,audit trail ,each digital commodity broker and digital commodity dealer shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions4 7h7 ,business conduct standards 7#a7 ,in general ,each digital commodity broker and digital commodity dealer shall conform with such business conduct standards as the ,commission1 by rule or regulation1 prescribes related to-- 7,a7 fraud1 manipulation1 and other abusive practices involving spot or margined1 leveraged1 or financed digital commodity transactions 7including transactions that are offered but not entered into72 7,b7 diligent supervision of the business of the registered digital commodity broker or digital commodity dealer1 respectively2 and 7,c7 such other matters as the ,commission deems appropriate4 7#b7 ,business conduct requirements ,the ,commission shall1 by rule1 prescribe business conduct requirements which-- 7,a7 require disclosure by a registered digital commodity broker and registered digital commodity dealer to any counterparty to the transaction 7other than an eligible contract participant7 of-- 7i7 information about the material risks and characteristics of the digital commodity2 7ii7 information about the material risks and characteristics of the transaction2 7,b7 establish a duty for such a digital commodity broker and such a digital commodity dealer to communicate in a fair and balanced manner based on principles of fair dealing and good faith2 7,c7 establish standards governing digital commodity broker and digital commodity dealer marketing and advertising1 including testimonials and endorsements2 and 7,d7 establish such other standards and requirements as the ,commission may determine are-- 7i7 in the public interest2 7ii7 appropriate for the protection of customers2 or 7iii7 otherwise in furtherance of the purposes of this ,act4 7#c7 ,prohibition on fraudulent practices ,it shall be unlawful for a digital commodity broker or digital commodity dealer to-- 7,a7 employ any device1 scheme1 or artifice to defraud any customer or counterparty2 7,b7 engage in any transaction1 practice1 or course of business that operates as a fraud or deceit on any customer or counterparty2 or 7,c7 engage in any act1 practice1 or course of business that is fraudulent1 deceptive1 or manipulative4 7i7 ,duties 7#a7 ,risk management procedures ,each digital commodity broker and digital commodity dealer shall establish robust and professional risk management systems adequate for managing the day-to-day business of the digital commodity broker or digital commodity dealer1 respectively4 7#b7 ,disclosure of general information ,each digital commodity broker and digital commodity dealer shall disclose to the ,commission information concerning-- 7,a7 the terms and conditions of the transactions of the digital commodity broker or digital commodity dealer1 respectively2 7,b7 the trading operations1 mechanisms1 and practices of the digital commodity broker or digital commodity dealer1 respectively2 7,c7 financial integrity protections relating to the activities of the digital commodity broker or digital commodity dealer1 respectively2 and 7,d7 other information relevant to trading in digital commodities by the digital commodity broker or digital commodity dealer1 respectively4 7#c7 ,ability to obtain information ,each digital commodity broker and digital commodity dealer shall-- 7,a7 establish and enforce internal systems and procedures to obtain any necessary information to perform any of the functions described in this section2 and 7,b7 provide the information to the ,commission1 on request4 7#d7 ,conflicts of interest ,each digital commodity broker and digital commodity dealer shall implement conflict-of-interest systems and procedures that-- 7,a7 establish structural and institutional safeguards-- 7i7 to minimize conflicts of interest that might potentially bias the judgment or supervision of the digital commodity broker or digital commodity dealer1 respectively1 and contravene the principles of fair and equitable trading and the business conduct standards described in this ,act1 including conflicts arising out of transactions or arrangements with affiliates 7including affiliates acting as digital asset issuers1 digital commodity dealers1 or qualified digital commodity custodians71 which may include information partitions and the legal separation of different persons involved in digital commodity activities2 and 7ii7 to ensure that the activities of any person within the digital commodity broker or digital commodity dealer relating to research or analysis of the price or market for any digital commodity or acting in a role of providing exchange activities or making determinations as to accepting exchange customers are separated by appropriate informational partitions within the digital commodity broker or digital commodity dealer from the review1 pressure1 or oversight of persons whose involvement in pricing1 trading1 exchange1 or clearing activities might potentially bias their judgment or supervision and contravene the core principles of open access and the business conduct standards described in this ,act2 and 7,b7 address such other issues as the ,commission determines to be appropriate4 7#e7 ,antitrust considerations ,unless necessary or appropriate to achieve the purposes of this ,act1 a digital commodity broker or digital commodity dealer shall not-- 7,a7 adopt any process or take any action that results in any unreasonable restraint of trade2 or 7,b7 impose any material anticompetitive burden on trading or clearing4 7j7 ,designation of chief compliance officer 7#a7 ,in general ,each digital commodity broker and digital commodity dealer shall designate an individual to serve as a chief compliance officer4 7#b7 ,duties ,the chief compliance officer shall-- 7,a7 report directly to the board or to the senior officer of the registered digital commodity broker or registered digital commodity dealer2 7,b7 review the compliance of the registered digital commodity broker or registered digital commodity dealer with respect to the registered digital commodity broker and registered digital commodity dealer requirements described in this section2 7,c7 in consultation with the board of directors1 a body performing a function similar to the board1 or the senior officer of the organization1 resolve any conflicts of interest that may arise2 7,d7 be responsible for administering each policy and procedure that is required to be established pursuant to this section2 7,e7 ensure compliance with this ,act 7including regulations71 including each rule prescribed by the ,commission under this section2 7,f7 establish procedures for the remediation of noncompliance issues identified by the chief compliance officer through any-- 7i7 compliance office review2 7ii7 look-back2 7iii7 internal or external audit finding2 7iv7 self-reported error2 or 7v7 validated complaint2 and 7,g7 establish and follow appropriate procedures for the handling1 management response1 remediation1 retesting1 and closing of noncompliance issues4 7#c7 ,annual reports 7,a7 ,in general ,in accordance with rules prescribed by the ,commission1 the chief compliance officer shall annually prepare and sign a report that contains a description of-- 7i7 the compliance of the registered digital commodity broker or registered digital commodity dealer with respect to this ,act 7including regulations72 and 7ii7 each policy and procedure of the registered digital commodity broker or registered digital commodity dealer of the chief compliance officer 7including the code of ethics and conflict of interest policies74 7,b7 ,requirements ,the chief compliance officer shall ensure that a compliance report under subparagraph 7,a7-- 7i7 accompanies each appropriate financial report of the registered digital commodity broker or registered digital commodity dealer that is required to be furnished to the ,commission pursuant to this section2 and 7ii7 includes a certification that1 under penalty of law1 the compliance report is accurate and complete4 7k7 ,segregation of digital commodities 7#a7 ,holding of customer assets 7,a7 ,in general ,each digital commodity broker and digital commodity dealer shall hold customer money1 assets1 and property in a manner to minimize the risk of loss to the customer or unreasonable delay in customer access to the money1 assets1 and property of the customer4 7,b7 ,qualified digital commodity custodian ,each digital commodity broker and digital commodity dealer shall hold in a qualified digital commodity custodian each unit of a digital commodity that is-- 7i7 the property of a customer or counterparty of the digital commodity broker or digital commodity dealer1 respectively2 7ii7 required to be held by the digital commodity broker or digital commodity dealer under subsection 7e72 or 7iii7 otherwise so required by the ,commission to reasonably protect customers or promote the public interest4 7#b7 ,segregation of funds 7,a7 ,in general ,each digital commodity broker and digital commodity dealer shall treat and deal with all money1 assets1 and property that is received by the registered digital commodity broker or registered digital commodity dealer1 or accrues to a customer as the result of trading in digital commodities1 as belonging to the customer4 7,b7 ,commingling prohibited 7i7 ,in general ,except as provided in clause 7ii71 each digital commodity broker and digital commodity dealer shall separately account for money1 assets1 and property of a digital commodity customer1 and shall not commingle any such money1 assets1 or property with the funds of the digital commodity broker or digital commodity dealer1 respectively1 or use any such money1 assets1 or property to margin1 secure1 or guarantee any trades or accounts of any customer or person other than the person for whom the money1 assets1 or property are held4 7ii7 ,exceptions 7,i7 ,use of funds 7aa7 ,in general ,a digital commodity broker or digital commodity dealer may1 for convenience1 commingle and deposit in the same account or accounts with any bank1 trust company1 derivatives clearing organization1 or qualified digital commodity custodian money1 assets1 and property of customers4 7bb7 ,withdrawal ,the share of the money1 assets1 and property described in item 7aa7 as in the normal course of business shall be necessary to margin1 guarantee1 secure1 transfer1 adjust1 or settle a contract of sale of a digital commodity with a registered entity may be withdrawn and applied to such purposes1 including the payment of commissions1 brokerage1 interest1 taxes1 storage1 and other charges1 lawfully accruing in connection with the contract4 7,,ii7 ,commission action ,in accordance with such terms and conditions as the ,commission may prescribe by rule1 regulation1 or order1 any money1 assets1 or property of the customers of a digital commodity broker or digital commodity dealer may be commingled and deposited in customer accounts with any other money1 assets1 or property received by the digital commodity broker or digital commodity dealer1 respectively1 and required by the ,commission to be separately accounted for and treated and dealt with as belonging to the customer of the digital commodity broker or digital commodity dealer1 respectively4 7#c7 ,permitted investments ,money described in paragraph 7#b7 may be invested in obligations of the ,united ,states1 in general obligations of any ,state or of any political subdivision of a ,state1 in obligations fully guaranteed as to principal and interest by the ,united ,states1 or in any other investment that the ,commission may by rule or regulation allow4 7#d7 ,customer protection during bankruptcy 7,a7 ,customer property ,all money1 assets1 or property described in paragraph 7#b7 shall be considered customer property for purposes of section #gfa of title #aa1 ,united ,states ,code4 7,b7 ,transactions ,a transaction involving a unit of a digital commodity occurring with a digital commodity dealer shall be considered a contract for the purchase or sale of a commodity for future delivery1 on or subject to the rules of1 a contract market or board of trade for purposes of the definition of a commodity contract in section #gfa of title #aa1 ,united ,states ,code4 7,c7 ,brokers and dealers ,a digital commodity dealer and a digital commodity broker shall be considered a futures commission merchant for purposes of section #gfa of title #aa1 ,united ,states ,code4 7,d7 ,assets removed from segregation ,assets removed from segregation due to a customer election under paragraph 7#e7 shall not be considered customer property for purposes of section #gfa of title #aa1 ,united ,states ,code4 7#e7 ,misuse of customer property 7,a7 ,in general ,it shall be unlawful-- 7i7 for any digital commodity broker or digital commodity dealer that has received any customer money1 assets1 or property for custody to dispose of1 or use any such money1 assets1 or property as belonging to the digital commodity broker or digital commodity dealer1 respectively2 or 7ii7 for any other person1 including any depository1 digital commodity exchange1 other digital commodity broker1 other digital commodity dealer1 or digital commodity custodian that has received any customer money1 assets1 or property for deposit1 to hold1 dispose of1 or use any such money1 assets1 or property1 as belonging to the depositing digital commodity broker or digital commodity dealer or any person other than the customers of the digital commodity broker or digital commodity dealer1 respectively4 7,b7 ,use further defined ,for purposes of this section1 use of a digital commodity includes utilizing any unit of a digital asset to participate in a blockchain service defined in paragraph 7#f7 or a decentralized governance system associated with the digital commodity or the blockchain system to which the digital commodity relates in any manner other than that expressly directed by the customer from whom the unit of a digital commodity was received4 7#f7 ,participation in blockchain services 7,a7 ,in general ,a customer shall have the right to waive the restrictions in paragraph 7#a7 for any unit of a digital commodity to be used under subparagraph 7,b71 by affirmatively electing1 in writing to the digital commodity broker or digital commodity dealer1 to waive the restrictions4 7,b7 ,use of funds ,customer digital commodities removed from segregation under subparagraph 7,a7 may be pooled and used by the digital commodity broker or digital commodity dealer1 or one of their designees1 to provide a blockchain service for a blockchain system to which the unit of the digital asset removed from segregation in subparagraph 7,a7 relates4 7,c7 ,limitations 7i7 ,in general ,the ,commission may1 by rule1 establish notice and disclosure requirements1 and any other limitations and rules related to the waiving of any restrictions under this paragraph that are reasonably necessary to protect customers1 including eligible contract participants1 non-eligible contract participants1 or any other class of customers4 7ii7 ,customer choice ,a digital commodity broker or digital commodity dealer may not require a waiver from a customer described in subparagraph 7,a7 as a condition of doing business with the broker or dealer4 7,d7 ,blockchain service defined ,in this subparagraph1 the term blockchain service means any activity relating to validating transactions on a blockchain system1 providing security for a blockchain system1 or other similar activity required for the ongoing operation of a blockchain system4 7l7 ,federal preemption ,notwithstanding any other provision of law1 the ,commission shall have exclusive jurisdiction over any digital commodity broker or digital commodity dealer registered under this section4 7m7 ,exemptions ,in order to promote responsible economic or financial innovation and fair competition1 or protect customers1 the ,commission may 7on its own initiative or on application of the registered digital commodity broker or registered digital commodity dealer7 exempt1 unconditionally or on stated terms or conditions1 or for stated periods1 and retroactively or prospectively1 or both1 a registered digital commodity broker or registered digital commodity dealer from the requirements of this section1 if the ,commission determines that-- 7#a7 7,a7 the exemption would be consistent with the public interest and the purposes of this ,act2 and 7,b7 the exemption will not have a material adverse effect on the ability of the ,commission to discharge regulatory duties under this ,act2 or 7#b7 the registered digital commodity broker or registered digital commodity dealer is subject to comparable1 comprehensive supervision and regulation by the appropriate government authorities in the home country of the registered digital commodity broker or registered digital commodity dealer1 respectively4 7n7 ,treatment under the ,bank ,secrecy ,act ,a registered digital commodity broker and a registered digital commodity dealer shall be treated as a financial institution for purposes of the ,bank ,secrecy ,act4 4 #djg4 ,registration of associated persons 7a7 ,in general ,section #dk of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #fk7 is amended-- 7#a7 by redesignating subsections 7#d7 through 7#f7 as subsections 7#e7 through 7#g71 respectively2 and 7#b7 by inserting after subsection 7#c7 the following3 7#d7 ,it shall be unlawful for any person to act as an associated person of a digital commodity broker or an associated person of a digital commodity dealer unless the person is registered with the ,commission under this ,act and such registration shall not have expired1 been suspended 7and the period of suspension has not expired71 or been revoked4 ,it shall be unlawful for a digital commodity broker or a digital commodity dealer to permit such a person to become or remain associated with the digital commodity broker or digital commodity dealer if the digital commodity broker or digital commodity dealer knew or should have known that the person was not so registered or that the registration had expired1 been suspended 7and the period of suspension has not expired71 or been revoked4 2 and 7#c7 in subsection 7#e7 7as so redesignated71 by striking or of a commodity trading advisor and inserting of a commodity trading advisor1 of a digital commodity broker1 or of a digital commodity dealer4 7b7 ,conforming amendments ,the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a et seq47 is amended by striking section #dk7#f7 each place it appears and inserting section #dk7#g74 #djh4 ,registration of commodity pool operators and commodity trading advisors ,section #dm7#c7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #fm7#c77 is amended-- 7#a7 in subparagraph 7,a7-- 7,a7 by striking any commodity trading advisor and inserting a commodity pool operator or commodity trading advisor2 and 7,b7 by striking acting as a commodity trading advisor and inserting acting as a commodity pool operator or commodity trading advisor2 and 7#b7 in subparagraph 7,c71 by inserting digital commodities1 after physical commodities14 #dji4 ,exclusion for ancillary activities ,the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq471 as amended by the preceding provisions of this ,act1 is amended by inserting after section #du the following3 #dv4 ,exclusion for ancillary activities 7a7 ,in general ,notwithstanding any other provision of this ,act1 a person shall not be subject to this ,act and the regulations promulgated under this ,act solely based on the person undertaking any ancillary activities4 7b7 ,exceptions ,subsection 7a7 shall not be construed to apply to the anti-fraud1 anti-manipulation1 or false reporting enforcement authorities of the ,commission4 7c7 ,ancillary activities defined ,in this section1 the term ancillary activities means any of the following activities related to the operation of a blockchain system3 7#a7 ,compiling network transactions1 operating or participating in a pool1 relaying1 searching1 sequencing1 validating1 or acting in a similar capacity with respect to contract of sale of a digital asset4 7#b7 ,providing computational work1 operating a node1 or procuring1 offering1 or utilizing network bandwidth1 or other similar incidental services with respect to a contract of sale of a digital asset4 7#c7 ,providing a user-interface that enables a user to read1 and access data about a blockchain system1 send messages1 or otherwise interact with a blockchain system4 7#d7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing a blockchain system4 7#e7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing software or systems that create or deploy hardware or software1 including wallets or other systems1 facilitating an individual user's own personal ability to keep1 safeguard1 or custody a user's digital commodities or related private keys4 4 #daj4 ,funding for implementation1 administration1 and enforcement ,out of any money in the ,treasury of the ,united ,states not otherwise appropriated1 there are appropriated #abj1jjj1jjj to the ,commodity ,futures ,trading ,commission for the implementation1 administration1 and enforcement of the provisions of this ,act to be administered by the ,commodity ,futures ,trading ,commission1 which amounts shall remain available through the #e-year period that begins with the date of the enactment of this ,act4 #daa4 ,effective date ,unless otherwise provided in this title1 this title and the amendments made by this title shall take effect #cfj days after the date of enactment of this ,act1 except that1 to the extent a provision of this title requires a rulemaking1 the provision shall take effect on the later of-- 7#a7 #cfj days after the date of enactment of this ,act2 or 7#b7 #fj days after the publication in the ,federal ,register of the final rule implementing the provision4 ,v4 ,innovation and ,technology ,improvements #eja4 ,codification of the ,,sec ,strategic ,hub for ,innovation and ,financial ,technology ,section #d of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;d7 is amended by adding at the end the following3 7l7 ,strategic ,hub for ,innovation and ,financial ,technology 7#a7 ,office established ,there is established within the ,commission the ,strategic ,hub for ,innovation and ,financial ,technology 7referred to in this section as the ,fin,hub74 7#b7 ,purposes ,the purposes of ,fin,hub are as follows3 7,a7 ,to assist in shaping the approach of the ,commission to technological advancements in the financial industry4 7,b7 ,to examine financial technology innovations within capital markets1 market participants1 and investors4 7,c7 ,to coordinate the response of the ,commission to emerging technologies in financial1 regulatory1 and supervisory systems4 7#c7 ,director of ,fin,hub ,fin,hub shall have a ,director who shall be appointed by the ,commission1 from among individuals having experience in both emerging technologies and ,federal securities law and serve at the pleasure of the ,commission4 ,the ,director shall report directly to the ,commission and perform such functions and duties as the ,commission may prescribe4 7#d7 ,responsibilities ,fin,hub shall-- 7,a7 foster responsible technological innovation and fair competition within the ,commission1 including around financial technology1 regulatory technology1 and supervisory technology2 7,b7 provide internal education and training to the ,commission regarding financial technology2 7,c7 advise the ,commission regarding financial technology that would serve the ,commission's oversight functions2 7,d7 analyze technological advancements and the impact of regulatory requirements on financial technology companies2 7,e7 advise the ,commission with respect to rulemakings or other agency or staff action regarding financial technology2 7,f7 provide businesses working in emerging financial technology fields with information on the ,commission1 its rules and regulations2 and 7,g7 encourage firms working in emerging technology fields to engage with the ,commission and obtain feedback from the ,commission on potential regulatory issues4 7#e7 ,access to documents ,the ,commission shall ensure that ,fin,hub has full access to the documents and information of the ,commission and any self-regulatory organization1 as necessary to carry out the functions of ,fin,hub4 7#f7 ,report to ,congress 7,a7 ,in general ,not later than ,october #ca of each year after #bjbd1 ,fin,hub shall submit to the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate and the ,committee on ,financial ,services of the ,house of ,representatives a report on the activities of ,fin,hub during the immediately preceding fiscal year4 7,b7 ,contents ,each report required under subparagraph 7,a7 shall include-- 7i7 the total number of persons that met with ,fin,hub2 7ii7 the total number of market participants ,fin,hub met with1 including the classification of those participants2 7iii7 a summary of general issues discussed during meetings with persons2 7iv7 information on steps ,fin,hub has taken to improve ,commission services1 including responsiveness to the concerns of persons2 7v7 recommendations-- 7,i7 with respect to the regulations of the ,commission and the guidance and orders of the ,commission2 and 7,,ii7 for such legislative actions as the ,fin,hub determines appropriate2 and 7vi7 any other information1 as determined appropriate by the ,director of ,fin,hub4 7,c7 ,confidentiality ,a report under subparagraph 7,a7 may not contain confidential information4 7#g7 ,systems of records 7,a7 ,in general ,the ,commission shall establish a detailed system of records 7as defined under section #eeb;a of title #e1 ,united ,states ,code7 to assist ,fin,hub in communicating with interested parties4 7,b7 ,entities covered by the system ,entities covered by the system required under subparagraph 7,a7 include entities or persons submitting requests or inquiries and other information to ,commission through ,fin,hub4 7,c7 ,security and storage of records ,fin,hub shall store-- 7i7 electronic records-- 7,i7 in the system required under subparagraph 7,a72 or 7,,ii7 on the secure network or other electronic medium1 such as encrypted hard drives or back-up media1 of the ,commission2 and 7ii7 paper records in secure facilities4 7#h7 ,effective date ,this subsection shall take effect on the date that is #ahj days after the date of the enactment of this subsection4 4 #ejb4 ,codification of ,lab,c,f,t,c 7a7 ,in general ,section #ah of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #bb7 is amended by adding at the end the following3 7c7 ,lab,c,f,t,c 7#a7 ,establishment ,there is established in the ,commission ,lab,c,f,t,c4 7#b7 ,purpose ,the purposes of ,lab,c,f,t,c are to-- 7,a7 promote responsible financial technology innovation and fair competition for the benefit of the ,american public2 7,b7 serve as an information platform to inform the ,commission about new financial technology innovation2 and 7,c7 provide outreach to financial technology innovators to discuss their innovations and the regulatory framework established by this ,act and the regulations promulgated thereunder4 7#c7 ,director ,lab,c,f,t,c shall have a ,director1 who shall be appointed by the ,commission and serve at the pleasure of the ,commission4 ,notwithstanding section #b7;a77#f77;,a71 the ,director shall report directly to the ,commission and perform such functions and duties as the ,commission may prescribe4 7#d7 ,duties ,lab,c,f,t,c shall-- 7,a7 advise the ,commission with respect to rulemakings or other agency or staff action regarding financial technology2 7,b7 provide internal education and training to the ,commission regarding financial technology2 7,c7 advise the ,commission regarding financial technology that would bolster the ,commission's oversight functions2 7,d7 engage with academia1 students1 and professionals on financial technology issues1 ideas1 and technology relevant to activities under this ,act2 7,e7 provide persons working in emerging technology fields with information on the ,commission1 its rules and regulations1 and the role of a registered futures association2 and 7,f7 encourage persons working in emerging technology fields to engage with the ,commission and obtain feedback from the ,commission on potential regulatory issues4 7#e7 ,access to documents ,the ,commission shall ensure that ,lab,c,f,t,c has full access to the documents and information of the ,commission and any self-regulatory organization or registered futures association1 as necessary to carry out the functions of ,lab,c,f,t,c4 7#f7 ,report to ,congress 7,a7 ,in general ,not later than ,october #ca of each year after #bjbd1 ,lab,c,f,t,c shall submit to the ,committee on ,agriculture of the ,house of ,representatives and the ,committee on ,agriculture1 ,nutrition1 and ,forestry of the ,senate a report on its activities4 7,b7 ,contents ,each report required under paragraph 7#a7 shall include-- 7i7 the total number of persons that met with ,lab,c,f,t,c2 7ii7 a summary of general issues discussed during meetings with the person2 7iii7 information on steps ,lab,c,f,t,c has taken to improve ,commission services1 including responsiveness to the concerns of persons2 7iv7 recommendations made to the ,commission with respect to the regulations1 guidance1 and orders of the ,commission and such legislative actions as may be appropriate2 and 7v7 any other information determined appropriate by the ,director of ,lab,c,f,t,c4 7,c7 ,confidentiality ,a report under paragraph 7,a7 shall abide by the confidentiality requirements in section #h4 7#g7 ,systems of records 7,a7 ,in general ,the ,commission shall establish a detailed system of records 7as defined in section #eeb;a of title #e1 ,united ,states ,code7 to assist ,lab,c,f,t,c in communicating with interested parties4 7,b7 ,persons covered by the system ,the persons covered by the system of records shall include persons submitting requests or inquiries and other information to the ,commission through ,lab,c,f,t,c4 7,c7 ,security and storage of records ,the system of records shall store records electronically or on paper in secure facilities1 and shall store electronic records on the secure network of the ,commission and on other electronic media1 such as encrypted hard drives and back-up media1 as needed4 4 7b7 ,conforming amendments ,section #b7;a77#f77;,a7 of such ,act 7#g ,u4,s4,c4 #b7;a77#f77;,a77 is amended-- 7#a7 by striking paragraph and in and inserting paragraph12 and 7#b7 by inserting and section #ah7;c77#c71 before the executive4 7c7 ,effective date ,the ,commodity ,futures ,trading ,commission shall implement the amendments made by this section 7including complying with section #ah7;c77#g7 of the ,commodity ,exchange ,act7 within #ahj days after the date of the enactment of this ,act4 #ejc4 ,,cftc-,,sec ,joint ,advisory ,committee on ,digital ,assets 7a7 ,establishment ,the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission 7in this section referred to as the ,commissions7 shall jointly establish the ,joint ,advisory ,committee on ,digital ,assets 7in this section referred to as the ,committee74 7b7 ,purpose 7#a7 ,in general ,the ,committee shall-- 7,a7 provide the ,commissions with advice on the rules1 regulations1 and policies of the ,commissions related to digital assets2 7,b7 further the regulatory harmonization of digital asset policy between the ,commissions2 7,c7 examine and disseminate methods for describing1 measuring1 and quantifying digital asset-- 7i7 decentralization2 7ii7 functionality2 7iii7 information asymmetries2 and 7iv7 transaction and network security2 7,d7 examine the potential for digital assets1 blockchain systems1 and distributed ledger technology to improve efficiency in the operation of financial market infrastructure and better protect financial market participants1 including services and systems which provide-- 7i7 improved customer protections2 7ii7 public availability of information2 7iii7 greater transparency regarding customer funds2 7iv7 reduced transaction cost2 and 7v7 increased access to financial market services2 and 7,e7 discuss the implementation by the ,commissions of this ,act and the amendments made by this ,act4 7#b7 ,review by ,agencies ,each ,commission shall-- 7,a7 review the findings and recommendations of the ,committee2 7,b7 each time the ,committee submits a finding or recommendation to a ,commission1 promptly issue a public statement-- 7i7 assessing the finding or recommendation of the ,committee2 7ii7 disclosing the action or decision not to take action made by the ,commission in response to a finding or recommendation2 and 7iii7 the reasons for the action or decision not to take action2 and 7,c7 each time the ,committee submits a finding or recommendation to a ,commission1 provide the ,committee with a formal response to the finding or recommendation not later than #c months after the date of the submission of the finding or recommendation4 7c7 ,membership and leadership 7#a7 ,non-federal members 7,a7 ,in general ,the ,commissions shall appoint at least #bj nongovernmental stakeholders with a wide diversity of opinion and who represent a broad spectrum of interests representing the digital asset ecosystem1 equally divided between the ,commissions1 to serve as members of the ,committee4 ,the appointees shall include-- 7i7 digital asset issuers2 7ii7 persons registered with the ,commissions and engaged in digital asset related activities2 7iii7 individuals engaged in academic research relating to digital assets2 and 7iv7 digital asset users4 7,b7 ,members not ,commission employees ,members appointed under subparagraph 7,a7 shall not be deemed to be employees or agents of a ,commission solely by reason of membership on the ,committee4 7#b7 ,co-designated ,federal officers 7,a7 ,number2 appointment ,there shall be #b co-designated ,federal officers of the ,committee1 as follows3 7i7 ,the ,director of ,lab,c,f,t,c of the ,commodity ,futures ,trading ,commission4 7ii7 ,the ,director of the ,strategic ,hub for ,innovation and ,financial ,technology of the ,securities and ,exchange ,commission4 7,b7 ,duties ,the duties required by chapter #aj of title #e1 ,united ,states ,code1 to be carried out by a designated ,federal officer with respect to the ,committee shall be shared by the co-designated ,federal officers of the ,committee4 7#c7 ,committee leadership 7,a7 ,composition2 election ,the ,committee members shall elect1 from among the ,committee members-- 7i7 a chair2 7ii7 a vice chair2 7iii7 a secretary2 and 7iv7 an assistant secretary4 7,b7 ,term of office ,each member elected under subparagraph 7,a7 in a #b-year period referred to in section #ajac7;b77#b7 of title #e1 ,united ,states ,code1 shall serve in the capacity for which the member was so elected1 until the end of the #b-year period4 7d7 ,no compensation for ,committee members 7#a7 ,non-,federal members ,all ,committee members appointed under subsection 7d77#a7 shall-- 7,a7 serve without compensation2 and 7,b7 while away from the home or regular place of business of the member in the performance of services for the ,committee1 be allowed travel expenses1 including per diem in lieu of subsistence1 in the same manner as persons employed intermittently in the ,government service are allowed expenses under section #egjc7;b7 of title #e1 ,united ,states ,code4 7#b7 ,no compensation for co-designated ,federal officers ,the co-designated ,federal officers shall serve without compensation in addition to that received for their services as officers or employees of the ,united ,states4 7e7 ,frequency of meetings ,the ,committee shall meet-- 7#a7 not less frequently than twice annually2 and 7#b7 at such other times as either ,commission may request4 7f7 ,duration ,section #ajac7;a77#b7 of title #e1 ,united ,states ,code1 shall not apply to the ,committee4 7g7 ,time limits ,the ,commissions shall-- 7#a7 adopt a joint charter for the ,committee within #ij days after the date of the enactment of this section2 7#b7 appoint members to the ,committee within #abj days after such date of enactment2 and 7#c7 hold the initial meeting of the ,committee within #ahj days after such date of enactment4 7h7 ,funding ,the ,commissions shall jointly fund the ,committee4 #ejd4 ,modernization of the ,securities and ,exchange ,commission mission 7a7 ,securities ,act of #aicc ,section #b7;b7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg7;b77 is amended-- 7#a7 in the heading1 by inserting ,innovation1 after ,efficiency12 and 7#b7 by inserting innovation1 after efficiency14 7b7 ,securities ,exchange act of #aicd ,section #c7;f7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh7;c77 is amended-- 7#a7 in the heading1 by inserting ,innovation1 after ,efficiency12 and 7#b7 by inserting innovation1 after efficiency14 7c7 ,investment ,advisers ,act of #aidj ,section #bjb7;c7 of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#b7 is amended-- 7#a7 in the heading1 by inserting ,innovation1 after ,efficiency12 and 7#b7 by inserting innovation1 after efficiency14 7d7 ,investment ,company ,act of #aidj ,section #b7;c7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#b7 is amended-- 7#a7 in the heading1 by inserting ,innovation1 after ,efficiency12 and 7#b7 by inserting innovation1 after efficiency14 #eje4 ,study on decentralized finance 7a7 ,in general ,the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly carry out a study on decentralized finance that analyzes-- 7#a7 the nature1 size1 role1 and use of decentralized finance blockchain protocols2 7#b7 the operation of blockchain protocols that comprise decentralized finance2 7#c7 the interoperability of blockchain protocols and blockchain systems2 7#d7 the interoperability of blockchain protocols and software-based systems1 including websites and wallets2 7#e7 the decentralized governance systems through which blockchain protocols may be developed1 published1 constituted1 administered1 maintained1 or otherwise distributed1 including-- 7,a7 whether the systems enhance or detract from-- 7i7 the decentralization of the decentralized finance2 and 7ii7 the inherent risks of the decentralized governance system2 and 7,b7 any procedures or requirements that would mitigate the risks identified in subparagraph 7,a77ii72 7#f7 the benefits of decentralized finance1 including-- 7,a7 operational resilience and interoperability of blockchain-based systems2 7,b7 market competition and innovation2 7,c7 transaction efficiency2 7,d7 transparency and traceability of transactions2 and 7,e7 disintermediation2 and 7#g7 the risks of decentralized finance1 including-- 7,a7 pseudonymity of users and transactions2 7,b7 disintermediation2 and 7,c7 cybersecurity vulnerabilities2 7#h7 the extent to which decentralized finance has integrated with the traditional financial markets and any potential risks to stability of the markets2 7#i7 how the levels of illicit activity in decentralized finance compare with the levels of illicit activity in traditional financial markets2 7#aj7 how decentralized finance may increase the accessibility of cross-border transactions2 and 7#aa7 the feasibility of embedding self-executing compliance and risk controls into decentralized finance4 7b7 ,report ,not later than #a year after the date of enactment of this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly submit to the relevant congressional committees a report that includes the results of the study required by subsection 7a74 7c7 ,,gao ,study ,the ,comptroller ,general of the ,united ,states shall-- 7#a7 carry out a study on decentralized finance that analyzes the information described under paragraphs 7#a7 through 7#aa7 of subsection 7a72 and 7#b7 not later than #a year after the date of enactment of this ,act1 submit to the relevant congressional committees a report that includes the results of the study required by paragraph 7#a74 7d7 ,definitions ,in this section3 7#a7 ,decentralized finance 7,a7 ,in general ,the term decentralized finance means blockchain protocols that allow users to engage in financial transactions in a self-directed manner so that a third-party intermediary does not effectuate the transactions or take custody of digital assets of a user during any part of the transactions4 7,b7 ,relationship to ancillary activities ,the term decentralized finance shall not be interpreted to limit or exclude any activity from the meaning of ancillary activities1 as defined in section #ae;,h7c7 of the ,securities ,exchange ,act of #aicd or section #dv7c7 of the ,commodity ,exchange ,act4 7#b7 ,relevant congressional committees ,the term relevant congressional committees means-- 7,a7 the ,committees on ,financial ,services and ,agriculture of the ,house of ,representatives2 and 7,b7 the ,committees on ,banking1 ,housing1 and ,urban ,affairs and ,agriculture1 ,nutrition1 and ,forestry of the ,senate4 #ejf4 ,study on non-fungible digital assets 7a7 ,the ,comptroller ,general of the ,united ,states shall carry out a study of non-fungible digital assets that analyzes-- 7#a7 the nature1 size1 role1 purpose1 and use of non-fungible digital assets2 7#b7 the similarities and differences between non-fungible digital assets and other digital assets1 including digital commodities and payments stablecoins1 and how the markets for those digital assets intersect with each other2 7#c7 how non-fungible digital assets are minted by issuers and subsequently administered to purchasers2 7#d7 how non-fungible digital assets are stored after being purchased by a consumer2 7#e7 the interoperability of non-fungible digital assets between different blockchain systems2 7#f7 the scalability of different non-fungible digital asset marketplaces2 7#g7 the benefits of non-fungible digital assets1 including verifiable digital ownership2 7#h7 the risks of non-fungible tokens1 including-- 7,a7 intellectual property rights2 7,b7 cybersecurity risks2 and 7,c7 market risks2 7#i7 whether and how non-fungible digital assets have integrated with traditional marketplaces1 including those for music1 real estate1 gaming1 events1 and travel2 7#aj7 whether non-fungible tokens can be used to facilitate commerce or other activities through the representation of documents1 identification1 contracts1 licenses1 and other commercial1 government1 or personal records2 7#aa7 any potential risks to traditional markets from such integration2 and 7#ab7 the levels and types of illicit activity in non-fungible digital asset markets4 7b7 ,report ,not later than #a year after the date of the enactment of this ,act1 the ,secretary of ,commerce1 shall make publicly available a report that includes the results of the study required by subsection 7a74 #ejg4 ,study on financial market infrastructure improvements 7a7 ,in general ,the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly conduct a study to assess whether additional guidance or rules are necessary to facilitate the development of tokenized securities and derivatives products1 and to the extent such guidance or rules would foster the development of fair and orderly financial markets1 be necessary or appropriate in the public interest1 and be consistent with the protection of investors and customers4 7b7 ,report 7#a7 ,time limit ,not later than #a year after the date of enactment of this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly submit to the relevant congressional committees a report that includes the results of the study required by subsection 7a74 7#b7 ,relevant congressional committees defined ,in this section1 the term relevant congressional committees means-- 7,a7 the ,committees on ,financial ,services and on ,agriculture of the ,house of ,representatives2 and 7,b7 the ,committees on ,banking1 ,housing1 and ,urban ,affairs and on ,agriculture1 ,nutrition1 and ,forestry of the ,senate4 #a4 ,short title2 table of contents 7a7 ,short title ,this ,act may be cited as the ,financial ,innovation and ,technology for the #bast ,century ,act4 7b7 ,table of contents ,the table of contents for this ,act is as follows3 ,sec4 #a4 ,short title2 table of contents4 ,title ,i--,definitions2 ,rulemaking2 ,notice of ,intent to ,register ,sec4 #aja4 ,definitions under the ,securities ,act of #aicc4 ,sec4 #ajb4 ,definitions under the ,securities ,exchange ,act of #aicd4 ,sec4 #ajc4 ,definitions under the ,commodity ,exchange ,act4 ,sec4 #ajd4 ,definitions under this ,act4 ,sec4 #aje4 ,joint rulemakings4 ,sec4 #ajf4 ,notice of intent to register for digital commodity exchanges1 brokers1 and dealers4 ,sec4 #ajg4 ,notice of intent to register for digital asset brokers1 dealers1 and trading systems4 ,sec4 #ajh4 ,commodity ,exchange ,act savings provisions4 ,sec4 #aji4 ,international harmonization4 ,sec4 #aaj4 ,implementation4 ,title ,,ii-- ,offers and ,sales of ,digital ,assets ,sec4 #bja4 ,exempted transactions in digital assets4 ,sec4 #bjb4 ,requirements for offers and sales of certain digital assets4 ,sec4 #bjc4 ,enhanced disclosure requirements4 ,sec4 #bjd4 ,certification of certain digital assets4 ,sec4 #bje4 ,effective date4 ,title ,,iii--,registration for ,digital ,asset ,intermediaries at the ,securities and ,exchange ,commission ,sec4 #cja4 ,treatment of digital commodities and other digital assets4 ,sec4 #cjb4 ,anti-fraud authority over permitted payment stablecoins4 ,sec4 #cjc4 ,registration of digital asset trading systems4 ,sec4 #cjd4 ,requirements for digital asset trading systems4 ,sec4 #cje4 ,registration of digital asset brokers and digital asset dealers4 ,sec4 #cjf4 ,requirements of digital asset brokers and digital asset dealers4 ,sec4 #cjg4 ,rules related to conflicts of interest4 ,sec4 #cjh4 ,treatment of certain digital assets in connection with federally regulated intermediaries4 ,sec4 #cji4 ,exclusion for ancillary activities4 ,sec4 #caj4 ,registration and requirements for notice-registered digital asset clearing agencies4 ,sec4 #caa4 ,treatment of custody activities by banking institutions4 ,sec4 #cab4 ,effective date2 administration4 ,title ,,iv--,registration for ,digital ,asset ,intermediaries at the ,commodity ,futures ,trading ,commission ,sec4 #dja4 ,commission jurisdiction over digital commodity transactions4 ,sec4 #djb4 ,requiring futures commission merchants to use qualified digital commodity custodians4 ,sec4 #djc4 ,trading certification and approval for digital commodities4 ,sec4 #djd4 ,registration of digital commodity exchanges4 ,sec4 #dje4 ,qualified digital commodity custodians4 ,sec4 #djf4 ,registration and regulation of digital commodity brokers and dealers4 ,sec4 #djg4 ,registration of associated persons4 ,sec4 #djh4 ,registration of commodity pool operators and commodity trading advisors4 ,sec4 #dji4 ,exclusion for ancillary activities4 ,sec4 #daj4 ,effective date4 ,title ,v--,innovation and ,technology ,improvements ,sec4 #eja4 ,codification of the ,,sec ,strategic ,hub for ,innovation and ,financial ,technology4 ,sec4 #ejb4 ,codification of ,lab,c,f,t,c4 ,sec4 #ejc4 ,,cftc-,,sec ,joint ,advisory ,committee on ,digital ,assets4 ,sec4 #ejd4 ,study on decentralized finance4 ,sec4 #eje4 ,study on non-fungible digital assets4 ,sec4 #ejf4 ,study on expanding financial literacy amongst digital asset holders4 ,sec4 #ejg4 ,study on financial market infrastructure improvements4 ,title ,,vi--,miscellaneous ,sec4 #fja4 ,findings2 sense of ,congress4 ,i ,definitions2 ,rulemaking2 ,notice of ,intent to ,register #aja4 ,definitions under the ,securities ,act of #aicc ,section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a77 is amended by adding at the end the following3 7#bj7 ,affiliated person ,the term affiliated person means a person 7including a related person7 that-- 7,a7 with respect to a digital asset issuer-- 7i7 directly1 or indirectly through one or more intermediaries1 controls1 or is controlled by1 or is under common control with1 such digital asset issuer2 and 7ii7 was described under clause 7i7 at any point in the previous #c-month period2 or 7,b7 with respect to any digital asset-- 7i7 beneficially owns #e percent or more of the units of such digital asset that are then outstanding2 and 7ii7 was described under clause 7i7 at any point in the previous #c-month period4 7#ba7 ,blockchain ,the term blockchain means any technology-- 7,a7 where data is-- 7i7 shared across a network to create a public ledger of verified transactions or information among network participants2 7ii7 linked using cryptography to maintain the integrity of the public ledger and to execute other functions2 and 7iii7 distributed among network participants in an automated fashion to concurrently update network participants on the state of the public ledger and any other functions2 and 7,b7 composed of source code that is publicly available4 7#bb7 ,blockchain protocol ,the term blockchain protocol means any executable software deployed to a blockchain composed of source code that is publicly available and accessible1 including a smart contract or any network of smart contracts4 7#bc7 ,blockchain system ,the term blockchain system means any blockchain or blockchain protocol4 7#bd7 ,decentralized network ,with respect to a blockchain system to which a digital asset relates1 the term decentralized network means the following conditions are met3 7,a7 ,during the previous #ab-month period1 no person-- 7i7 had the unilateral authority1 directly or indirectly1 through any contract1 arrangement1 understanding1 relationship1 or otherwise1 to control or materially alter the functionality or operation of the blockchain system2 or 7ii7 had the unilateral authority to restrict or prohibit any person who is not a digital asset issuer1 related person1 or an affiliated person from-- 7,i7 using1 earning1 or transmitting the digital asset2 7,,ii7 deploying software that uses or integrates with the blockchain system2 7,,iii7 participating in a decentralized governance system with respect to the blockchain system2 or 7,,iv7 operating a node1 validator1 or other form of computational infrastructure with respect to the blockchain system4 7,b7 ,during the previous #ab-month period-- 7i7 no digital asset issuer or affiliated person beneficially owned1 in the aggregate1 #bj percent or more of the total amount of units of such digital asset that-- 7,i7 can be created1 issued1 or distributed in such blockchain system2 and 7,,ii7 were freely transferrable or otherwise used or available to be used for the purposes of such blockchain system2 7ii7 no digital asset issuer or affiliated person had the unilateral authority to direct the voting1 in the aggregate1 of #bj percent or more of the outstanding voting power of such digital asset or related decentralized governance system2 or 7iii7 the digital asset did not include voting power with respect to any decentralized governance system of the blockchain system4 7,c7 ,during the previous #c-month period1 the digital asset issuer1 any affiliated person1 or any related person has not implemented or contributed any intellectual property to the source code of the blockchain system that materially alters the functionality or operation of the blockchain system1 unless such implementation or contribution to the source code-- 7i7 addressed vulnerabilities1 errors1 regular maintenance1 cybersecurity risks1 or other technical changes to the blockchain system2 or 7ii7 were adopted through the consensus or agreement of a decentralized governance system4 7,d7 ,during the previous #c-month period1 neither any digital asset issuer nor any affiliated person described under paragraph 7#bj77;,a7 has marketed to the public the digital assets as an investment4 7,e7 ,during the previous #ab-month period1 all issuances of units of such digital asset through the programmatic functioning of the blockchain system were end user distributions4 7#be7 ,decentralized governance system 7,a7 ,in general ,the term decentralized governance system means1 with respect to a blockchain system1 any rules-based system permitting persons using the blockchain system or the digital assets related to such blockchain system to form consensus or reach agreement in the development1 provision1 publication1 management1 or administration of such blockchain system4 7,b7 ,relationship of persons to decentralized governance systems ,persons acting through a decentralized governance system shall be treated as separate persons unless such persons are under common control4 7,c7 ,exclusion ,the term decentralized governance system does not include a system in which-- 7i7 a person or group of persons under common control have the ability to-- 7,i7 unilaterally alter the rules of consensus or agreement for the blockchain system2 or 7,,ii7 determine the final outcome of decisions related to the development1 provision1 publication1 management1 or administration of such blockchain system2 7ii7 a person or group of persons is directly engaging in an activity that requires registration with the ,commission or the ,commodity ,futures ,trading ,commission other than-- 7,i7 developing1 providing1 publishing1 managing1 or administering a blockchain system2 or 7,,ii7 an activity with respect to which the organization is exempt from such registration2 or 7iii7 a person or group of persons seeking to knowingly evade the requirements imposed on a digital asset issuer1 a related person1 an affiliated person1 or any other person registered 7or required to be registered7 under the securities laws1 the ,financial ,innovation and ,technology for the #bast ,century ,act1 or the ,commodity ,exchange ,act4 7#bf7 ,digital asset 7,a7 ,in general ,the term digital asset means any fungible digital representation of value that can be exclusively possessed and transferred1 person to person1 without necessary reliance on an intermediary1 and is recorded on a cryptographically secured public distributed ledger4 7,b7 ,exclusions ,the term digital asset does not include-- 7i7 any note1 stock1 treasury stock1 security future1 security-based swap1 bond1 debenture1 evidence of indebtedness1 certificate of interest or participation in any profit-sharing agreement1 collateral-trust certificate1 preorganization certificate or subscription1 or transferable share2 or 7ii7 any asset1 which based on its terms and other characteristics1 is1 represents1 or is functionally equivalent to an agreement1 contract1 or transaction that is-- 7,i7 a contract of sale of a commodity 7as defined under section #a;a of the ,commodity ,exchange ,act7 for future delivery or an option thereon2 7,,ii7 a security futures product2 7,,iii7 a swap2 7,,iv7 an agreement1 contract1 or transaction described in section #b7;c77#b77;,c77i7 or #b7;c77#b77;,d77i7 of the ,commodity ,exchange ,act2 7,v7 a commodity option authorized under section #d;c of the ,commodity ,exchange ,act2 or 7,,vi7 a leverage transaction authorized under section #ai of the ,commodity ,exchange ,act4 7,c7 ,rule of construction ,nothing in this paragraph shall be construed to create a presumption that a digital asset is a representation of any type of security not excluded from the definition of digital asset4 7,d7 ,relationship to a blockchain system ,a digital asset is considered to relate to a blockchain system if the digital asset is intrinsically linked to the blockchain system1 including-- 7i7 where the digital asset's value is reasonably expected to be generated by the programmatic functioning of the blockchain system2 7ii7 where the digital asset has voting rights with respect to the decentralized governance system of the blockchain system2 or 7iii7 where the digital asset is issued through the programmatic functioning of the blockchain system4 7,e7 ,treatment of certain digital assets sold pursuant to an investment contract ,a digital asset offered or sold or intended to be offered or sold pursuant to an investment contract is not and does not become a security as a result of being sold or otherwise transferred pursuant to that investment contract4 7#bg7 ,digital asset issuer 7,a7 ,in general ,with respect to a digital asset1 the term digital asset issuer means any person that1 in exchange for any consideration-- 7i7 issues or causes to be issued a unit of such digital asset to a person2 or 7ii7 offers or sells a right to a future issuance of a unit of such digital asset to a person4 7,b7 ,exclusion ,the term digital asset issuer does not include any person solely because such person deploys source code that creates or issues units of a digital asset that are only distributed in end user distributions4 7,c7 ,prohibition on evasion ,it shall be unlawful for any person to knowingly evade classification as a digital asset issuer and facilitate an arrangement for the primary purpose of effecting a sale1 distribution1 or other issuance of a digital asset4 7#bh7 ,digital asset maturity date ,the term digital asset maturity date means1 with respect to any digital asset1 the first date on which #bj percent or more of the total units of such digital asset that are then outstanding as of such date are-- 7,a7 digital commodities2 or 7,b7 digital assets that have been registered with the ,commission4 7#bi7 ,digital commodity ,the term digital commodity has the meaning given that term under section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a74 7#cj7 ,end user distribution 7,a7 ,in general ,the term end user distribution means an issuance of a unit of a digital asset that-- 7i7 does not involve an exchange of more than a nominal value of cash1 property1 or other assets2 and 7ii7 is distributed in a broad1 equitable1 and non-discretionary manner based on conditions capable of being satisfied by any participant in the blockchain system1 including as incentive-based rewards-- 7,i7 to users of the digital asset or any blockchain system to which the digital asset relates2 7,,ii7 for activities directly related to the operation of the blockchain system1 such as mining1 validating1 staking1 or other activity directly tied to the operation of the blockchain system2 or 7,,iii7 to the existing holders of another digital asset1 in proportion to the total units of such other digital asset as are held by each person4 7,b7 ,prohibition on evasion ,it shall be unlawful for any person to facilitate an end user distribution to knowingly evade classification as a digital asset issuer1 related person1 or an affiliated person1 or the requirements related to a digital asset issuance4 7#ca7 ,functional network ,with respect to a blockchain system to which a digital asset relates1 the term functional network means the network allows network participants to use such digital asset for-- 7,a7 the transmission and storage of value on the blockchain system2 7,b7 the participation in services provided by or an application running on the blockchain system2 or 7,c7 the participation in the decentralized governance system of the blockchain system4 7#cb7 ,permitted payment stablecoin ,the term permitted payment stablecoin-- 7,a7 means a digital asset-- 7i7 that is or is designed to be used as a means of payment or settlement2 7ii7 the issuer of which-- 7,i7 is obligated to convert1 redeem1 or repurchase for a fixed amount of monetary value2 or 7,,ii7 represents will maintain or creates the reasonable expectation that it will maintain a stable value relative to the value of a fixed amount of monetary value2 and 7iii7 that is subject to regulation by a ,federal or ,state regulator with authority over entities that issue payment stablecoins2 and 7,b7 that is not-- 7i7 a national currency2 or 7ii7 a security issued by an investment company registered under section #h7;a7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#h7;a774 7#cc7 ,related person ,with respect to a digital asset issuer1 the term related person means-- 7,a7 a founder1 promoter1 employee1 consultant1 advisor1 or person serving in a similar capacity2 7,b7 any person that is or was in the previous #f-month period an executive officer1 director1 trustee1 general partner1 advisory board member1 or person serving in a similar capacity2 7,c7 any equity holder or other security holder2 or 7,d7 any other person that received a unit of digital asset from such digital asset issuer through-- 7i7 an exempt offering1 other than an offering made in reliance on section #d7;a77#h72 or 7ii7 a distribution that is not an end user distribution described under section #db7;d77#a7 of the ,securities ,exchange ,act of #aicd4 7#cd7 ,restricted digital asset 7,a7 ,in general ,the term restricted digital asset means-- 7i7 any unit of a digital asset held by a person1 other than the digital asset issuer1 a related person1 or an affiliated person1 prior to the first date on which each blockchain system to which the digital asset relates is a functional network and certified to be a decentralized network under section #dd of the ,securities ,exchange ,act of #aicd1 that was-- 7,i7 issued to such person through a distribution1 other than an end user distribution described under section #db7;d77#a7 of the ,securities ,exchange ,act of #aicd2 or 7,,ii7 acquired by such person in a transaction that was not executed on a digital commodity exchange2 7ii7 any digital asset held by a related person or an affiliated person during any period when any blockchain system to which the digital asset relates is not a functional network or not certified to be a decentralized network under section #dd of the ,securities ,exchange ,act of #aicd2 or 7iii7 any unit of a digital asset held by the digital asset issuer4 7,b7 ,exclusion ,the term restricted digital asset does not include a permitted payment stablecoin4 7#ce7 ,securities laws ,the term securities laws has the meaning given that term under section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a774 7#cf7 ,source code ,with respect to a blockchain system1 the term source code means a listing of commands to be compiled or assembled into an executable computer program4 4 #ajb4 ,definitions under the ,securities ,exchange ,act of #aicd ,section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a77 is amended-- 7#h7 by redesignating the second paragraph 7#hj7 7relating to funding portals7 as paragraph 7#ha72 and 7#i7 by adding at the end the following3 7#hb7 ,bank ,secrecy ,act ,the term ,bank ,secrecy ,act means-- 7,a7 section #ba of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahbi;b72 7,b7 chapter #b of title ,i of ,public ,law #ia-ejh 7#ab ,u4,s4,c4 #aiea et seq472 and 7,c7 subchapter ,,ii of chapter #ec of title #ca1 ,united ,states ,code4 7#hc7 ,digital asset broker ,the term digital asset broker-- 7,a7 means any person engaged in the business of effecting transactions in restricted digital assets for the account of others2 and 7,b7 does not include a blockchain protocol or a person or group of persons solely because of their development of a blockchain protocol4 7#hd7 ,digital asset custodian ,the term digital asset custodian means an entity in the business of providing custodial or safekeeping services for restricted digital assets4 7#he7 ,digital asset dealer ,the term digital asset dealer-- 7,a7 means any person engaged in the business of buying and selling restricted digital assets for such person's own account through a broker or otherwise2 and 7,b7 does not include-- 7i7 a person that buys or sells restricted digital assets for such person's own account1 either individually or in a fiduciary capacity1 but not as a part of a regular business2 or 7ii7 a blockchain protocol or a person or group of persons solely because of their development of a blockchain protocol4 7#hf7 ,digital asset trading system ,the term digital asset trading system-- 7,a7 means any organization1 association1 person1 or group of persons1 whether incorporated or unincorporated1 that constitutes1 maintains1 or provides a market place or facilities for bringing together purchasers and sellers of restricted digital assets or for otherwise performing with respect to digital assets the functions commonly performed by a stock exchange within the meaning of section #bdj4c;b-#af of title #ag1 ,code of ,federal ,regulations1 as in effect on the date of enactment of this paragraph2 and 7,b7 does not include a blockchain protocol or a person or group of persons solely because of their development of a blockchain protocol4 7#hg7 ,mixed digital asset transaction ,the term mixed digital asset transaction means an agreement1 contract1 or transaction involving a restricted digital asset and a digital commodity4 7#hh7 ,notice-registered digital asset clearing agency ,the term notice-registered digital asset clearing agency means a clearing agency that has registered with the ,commission pursuant to section #ag;,a7b77#i74 7#hi7 ,additional digital asset-related terms 7,a7 ,securities ,act of #aicc ,the terms affiliated person1 blockchain system1 decentralized governance system1 decentralized network1 digital asset1 digital asset issuer1 digital asset maturity date1 end user distribution1 functional network1 mixed digital asset transaction1 permitted payment stablecoin1 related person1 restricted digital asset1 and source code have the meaning given those terms1 respectively1 under section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a774 7,b7 ,commodity ,exchange ,act ,the terms digital commodity1 digital commodity broker1 digital commodity dealer1 and digital commodity exchange have the meaning given those terms1 respectively1 under section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a74 4 #ajc4 ,definitions under the ,commodity ,exchange ,act ,section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a7 is amended-- 7#a7 in paragraph 7#aj77;,a7-- 7,a7 by redesignating clauses 7iii7 and 7iv7 as clauses 7iv7 and 7v71 respectively2 and 7,b7 by inserting after clause 7ii7 the following3 7iii7 digital commodity2 2 7#b7 in paragraph 7#aa7-- 7,a7 in subparagraph 7,a77i7-- 7i7 by redesignating subclauses 7,,iii7 and 7,,iv7 as subclauses 7,,iv7 and 7,v71 respectively2 and 7ii7 by inserting after subclause 7,,ii7 the following3 7,,iii7 digital commodity2 2 and 7,b7 by redesignating subparagraph 7,b7 as subparagraph 7,c7 and inserting after subparagraph 7,a7 the following3 7,b7 ,exclusion ,the term commodity pool operator does not include-- 7i7 a decentralized governance system2 or 7ii7 ancillary activities1 as defined in section #dv4 2 7#c7 in paragraph 7#ab77;,a77i7-- 7,a7 in subclause 7,,ii71 by adding at the end a semicolon2 7,b7 by redesignating subclauses 7,,iii7 and 7,,iv7 as subclauses 7,,iv7 and 7,v71 respectively2 and 7,c7 by inserting after subclause 7,,ii7 the following3 7,,iii7 a digital commodity2 2 7#d7 in paragraph 7#dj7-- 7,a7 by striking and at the end of subparagraph 7,e72 7,b7 by striking the period at the end of subparagraph 7,f7 and inserting 2 and2 and 7,c7 by adding at the end the following3 7,g7 a digital commodity exchange registered under section #e;i4 2 and 7#e7 by adding at the end the following3 7#eb7 ,associated person of a digital commodity broker 7,a7 ,in general ,except as provided in subparagraph 7,b71 the term associated person of a digital commodity broker means a person who is associated with a digital commodity broker as a partner1 officer1 employee1 or agent 7or any person occupying a similar status or performing similar functions7 in any capacity that involves-- 7i7 the solicitation or acceptance of a contract for sale of a digital commodity2 or 7ii7 the supervision of any person engaged in the solicitation or acceptance of a contract for sale of a digital commodity4 7,b7 ,exclusion ,the term associated person of a digital commodity broker does not include any person associated with a digital commodity broker the functions of which are solely clerical or ministerial4 7#ec7 ,associated person of a digital commodity dealer 7,a7 ,in general ,except as provided in subparagraph 7,b71 the term associated person of a digital commodity dealer means a person who is associated with a digital commodity dealer as a partner1 officer1 employee1 or agent 7or any person occupying a similar status or performing similar functions7 in any capacity that involves-- 7i7 the solicitation or acceptance of a contract for sale of a digital commodity2 or 7ii7 the supervision of any person engaged in the solicitation or acceptance of a contract for sale of a digital commodity4 7,b7 ,exclusion ,the term associated person of a digital commodity dealer does not include any person associated with a digital commodity dealer the functions of which are solely clerical or ministerial4 7#ed7 ,bank ,secrecy ,act ,the term ,bank ,secrecy ,act means-- 7,a7 section #ba of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahbi;b72 7,b7 chapter #b of title ,i of ,public ,law #ia-ejh 7#ab ,u4,s4,c4 #aiea et seq472 and 7,c7 subchapter ,,ii of chapter #ec of title #ca1 ,united ,states ,code4 7#ee7 ,digital commodity 7,a7 ,in general ,the term digital commodity means-- 7i7 any unit of a digital asset held by a person1 other than a digital asset issuer1 a related person1 or an affiliated person1 before the first date on which each blockchain system to which the digital asset relates is a functional network and certified to be a decentralized network under section #dd of the ,securities ,exchange ,act of #aicd1 that was-- 7,i7 issued to the person through an end user distribution described under section #db7;d77#a7 of the ,securities ,exchange ,act of #aicd2 or 7,,ii7 acquired by such person in a transaction that was executed on a digital commodity exchange2 or 7ii7 any unit of a digital asset held by a person1 other than a digital asset issuer1 a related person1 or an affiliated person1 after the first date on which each blockchain system to which the digital asset relates is a functional network and certified to be a decentralized network under section #dd of the ,securities ,exchange ,act of #aicd2 and 7iii7 any unit of a digital asset held by a related person or an affiliated person during any period when any blockchain system to which the digital asset relates is a functional network and certified to be a decentralized network under section #dd of the ,securities ,exchange ,act of #aicd4 7,b7 ,exclusion ,the term digital commodity does not include a permitted payment stablecoin4 7#ef7 ,digital commodity broker 7,a7 ,in general ,the term digital commodity broker means any person who1 in a digital commodity cash or spot market1 is-- 7i7 engaged in soliciting or accepting orders for the purchase or sale of a unit of a digital commodity from a customer that is not an eligible contract participant2 7ii7 engaged in soliciting or accepting orders for the purchase or sale of a unit of a digital commodity from a customer on or subject to the rules of a registered entity2 or 7iii7 registered with the ,commission as a digital commodity broker4 7,b7 ,exceptions ,the term digital commodity broker does not include a person solely because the person-- 7i7 enters into a digital commodity transaction the primary purpose of which is to make1 send1 receive1 or facilitate payments1 whether involving a payment service provider or on a peer-to-peer basis2 or 7ii7 validates a digital commodity transaction1 operates a node1 or engages in similar activity to participate in facilitating1 operating1 or securing a blockchain system4 7#eg7 ,digital commodity custodian ,the term digital commodity custodian means a bank or trust company in the business of holding1 maintaining1 or safeguarding digital commodities4 7#eh7 ,digital commodity dealer 7,a7 ,in general ,the term digital commodity dealer means any person who-- 7i7 in digital commodity cash or spot markets-- 7,i7 holds itself out as a dealer in a digital commodity2 7,,ii7 makes a market in a digital commodity2 7,,iii7 regularly enters into digital commodity transactions with counterparties as an ordinary course of business for its own account2 or 7,,iv7 engages in any activity causing the person to be commonly known in the trade as a dealer or market maker in a digital commodity2 7ii7 regularly enters into any agreement1 contract1 or transaction described in subsection 7c77#b77;,d77i7 involving a digital commodity2 or 7iii7 is registered with the ,commission as a digital commodity dealer4 7,b7 ,exception ,the term digital commodity dealer does not include a person solely because the person-- 7i7 enters into a digital commodity transaction with an eligible contract participant2 7ii7 enters into a digital commodity transaction on or through a registered digital commodity exchange2 7iii7 enters into a digital commodity transaction for the person's own account1 either individually or in a fiduciary capacity1 but not as a part of a regular business2 7iv7 enters into a digital commodity transaction the primary purpose of which is to make1 send1 receive1 or facilitate payments1 whether involving a payment service provider or on a peer-to-peer basis2 or 7v7 validates a digital commodity transaction1 operates a node1 or engages in similar activity to participate in facilitating1 operating1 or securing a blockchain system4 7#ei7 ,digital commodity exchange ,the term digital commodity exchange means a trading facility that offers or seeks to offer a cash or spot market in at least #a digital commodity4 7#fj7 ,digital asset-related definitions 7,a7 ,securities ,act of #aicc ,the terms affiliated person1 blockchain system1 decentralized governance system1 decentralized network1 digital asset1 digital asset issuer1 end user distribution1 functional network1 permitted payment stablecoin1 related person1 and restricted digital asset have the meaning given the terms1 respectively1 under section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a774 7,b7 ,securities ,exchange ,act of #aicd ,the terms digital asset broker and digital asset dealer have the meaning given those terms1 respectively1 under section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a774 7#fa7 ,mixed digital asset transaction ,the term mixed digital asset transaction has the meaning given that term under section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a774 4 #ajd4 ,definitions under this ,act ,in this ,act3 7#a7 ,definitions under the ,commodity ,exchange ,act ,the terms digital commodity1 digital commodity broker1 digital commodity dealer1 and digital commodity exchange have the meaning given those terms1 respectively1 under section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a74 7#b7 ,definitions under the ,securities ,act of #aicc ,the terms affiliated person1 blockchain1 blockchain system1 blockchain protocol1 decentralized network1 digital asset1 digital asset issuer1 digital asset maturity date1 digital asset trading system1 end user distribution1 functional network1 permitted payment stablecoin1 restricted digital asset1 securities laws1 and source code have the meaning given those terms1 respectively1 under section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a774 7#c7 ,definitions under the ,securities ,exchange ,act of #aicd ,the terms ,bank ,secrecy ,act1 digital asset broker1 digital asset dealer1 digital asset trading system1 mixed digital asset transaction1 and self-regulatory organization have the meaning given those terms1 respectively1 under section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a774 #aje4 ,joint rulemakings 7a7 ,definitions ,the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly issue rules to further define the following terms3 7#a7 ,the terms affiliated person1 blockchain1 blockchain system1 blockchain protocol1 decentralized network1 decentralized governance system1 digital asset1 digital asset issuer1 digital asset maturity date1 end user distribution1 functional network1 related person1 restricted digital asset1 and source code1 as defined under section #b7;a7 of the ,securities ,act of #aicc4 7#b7 ,the term mixed digital asset transaction1 as defined under section #c7;a7 of the ,securities ,exchange ,act of #aicd4 7#c7 ,the term digital commodity1 as defined under section #a;a of the ,commodity ,exchange ,act4 7b7 ,joint rulemaking for exchanges ,the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly issue rules to exempt persons dually registered with the ,commodity ,futures ,trading ,commission as a digital commodity exchange and with the ,securities and ,exchange ,commission as a digital asset trading system from duplicative1 conflicting1 or unduly burdensome provisions of this ,act1 the securities laws1 and the ,commodity ,exchange ,act and the rules thereunder1 to the extent such exemption would foster the development of fair and orderly markets in digital assets1 be necessary or appropriate in the public interest1 and be consistent with the protection of investors4 7c7 ,joint rulemaking for mixed digital asset transactions ,the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly issue rules applicable to mixed digital asset transactions under this ,act and the amendments made by this ,act4 7d7 ,protection of self-custody 7#a7 ,in general ,the ,financial ,crimes ,enforcement ,network may not issue any rule or order that would prohibit a ,u4,s4 individual from-- 7,a7 maintaining a hardware wallet1 software wallet1 or other means to facilitate such individual's own custody of digital assets2 or 7,b7 conducting transactions and self-custody digital assets for any lawful purpose4 7#b7 ,rule of construction ,paragraph 7#a7 may not be construed to limit the ability of ,financial ,crimes ,enforcement ,network to carry out any enforcement authority4 7e7 ,joint rulemaking1 procedures1 or guidance for delisting ,not later than #cj days after the date of the enactment of this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly issue rules1 procedures1 or guidance 7as determined appropriate by the ,commissions7 regarding the process to delist an asset for trading under sections #ajf and #ajg of this ,act if the ,commissions determine that the listing is inconsistent with the ,commodity ,exchange ,act1 the securities laws 7including regulations under those laws71 or this ,act4 #ajf4 ,notice of intent to register for digital commodity exchanges1 brokers1 and dealers 7a7 ,in general 7#a7 ,notice of intent to register ,any person may file a notice of intent to register with the ,commodity ,futures ,trading ,commission 7in this subsection referred to as the ,commission7 as a-- 7,a7 digital commodity exchange1 for a person intending to register as a digital commodity exchange under section #e;i of the ,commodity ,exchange ,act2 7,b7 digital commodity broker1 for a person intending to register as a digital commodity broker under section #du of such ,act2 or 7,c7 digital commodity dealer1 for a person intending to register as a digital commodity dealer under section #du of such ,act4 7#b7 ,filing ,a person desiring to file a notice of intent to register under paragraph 7#a7 shall be in compliance with this section if the person submits to the ,commission-- 7,a7 a statement of the nature of the registrations the filer intends to pursue2 7,b7 the information required by subsections 7b7 and 7c74 7b7 ,disclosure of general information ,a person filing a notice of intent to register under subsection 7a7 shall disclose to the ,commission the following3 7#a7 ,information concerning the management of the person1 including information describing-- 7,a7 the ownership and management of the person2 7,b7 the financial condition of the person2 7,c7 affiliated entities2 and 7,d7 potential conflicts of interest4 7#b7 ,information concerning the operations of the person1 including-- 7,a7 any rulebook or other customer order fulfilment rules2 7,b7 risk management procedures2 and 7,c7 a description of the product listing process4 7c7 ,listing information ,a person filing a notice of intent to register under subsection 7a7 shall provide to the ,commission and the ,securities and ,exchange ,commission a detailed description of the product listing determination made by the person for each asset listed or offered for trading by the person4 7d7 ,requirements ,a person filing a notice of intent to register under subsection 7a7 shall comply with the following requirements3 7#a7 ,books and records ,the person shall keep their books and records open to inspection and examination by the ,commission4 7#b7 ,customer disclosures ,the person shall disclose to consumers-- 7,a7 information about the material risks and characteristics of the assets listed for trading on the person2 and 7,b7 information about the material risks and characteristics of the transactions facilitated by the person4 7#c7 ,customer assets 7,a7 ,in general ,the person shall-- 7i7 hold customer money1 assets1 and property in a manner to minimize the risk of loss to the customer or unreasonable delay in customer access to money1 assets1 and property of the customer2 7ii7 treat and deal with all money1 assets1 and property1 including any rights associated with any such money1 assets1 or property1 of any customer received as belonging to the customer2 7iii7 segregate all money1 assets1 and property received from any customer of the person from the funds of the person1 except that-- 7,i7 the money1 assets1 and property of any customer may be commingled with that of any other customer1 if separately accounted for2 and 7,,ii7 the share of the money1 assets1 and property1 as in the normal course of business are necessary to margin1 guarantee1 secure1 transfer1 adjust1 or settle a contract of sale of a commodity asset1 may be withdrawn and applied to do so1 including the payment of commissions1 brokerage1 interest1 taxes1 storage1 and other charges lawfully accruing in connection with the contract of sale of a digital commodity4 7,b7 ,additional resources 7i7 ,in general ,this section shall not prevent or be construed to prevent the person from adding to the customer money1 assets1 and property required to be segregated under subparagraph 7,a71 additional amounts of money1 assets1 or property from the account of the person as the person determines necessary to prevent the account of a customer from becoming under-segregated4 7ii7 ,treatment as customer funds ,any money1 assets1 or property deposited pursuant to clause 7i7 shall be considered customer property within the meaning of this subsection4 7e7 ,compliance and enforcement 7#a7 ,in general ,a person who has filed a notice of intent to register under this section and is in compliance with this section shall not be subject to an enforcement action by the ,securities and ,exchange ,commission for-- 7,a7 listing or offering a digital asset deemed a security2 or 7,b7 failing to register as a national securities exchange1 broker1 dealer1 or clearing agency1 for activities related to digital assets deemed a security4 7#b7 ,noncompliance ,paragraph 7#a7 shall not apply if1 after notice from the ,commission and a reasonable opportunity to correct the deficiency1 a person who has submitted a notice of intent to register is not in compliance with this section4 7#c7 ,anti-fraud and anti-manipulation ,paragraph 7#a7 shall not be construed to limit any anti-manipulation1 anti-fraud1 or false reporting enforcement authority of the ,commission or the ,securities and ,exchange ,commission4 7#d7 ,delisting ,paragraph 7#a7 shall not be construed to limit the authority of the ,commission or the ,securities and ,exchange ,commission to require a person to delist an asset for trading if the ,commission or the ,securities and ,exchange ,commission determines that the listing is inconsistent with the ,commodity ,exchange ,act1 the securities laws 7including regulations under those laws71 or this ,act4 7f7 ,final registration 7#a7 ,in general ,a person may not file a notice of intent to register with the ,commission after the ,commission has finalized its rules for the registration of digital commodity exchanges1 digital commodity brokers1 or digital commodity dealers1 as appropriate4 7#b7 ,transition to final registration 7,a7 ,ongoing deferral for entities registered with the ,commission ,subsection 7e77#a7 shall continue to apply to a person who has submitted a notice of intent to register while the person is registered with the ,commission as a digital commodity exchange1 a digital commodity broker1 or a digital commodity dealer1 as appropriate4 7,b7 ,end of deferral ,subsection 7e77#a7 shall not apply to a person who has submitted a notice of intent to register if-- 7i7 the ,commission-- 7,i7 determines that the person has failed to comply with the requirements of this section2 or 7,,ii7 denies the application of the person to register2 or 7ii7 the digital commodity exchange1 digital commodity broker1 or digital commodity dealer that filed a notice of intent to register failed to register as such with the ,commission within #ahj days after the ,commission finalized the rules of the ,commission for the registration of digital commodity exchanges1 digital commodity brokers1 or digital commodity dealers1 as appropriate4 7g7 ,liability of the filer ,it shall be unlawful for any person to provide false information in support of a filing under this section if the person knowingly or reasonably should have known that the information was false4 #ajg4 ,notice of intent to register for digital asset brokers1 dealers1 and trading systems 7a7 ,in general 7#a7 ,notice of intent to register ,any person may file a notice of intent to register with the ,securities and ,exchange ,commission 7in this section referred to as the ,commission7 as-- 7,a7 a digital asset trading system1 for a person intending to register as a digital asset trading system under section #f7m7 of the ,securities ,exchange ,act of #aicd2 7,b7 a digital asset broker1 for a person intending to register as a digital asset broker under section #ae;,h of the ,securities ,exchange ,act of #aicd2 or 7,c7 a digital asset dealer1 for a person intending to register as a digital asset dealer under section #ae;,h of the ,securities ,exchange ,act of #aicd4 7#b7 ,filing ,a person desiring to file a notice of intent to register under paragraph 7#a7 shall be in compliance with this section if the person submits to the ,commission-- 7,a7 a statement of the nature of the registrations the filer intends to pursue2 and 7,b7 the information required by subsections 7b7 and 7c74 7b7 ,disclosure of general information ,a person filing a notice of intent to register under subsection 7a7 shall disclose to the ,commission the following3 7#a7 ,information concerning the management of the person1 including information describing-- 7,a7 the ownership and management of the person2 7,b7 the financial condition of the person2 7,c7 affiliated entities2 and 7,d7 potential conflicts of interest4 7#b7 ,information concerning the operations of the person1 including-- 7,a7 any rulebook or other customer order fulfilment rules2 7,b7 risk management procedures2 and 7,c7 a description of the product listing process4 7c7 ,listing information ,a person filing a notice of intent to register under subsection 7a7 shall provide to the ,commission and the ,commodity ,futures ,trading ,commission a detailed description of the product listing determination made by the person for each asset listed or offered for trading by the person4 7d7 ,requirements ,a person filing a notice of intent to register under subsection 7a7 shall comply with the following requirements3 7#a7 ,national securities association ,the person shall be a member of a national securities association registered under section #ae;,a of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#c71 and shall comply with the rules of the association1 including the rules of the association pertaining to customer disclosures and protection of customer assets4 7#b7 ,books and records ,the person shall keep their books and records open to inspection and examination by the ,commission4 7#c7 ,customer disclosures ,the person shall disclose to customers-- 7,a7 information about the material risks and characteristics of the assets listed for trading on the person2 7,b7 information about the material risks and characteristics of the transactions facilitated by the person2 and 7,c7 in their disclosure documents1 offering documents1 and promotional material1 in a prominent manner1 that they are not registered with or regulated by the ,commission4 7#d7 ,customer assets 7,a7 ,in general ,the person shall-- 7i7 hold customer money1 assets1 and property in a manner to minimize the risk of loss to the customer or unreasonable delay in customer access to money1 assets1 and property of the customer2 7ii7 treat and deal with all money1 assets1 and property1 including any rights associated with any such money1 assets1 or property1 of any customer received as belonging to the customer2 7iii7 segregate all money1 assets1 and property received from any customer of the person from the funds of the person1 except that-- 7,i7 the money1 assets1 and property of any customer may be commingled with that of any other customer1 if separately accounted for2 and 7,,ii7 the share of the money1 assets1 and property1 as in the normal course of business are necessary to margin1 guarantee1 secure1 transfer1 adjust1 or settle a contract of sale of a digital asset1 may be withdrawn and applied to do so1 including the payment of commissions1 brokerage1 interest1 taxes1 storage1 and other charges lawfully accruing in connection with the contract of sale of a digital asset4 7,b7 ,additional resources 7i7 ,in general ,this section shall not prevent or be construed to prevent the person from adding to the customer money1 assets1 and property required to be segregated under subparagraph 7,a7 additional amounts of money1 assets1 or property from the account of the person as the person determines necessary to hold money1 assets1 or property equal to or in excess of the total digital asset obligation of the person4 7ii7 ,treatment as customer funds ,any money1 assets1 or property deposited pursuant to clause 7i7 shall be considered customer property within the meaning of this subsection4 7e7 ,compliance 7#a7 ,in general ,a person who has filed a notice of intent to register under this section and is in compliance with this section shall be exempt from ,commission rules and regulations pertaining to registering as a national securities exchange1 broker1 dealer1 or clearing agency1 for activities related to a digital asset deemed a security4 7#b7 ,noncompliance ,paragraph 7#a7 shall not apply if1 after notice from the ,commission and a reasonable opportunity to correct the deficiency1 a person who has submitted a notice of intent to register is not in compliance with this section4 7#c7 ,anti-fraud and anti-manipulation ,paragraph 7#a7 shall not be construed to limit any fraud1 anti-manipulation1 or false reporting enforcement authority of the ,commission or the ,commodity ,futures ,trading ,commission4 7#d7 ,delisting ,paragraph 7#a7 shall not be construed to limit the authority of the ,commission and the ,commodity ,futures ,trading ,commission to jointly require a person to delist an asset for trading if the ,commission and the ,commodity ,futures ,trading ,commission determines that the listing is inconsistent with the ,commodity ,exchange ,act1 the securities laws 7including regulations under those laws71 or this ,act4 7f7 ,final registration 7#a7 ,in general ,a person may not file a notice of intent to register with the ,commission after the ,commission has finalized its rules for the registration of digital asset brokers1 digital asset dealers1 digital asset trading systems1 and notice-registered clearing agencies1 as appropriate4 7#b7 ,transition to final registration ,subsection 7e77#a7 shall not apply to a person who has submitted a notice of intent to register if-- 7,a7 the ,commission-- 7i7 determines that the person has failed to comply with the requirements of this section2 or 7ii7 denies the application of the person to register2 or 7,b7 the digital asset broker1 digital asset dealer1 or digital asset trading system that filed a notice of intent to register failed to apply for registration as such with the ,commission within #ahj days after the effective date of the ,commission's final rules for the registration of digital asset brokers1 digital asset dealers1 and digital asset trading systems1 as appropriate4 7g7 ,liability of the filer ,it shall be unlawful for any person to provide false information in support of a filing under this section if the person knew or reasonably should have known that the information was false4 7h7 ,national securities association ,a national securities association shall adopt rules for membership with such association for persons required to be members of such association under subsection 7d77#a7 within #ahj days after the date of enactment of this ,act4 #ajh4 ,commodity ,exchange ,act savings provisions 7a7 ,in general ,nothing in this ,act shall affect or apply to1 or be interpreted to affect or apply to-- 7#a7 any agreement1 contract1 or transaction that is subject to regulation under the ,commodity ,exchange ,act as-- 7,a7 a contract of sale of a commodity for future delivery or an option on such a contract2 7,b7 a swap2 7,c7 a security futures product2 7,d7 an option authorized under section #d;c of such ,act2 7,e7 an agreement1 contract1 or transaction described in section #b7;c77#b77;,c77i7 of such ,act2 or 7,f7 a leverage transaction authorized under section #ai of such ,act2 or 7#b7 the activities of any person with respect to any such agreement1 contract1 or transaction4 7b7 ,prohibitions on spot digital commodity entities ,nothing in this ,act authorizes1 or shall be interpreted to authorize1 a digital commodity exchange1 digital commodity broker1 or digital commodity dealer to engage in any activities involving any transaction1 contract1 or agreement described in subsection 7a77#a71 solely by virtue of being registered or filing notice of intent to register as a digital commodity exchange1 digital commodity broker1 or digital commodity dealer4 7c7 ,definitions ,in this section1 each term shall have the meaning provided in the ,commodity ,exchange ,act or the regulations prescribed under such ,act4 #aji4 ,international harmonization ,in order to promote effective and consistent global regulation of digital assets1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission1 as appropriate-- 7#a7 shall consult and coordinate with foreign regulatory authorities on the establishment of consistent international standards with respect to the regulation of digital assets1 restricted digital assets1 and digital commodities2 and 7#b7 may agree to such information-sharing arrangements as may be deemed to be necessary or appropriate in the public interest or for the protection of investors1 customers1 and users of digital assets4 #aaj4 ,implementation 7a7 ,global rulemaking timeframe ,unless otherwise provided in this ,act or an amendment made by this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission1 or both1 shall individually1 and jointly where required1 promulgate rules and regulations required of each ,commission under this ,act or an amendment made by this ,act not later than #cfj days after the date of enactment of this ,act4 7b7 ,rules and registration before final effective dates 7#a7 ,in general ,in order to prepare for the implementation of this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission may1 before any effective date provided in this ,act-- 7,a7 promulgate rules1 regulations1 or orders permitted or required by this ,act2 7,b7 conduct studies and prepare reports and recommendations required by this ,act2 7,c7 register persons under this ,act2 and 7,d7 exempt persons1 agreements1 contracts1 or transactions from provisions of this ,act1 under the terms contained in this ,act4 7#b7 ,limitation on effectiveness ,an action by the ,commodity ,futures ,trading ,commission or the ,securities and ,exchange ,commission under paragraph 7#a7 shall not become effective before the effective date otherwise applicable to the action under this ,act4 ,,ii ,offers and ,sales of ,digital ,assets #bja4 ,exempted transactions in digital assets 7a7 ,in general ,the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;a et seq47 is amended-- 7#a7 in section #d7;a71 by adding at the end the following3 7#h7 transactions involving the offer or sale of units of a digital asset by a digital asset issuer1 if-- 7,a7 the aggregate amount of units of the digital asset sold by the digital asset issuer in reliance on the exemption provided under this paragraph1 during the #ab-month period preceding the date of such transaction1 including the amount sold in such transaction1 is not more than #ge1jjj1jjj 7as such amount is annually adjusted by the ,commission to reflect the change in the ,consumer ,price ,index for ,all ,urban ,consumers published by the ,bureau of ,labor ,statistics of the ,department of ,labor72 7,b7 with respect to a transaction involving the purchase of units of a digital asset by a person who is not an accredited investor1 the aggregate amount of all units of digital assets purchased by such person during the #ab-month period preceding the date of such transaction1 including the unit of a digital asset purchased in such transaction1 does not exceed the greater of-- 7i7 #aj percent of the person's annual income or joint income with that person's spouse or spousal equivalent2 or 7ii7 #aj percent of the person's net worth or joint net worth with the person's spouse or spousal equivalent2 7,c7 after the completion of the transaction1 the purchaser does not own more than #aj percent of the total amount of the units of the digital asset sold in reliance on the exemption under this paragraph2 7,d7 the transaction does not involve the offer or sale of any digital asset not offered as part of an investment contract2 7,e7 the transaction does not involve the offer or sale of a unit of a digital asset by a digital asset issuer that-- 7i7 is not organized under the laws of a ,state1 a territory of the ,united ,states1 or the ,district of ,columbia2 7ii7 is a development stage company that either-- 7,i7 has no specific business plan or purpose2 or 7,,ii7 has indicated that the business plan of the company is to merge with or acquire an unidentified company2 7iii7 is an investment company1 as defined in section #c of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#c71 or is excluded from the definition of investment company by section #c7;b7 or section #c7;c7 of that ,act 7#ae ,u4,s4,c4 #hj;a-#c7;b7 or #hj;a-#c7;c772 7iv7 is issuing fractional undivided interests in oil or gas rights1 or a similar interest in other mineral rights2 7v7 is1 or has been1 subject to any order of the ,commission entered pursuant to section #ab7;j7 of the ,securities ,exchange ,act of #aicd during the #e-year period before the filing of the offering statement2 or 7vi7 is disqualified pursuant to section #bcj4bfb of title #ag1 ,code of ,federal ,regulations2 and 7,f7 the issuer meets the requirements of section #d;,b7a74 2 and 7#b7 by inserting after section #d;,a the following3 #d;,b4 ,requirements with respect to certain digital asset transactions 7a7 ,requirements for digital asset issuers 7#a7 ,information required in statement ,a digital asset issuer offering or selling a unit of digital asset in reliance on section #d7;a77#h7 shall file with the ,commission a statement containing the following information3 7,a7 ,the name1 legal status 7including the jurisdiction in which the issuer is organized and the date of organization71 and website of the digital asset issuer4 7,b7 ,the address and telephone number of the issuer or a legal representative of the issuer4 7,c7 ,a certification that the digital asset issuer meets the relevant requirements described under section #d7;a77#h74 7,d7 ,an overview of the material aspects of the offering4 7,e7 ,a description of the purpose and intended use of the offering proceeds4 7,f7 ,a description of the plan of distribution of any unit of a digital asset that is to be offered4 7,g7 ,a description of the material risks surrounding ownership of a unit of a digital asset4 7,h7 ,a description of the material aspects of the digital asset issuer's business4 7,i7 ,a description of exempt offerings conducted within the past three years by the digital asset issuer4 7,j7 ,a description of the digital asset issuer and the current number of employees of the digital asset issuer4 7,k7 ,a description of any material transactions or relationships between the digital asset issuer and affiliated persons4 7,l7 ,a description of exempt offerings conducted within the past three years4 7#b7 ,information required for purchasers ,a digital asset issuer shall disclose the information described under section #dc of the ,securities ,exchange ,act of #aicd on a freely accessible public website4 7#c7 ,ongoing disclosure requirements ,a digital asset issuer that has filed a statement under paragraph 7#a7 to offer and sell a unit of a digital asset in reliance on section #d7;a77#h7 shall file the following with the ,commission3 7,a7 ,annual reports ,an annual report that includes any material changes to the information described under paragraph 7#b7 for the current fiscal year and for any fiscal year thereafter1 unless the issuer is no longer obligated to file such annual report pursuant to paragraph 7#d74 7,b7 ,semiannual reports ,along with each annual report required under subparagraph 7,a71 and separately six months thereafter1 a report containing-- 7i7 an updated description of the current state and timeline for the development of the blockchain system to which the digital asset relates1 showing how and when the blockchain system intends or intended to be considered a functional network and a decentralized network2 7ii7 the amount of money raised by the digital asset issuer in reliance on section #d7;a77#h71 how much of that money has been spent1 and the general categories and amounts on which that money has been spent2 and 7iii7 any material changes to the information in the most recent annual report4 7,c7 ,current reports ,a current report shall be filed with the ,commission reflecting any material changes to the information previously reported to the ,commission by the digital asset issuer4 7#d7 ,termination of reporting requirements 7,a7 ,in general ,the ongoing reporting requirements under paragraph 7#c7 shall not apply to a digital asset issuer #ahj days after the end of the covered fiscal year4 7,b7 ,covered fiscal year defined ,in this paragraph1 the term covered fiscal year means the first fiscal year of an issuer in which the blockchain system to which the digital asset relates is a functional network and certified to be a decentralized network under section #dd of the ,securities ,exchange ,act of #aicd4 7b7 ,requirements for intermediaries 7#a7 ,in general ,a person acting as an intermediary in a transaction involving the offer or sale of a unit of a digital asset in reliance on section #d7;a77#h7 shall-- 7,a7 register with the ,commission as a digital asset broker2 and 7,b7 be a member of a national securities association registered under section #ae;,a of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#c74 7#b7 ,purchaser qualification 7,a7 ,in general ,each time1 before accepting any commitment 7including any additional commitment from the same person71 an intermediary or digital asset issuer shall have a reasonable basis for believing that the purchaser satisfies the requirements of section #d7;a77#h74 7,b7 ,reliance on purchaser's representations ,for purposes of subparagraph 7,a71 an intermediary or digital asset issuer may rely on a purchaser's representations concerning the purchaser's annual income and net worth and the amount of the purchaser's other investments made1 unless the intermediary or digital asset issuer has reason to question the reliability of the representation4 7,c7 ,reliance on intermediary ,for purposes of determining whether a transaction meets the requirements described under subparagraph 7,a7 through 7,c7 of section #d7;a77#h71 a digital asset issuer may rely on the efforts of an intermediary4 7c7 ,additional provisions 7#a7 ,acceptance of written offers2 sales ,after an issuer files a statement under paragraph 7#a7 to offer and sell a digital asset in reliance on section #d7;a77#h7-- 7,a7 written offers of the digital asset may be made2 and 7,b7 the issuer may sell the digital assets in reliance on section #d7;a77#h71 if such sales meet all other requirements4 7#b7 ,solicitation of interest 7,a7 ,in general ,at any time before the filing of a statement under paragraph 7#a71 a digital asset issuer may communicate orally or in writing to determine whether there is any interest in a contemplated offering4 ,such communications are deemed to be an offer of a unit of a digital asset for sale for purposes of the anti-fraud provisions of the ,federal securities laws4 ,no solicitation or acceptance of money or other consideration1 nor of any commitment1 binding or otherwise1 from any person is permitted until the statement is filed4 7,b7 ,conditions ,in any communication described under subparagraph 7,a71 the digital asset issuer shall-- 7i7 state that no money or other consideration is being solicited1 and if sent in response1 will not be accepted2 7ii7 state that no offer to buy a unit of a digital asset can be accepted and no part of the purchase price can be received until the statement is filed and then only through an intermediary2 and 7iii7 state that a person's indication of interest involves no obligation or commitment of any kind4 7,c7 ,indications of interest ,any written communication described under subparagraph 7,a7 may include a means by which a person may indicate to the digital asset issuer that such person is interested in a potential offering4 ,a digital asset issuer may require a name1 address1 telephone number1 or email address in any response form included with a communication described under subparagraph 7,a74 7#c7 ,disqualification provisions ,the ,commission shall issue rules to apply the disqualification provisions under section #bcj4bfb of title #ag1 ,code of ,federal ,regulations1 to the exemption provided under section #d7;a77#h74 7#d7 ,digital assets deemed restricted digital asset ,a unit of a digital asset acquired directly or indirectly from the digital asset issuer in reliance on the exemption provided under section #d7;a77#h7 is deemed a restricted digital asset4 4 7b7 ,additional exemptions 7#a7 ,certain registration requirements ,section #ab7;g77#f7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghl7g77#f77 is amended by striking under section #d7f7 and inserting under section #d7;a77#f7 or #d7;a77#h74 7#b7 ,exemption from ,state regulation ,section #ah7;b77#d7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggr7b77#d77 is amended-- 7,a7 in section 7,b71 by striking section #d7d7 and inserting section #d7;a77#d72 7,b7 in section 7,c71 by striking section #d7f7 and inserting section #d7;a77#f72 7,c7 in subparagraph 7,f7-- 7i7 by striking section #d7b7 each place such term appears and inserting section #d7;a77#b72 7ii7 by striking or at the end2 7,d7 in subparagraph 7,g71 by striking the period and inserting 2 or2 and 7,e7 by adding at the end the following3 7,h7 section #d7;a77#h74 4 #bjb4 ,requirements for offers and sales of certain digital assets ,title ,i of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 is amended by adding at the end the following3 #db4 ,requirements for offers and sales of certain digital assets 7a7 ,offers and sales of certain restricted digital assets 7#a7 ,in general ,notwithstanding any other provision of law1 subject to paragraph 7#b71 a restricted digital asset may be offered and sold on a digital asset trading system by any person other than a digital asset issuer if1 at the time of such offer or sale1 any blockchain system to which the restricted digital asset relates is a functional network and the information described in section #dc has been certified and made publicly available for any blockchain system to which the restricted digital asset relates4 7#b7 ,additional rules for related persons and affiliated persons ,except as provided under subsection 7c71 a restricted digital asset owned by a related person or an affiliated person may only be offered or sold after #ab months after the later of-- 7,a7 the date on which such restricted digital asset was acquired2 or 7,b7 the digital asset maturity date4 7b7 ,offers and sales of certain digital commodities 7#a7 ,in general ,subject to paragraph 7#b71 a digital commodity may be offered and sold by any person4 7#b7 ,rules for related and affiliated persons ,except as provided under subsection 7c71 a digital commodity may only be offered or sold by a related person or an affiliated person if-- 7,a7 the holder of the digital commodity owned the digital commodity while it was a restricted digital asset for #ab months after the later of-- 7i7 the date on which such restricted digital asset was acquired2 or 7ii7 the digital asset maturity date2 7,b7 any blockchain system to which the digital commodity relates is certified to be a decentralized network under section #dd2 and 7,c7 the digital commodity is offered or sold on or subject to the rules of a digital commodity exchange registered under section #e;i of the ,commodity ,exchange ,act4 7#c7 ,not an investment contract ,for purposes of the securities laws1 an offer or sale of a digital commodity that does not violate paragraph 7#b7 shall not be a transaction in an investment contract4 7c7 ,sales restrictions for affiliated persons ,a digital asset may be offered and sold by an affiliated person under subsection 7a7 or 7b7 if-- 7#a7 the aggregate amount of such digital assets sold in any #c-month period by the affiliated person is not greater than one percent of the digital assets then outstanding2 or 7#b7 the affiliated person promptly1 following the placement of an order to sell one percent or more of the digital assets then outstanding during any #c-month period1 reports the sale to-- 7,a7 the ,commodity ,futures ,trading ,commission1 in the case of an order to sell a digital commodity on or subject to the rules of a digital commodity exchange2 or 7,b7 the ,securities and ,exchange ,commission1 in the case of a sell order for a restricted digital asset placed with a digital asset trading system4 7d7 ,treatment of certain end user distributions under the securities laws 7#a7 ,in general ,with respect to a digital asset1 an end user distribution is described under this paragraph if-- 7,a7 each blockchain system to which such digital asset relates is a functional network2 and 7,b7 with respect to the digital asset and each blockchain system to which such digital asset relates1 the information described in section #dc has been certified and made publicly available4 7#b7 ,not an investment contract ,for purposes of the securities laws1 an end user distribution described under paragraph 7#a7 shall not be a transaction in an investment contract4 7#c7 ,exemption ,section #e of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;e7 shall not apply to an end user distribution described under paragraph 7#a7 or a transaction in a unit of digital asset issued in such a distribution4 4 #bjc4 ,enhanced disclosure requirements ,title ,i of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq471 as amended by section #bjb1 is further amended by adding at the end the following3 #dc4 ,enhanced disclosure requirements with respect to digital assets 7a7 ,disclosure information ,with respect to a digital asset and any blockchain system to which the digital asset relates1 the information described under this section is as follows3 7#a7 ,source code ,the source code for any blockchain system to which the digital asset relates4 7#b7 ,transaction history ,a description of the steps necessary to independently access1 search1 and verify the transaction history of any blockchain system to which the digital asset relates4 7#c7 ,digital asset economics ,a description of the purpose of any blockchain system to which the digital asset relates and the operation of any such blockchain system1 including-- 7,a7 information explaining the launch and supply process1 including the number of digital assets to be issued in an initial allocation1 the total number of digital assets to be created1 the release schedule for the digital assets1 and the total number of digital assets then outstanding2 7,b7 information on any applicable consensus mechanism or process for validating transactions1 method of generating or mining digital assets1 and any process for burning or destroying digital assets on the blockchain system2 7,c7 an explanation of governance mechanisms for implementing changes to the blockchain system or forming consensus among holders of such digital assets2 and 7,d7 sufficient information for a third party to create a tool for verifying the transaction history of the digital asset4 7#d7 ,plan of development ,the current state and timeline for the development of any blockchain system to which the digital asset relates1 showing how and when the blockchain system intends or intended to be considered a functional network and decentralized network4 7#e7 ,development disclosures ,a list of all persons who are related persons or affiliated persons who have been issued a unit of a digital asset by a digital asset issuer or have a right to a unit of a digital asset from a digital asset issuer4 7#f7 ,risk factor disclosures ,where appropriate1 provide under the caption ,risk ,factors a description of the material risks surrounding ownership of a unit of a digital asset4 ,this discussion shall be organized logically with relevant headings and each risk factor shall be set forth under a subcaption that adequately describes the risk4 7b7 ,certification ,with respect to a digital asset and any blockchain system to which the digital asset relates1 the information required to be made available under this section has been certified if the digital asset issuer1 an affiliated person1 a decentralized governance system1 or a digital commodity exchange certifies on a quarterly basis to the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission that the information is true and correct4 4 #bjd4 ,certification of certain digital assets ,title ,i of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq471 as amended by section #bjc1 is further amended by adding at the end the following3 #dd4 ,certification of certain digital assets 7a7 ,certification ,any person may certify to the ,securities and ,exchange ,commission that the blockchain system to which a digital asset relates is a decentralized network4 7b7 ,filing requirements ,a certification described under subsection 7a7 shall be filed with the ,commission1 and include-- 7#a7 information regarding the person making the certification2 7#b7 a description of the blockchain system and the digital asset which relates to such blockchain system1 including-- 7,a7 the operation of the blockchain system2 7,b7 the functionality of the related digital asset2 7,c7 any decentralized governance system which relates to the blockchain system2 and 7,d7 the process to develop consensus or agreement within such decentralized governance system2 7#c7 a description of the development of the blockchain system and the digital asset which relates to the blockchain system1 including-- 7,a7 a history of the development of the blockchain system and the digital asset which relates to such blockchain system2 7,b7 a description of the issuance process for the digital asset which relates to the blockchain system2 7,c7 information identifying the digital asset issuer of the digital asset which relates to the blockchain system2 and 7,d7 a list of any affiliated person related to the digital asset issuer2 7#d7 an analysis of the factors on which such person based the certification that the blockchain system is a decentralized network1 including-- 7,a7 an explanation of the protections and prohibitions available during the previous #ab months against any one person being able to-- 7i7 control or materially alter the blockchain system2 7ii7 exclude any other person from using or participating on the blockchain system2 and 7iii7 exclude any other person from participating in a decentralized governance system2 7,b7 information regarding the beneficial ownership of the digital asset which relates to such blockchain system and the distribution of voting power in any decentralized governance system during the previous #ab months2 7,c7 information regarding the history of upgrades to the source code for such blockchain system during the previous #c months1 including-- 7i7 a description of any consensus or agreement process utilized to process or approve changes to the source code2 7ii7 a list of any material changes to the source code1 the purpose and effect of the changes1 and the contributor of the changes1 if known2 and 7iii7 any changes to the source code made by the digital asset issuer1 a related person1 or an affiliated person2 7,d7 information regarding any activities conducted to market the digital asset which relates to the blockchain system during the previous #c months by the digital asset issuer or an affiliated person of the digital asset issuer2 and 7,e7 information regarding any issuance of a unit of the digital asset which relates to such blockchain system during the previous #ab months2 and 7#e7 with respect to a blockchain system for which a certification has previously been rebutted under this section or withdrawn under section #e;i7m7 of the ,commodity ,exchange ,act1 specific information relating to the analysis provided in subsection 7f77#b7 in connection with such rebuttal or such section #e;i7m77#a77;,c7 in connection with such withdrawal4 7c7 ,rebuttable presumption ,the ,commission may rebut a certification described under subsection 7a7 with respect to a blockchain system if the ,commission1 within #fj days of receiving such certification1 determines that the blockchain system is not a decentralized network4 7d7 ,certification review 7#a7 ,in general ,any blockchain system that relates to a digital asset for which a certification has been made under subsection 7a7 shall be considered a decentralized network #fj days after the date on which the ,commission receives a certification under subsection 7a71 unless the ,commission notifies the person who made the certification within such time that the ,commission is staying the certification due to-- 7,a7 an inadequate explanation by the person making the certification2 or 7,b7 any novel or complex issues which require additional time to consider4 7#b7 ,public notice ,the ,commission shall make the following available to the public and provide a copy to the ,commodity ,futures ,trading ,commission3 7,a7 ,each certification received under subsection 7a74 7,b7 ,each stay of the ,commission under this section1 and the reasons therefore4 7,c7 ,any response from a person making a certification under subsection 7a7 to a stay of the certification by the ,commission4 7#c7 ,consolidation ,the ,commission may consolidate and treat as one submission multiple certifications made under subsection 7a7 for the same blockchain system which relates to a digital asset which are received during the review period provided under this subsection4 7e7 ,stay of certification 7#a7 ,in general ,a notification by the ,commission pursuant to subsection 7d77#a7 shall stay the certification once for up to an additional #abj days from the date of the notification4 7#b7 ,public comment period ,before the end of the #fj-;day period described under subsection 7d77#a71 the ,commission may begin a public comment period of at least #cj days in conjunction with a stay under this section4 7f7 ,disposition of certification 7#a7 ,in general ,a certification made under subsection 7a7 shall-- 7,a7 become effective-- 7i7 upon the publication of a notification from the ,commission to the person who made the certification that the ,commission does not object to the certification2 or 7ii7 at the expiration of the certification review period2 and 7,b7 not become effective upon the publication of a notification from the ,commission to the person who made the certification that the ,commission has rebutted the certification4 7#b7 ,detailed analysis included with rebuttal ,the ,commission shall include1 with each publication of a notification of rebuttal described under paragraph 7#a77;,b71 a detailed analysis of the factors on which the decision was based4 7g7 ,recertification ,with respect to a blockchain system for which a certification has been rebutted under this section1 no person may make a certification under subsection 7a7 with respect to such blockchain system during the #ij-;day period beginning on the date of such rebuttal4 7h7 ,appeal of rebuttal 7#a7 ,in general ,if a certification is rebutted under this section1 the person making such certification may appeal the decision to the ,united ,states ,court of ,appeals for the ,district of ,columbia1 not later than #fj days after the notice of rebuttal is made4 7#b7 ,review ,in an appeal under paragraph 7#a71 the court shall have de novo review of the determination to rebut the certification4 7i7 ,liability for providing false information ,it shall be unlawful for any person to provide false information in support of a certification under this section if such person knew or reasonably should have known such information was false4 4 #bje4 ,effective date ,unless otherwise provided in this title1 this title and the amendments made by this title shall take effect #cfj days after the date of enactment of this ,act1 except that1 to the extent a provision of this title requires a rulemaking1 the provision shall take effect on the later of-- 7#a7 #cfj days after the date of enactment of this ,act2 or 7#b7 #fj days after the publication in the ,federal ,register of the final rule implementing the provision4 ,,iii ,registration for ,digital ,asset ,intermediaries at the ,securities and ,exchange ,commission #cja4 ,treatment of digital commodities and other digital assets 7a7 ,securities ,act of #aicc ,section #b7;a77#a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a77#a77 is amended by adding at the end the following3 ,the term does not include a digital commodity or permitted payment stablecoin44 7b7 ,securities ,exchange ,act of #aicd ,section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a77 is amended-- 7#a7 in paragraph 7#a71 by adding at the end the following3 ,the term exchange does not include a digital asset trading system1 blockchain protocol1 or any person or group of persons solely because of their development of a blockchain protocol42 7#b7 in paragraph 7#b71 by adding at the end the following3 ,a digital asset trading system is not a facility of an exchange42 7#c7 in paragraph 7#d77;,a71 by inserting 1 other than restricted digital assets1 after securities2 7#d7 in paragraph 7#e77;,a71 by inserting restricted digital assets or after not including2 7#e7 in paragraph 7#bf7 by inserting 7other than a notice-registered digital asset clearing agency7 after or registered clearing agency2 7#f7 in paragraph 7#bh7 by inserting 7other than a notice-registered digital asset clearing agency7 after registered clearing agency2 and 7#g7 in paragraph 7#aj71 by adding at the end the following3 ,subject to subsection 7i71 the term does not include a digital commodity or permitted payment stablecoin44 7c7 ,investment ,advisers ,act of #aidj ,section #bjb7;a7 of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#b7 is amended-- 7#a7 in paragraph 7#ah71 by adding at the end the following3 ,the term does not include a digital commodity or permitted payment stablecoin42 7#b7 by redesignating the second paragraph 7#bi7 7relating to commodity pools7 as paragraph 7#ca72 7#c7 by adding at the end1 the following3 7#cb7 ,digital asset-related terms ,the terms digital commodity and permitted payment stablecoin have the meaning given those terms1 respectively1 under section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a774 4 7d7 ,investment ,company ,act of #aidj ,section #b7;a7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#b7 is amended-- 7#a7 in paragraph 7#cf71 by adding at the end the following3 ,the term does not include a digital commodity or permitted payment stablecoin42 and 7#b7 by adding at the end1 the following3 7#ee7 ,digital asset-related terms ,the terms digital commodity and permitted payment stablecoin have the meaning given those terms1 respectively1 under section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a774 4 #cjb4 ,anti-fraud authority over permitted payment stablecoins 7a7 ,in general ,section #aj of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;j7 is amended-- 7#a7 by moving subsection 7c7 so as to appear after subsection 7b72 7#b7 by designating the undesignated matter at the end of that section as subsection 7d72 and 7#c7 by adding at the end the following3 7e7 7#a7 ,rules promulgated under subsection 7b7 that prohibit fraud1 manipulation1 or insider trading 7but not rules imposing or specifying reporting or recordkeeping requirements1 procedures1 or standards as prophylactic measures against fraud1 manipulation1 or insider trading71 and judicial precedents decided under subsection 7b7 and rules promulgated thereunder that prohibit fraud1 manipulation1 or insider trading1 shall apply to permitted payment stablecoins with respect to those circumstances in which the permitted payment stablecoins are brokered1 traded1 or custodied by a broker1 dealer1 digital asset broker1 or digital asset dealer or through an alternative trading system or digital asset trading platform to the same extent as they apply to securities4 7#b7 ,judicial precedents decided under section #ag7;a7 of the ,securities ,act of #aicc and sections #i1 #ae1 #af1 #bj1 and #ba;,a of this title1 and judicial precedents decided under applicable rules promulgated under such sections1 shall apply to permitted payment stablecoins with respect to those circumstances in which the permitted payment stablecoins are brokered1 traded1 or custodied by a digital asset broker1 digital asset dealer1 or digital asset trading system to the same extent as they apply to securities4 7#c7 ,nothing in this subsection may be construed to provide the ,commission authority to make any rule1 regulation1 requirement1 or obligation on a permitted payment stablecoin issuer regarding the operations of a permitted payment stablecoin issuer or a permitted payment stablecoin1 including any aspect of the operation of a permitted payment stablecoin issuer or permitted payment stablecoin4 4 7b7 ,treatment of permitted payment stablecoins ,title ,i of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq471 as amended by section #cjd1 is amended by inserting after section #f;,b the following #f;,c4 ,treatment of transactions in permitted payment stablecoins 7a7 ,authority to broker1 trade1 and custody permitted payment stablecoins ,permitted payment stablecoins may be brokered1 traded1 or custodied by a broker1 dealer1 digital asset broker1 or digital asset dealer or through an alternative trading system or digital asset trading platform4 7b7 ,commission jurisdiction ,the ,commission shall have jurisdiction over a transaction in a permitted payment stablecoin with respect to those circumstances in which a permitted payment stablecoin is brokered1 traded1 or custodied-- 7#a7 by a broker1 dealer1 digital asset broker1 or digital asset dealer2 or 7#b7 through an alternative trading system or digital asset trading system4 7c7 ,limitation ,subsection 7b7 shall only apply to a transaction described in subsection 7b7 for the purposes of regulating the offer1 execution1 solicitation1 or acceptance of a permitted payment stablecoin in those circumstances in which the permitted payment stablecoin is brokered1 traded1 or custodied-- 7#a7 by a broker1 dealer1 digital asset broker1 or digital asset dealer2 or 7#b7 through an alternative trading system or digital asset trading system4 4 #cjc4 ,registration of digital asset trading systems ,section #f of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;f7 is amended by adding at the end the following3 7m7 ,digital asset trading system 7#a7 ,in general ,it shall be unlawful for any digital asset trading system to make use of the mails or any means or instrumentality of interstate commerce within or subject to the jurisdiction of the ,united ,states to effect any transaction in a restricted digital asset1 unless such digital asset trading system is registered with the ,commission4 7#b7 ,application ,a person desiring to register as a digital asset trading system shall submit to the ,commission an application in such form and containing such information as the ,commission may require for the purpose of making the determinations required for approval4 7#c7 ,exemptions ,a digital asset trading system that offers or seeks to offer at least one restricted digital asset shall not be required to register under this section 7and subparagraph 7,a7 shall not apply to such digital asset trading system7 if the trading system satisfies any exemption contained on a list of exemptions prepared by the ,commission to be as close as practicable to those exemptions set forth in section #bdj4c;b-#af7;b7 of title #ag1 ,code of ,federal ,regulations1 applicable to the definition of an exchange4 7#d7 ,additional registrations 7,a7 ,with the commission 7i7 ,in general ,a registered digital asset trading system shall be permitted to maintain any other registration with the ,commission relating to the other activities of the registered digital asset trading system1 including as a-- 7,i7 national securities exchange2 7,,ii7 broker2 7,,iii7 dealer2 7,,iv7 alternative trading system1 pursuant to part #bdb of title #ag1 ,code of ,federal ,regulations1 as in effect on the date of enactment of this subsection2 7,v7 digital asset broker2 or 7,,vi7 digital asset dealer4 7ii7 ,rulemaking ,the ,commission shall prescribe rules for an entity with multiple registrations described under subparagraph 7,a7 to exempt the entity from duplicative1 conflicting1 or unduly burdensome provisions of this ,act and the rules under this ,act1 to the extent such an exemption would protect investors1 maintain fair1 orderly1 and efficient markets1 and facilitate capital formation4 7,b7 ,with the ,commodity ,futures ,trading ,commission ,a registered digital asset trading system shall be permitted to maintain a registration with the ,commodity ,futures ,trading ,commission as a digital commodity exchange to offer contracts of sale for digital commodities4 4 #cjd4 ,requirements for digital asset trading systems ,title ,i of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 is amended by inserting after section #f the following3 #f;,a4 ,requirements for digital asset trading systems 7a7 ,holding of customer assets 7#a7 ,in general ,a digital asset trading system shall hold customer money1 assets1 and property in a manner to minimize the risk of loss to the customer or unreasonable delay in the access to the money1 assets1 and property of the customer4 7#b7 ,qualified digital asset custodian required ,a digital asset trading system shall hold customer restricted digital assets described in paragraph 7#a7 with a qualified digital asset custodian described under section #f;,b4 7#c7 ,custody prohibited ,a digital asset trading system1 in its capacity as such1 may not hold custody of customer money1 assets1 or property4 7b7 ,rulemaking ,the ,commission shall prescribe rules for digital asset trading systems relating to the following3 7#a7 ,notice ,notice to the ,commission of the initial operation of a digital asset trading system or any material change to the operation of the digital asset trading system4 7#b7 ,order display ,the thresholds at which a digital asset trading system is required to display the orders of the digital asset trading system1 and the manner of such display4 7#c7 ,fair access ,the thresholds at which a digital asset trading system is required to have policies regarding providing fair access to the digital asset trading system4 7#d7 ,capacity1 integrity1 and security of automated systems ,policies and procedures reasonably designed to ensure the capacity1 integrity1 and security of the digital asset trading system1 taking into account the particular nature of digital asset trading systems4 7#e7 ,examinations1 inspections1 and investigations ,the examination and inspection of the premises1 systems1 and records of the digital asset trading system by the ,commission or by a self-regulatory organization of which such digital asset trading system is a member4 7#f7 ,recordkeeping ,the making1 keeping current1 and preservation of records related to trading activity on the digital asset trading system4 7#g7 ,reporting ,the reporting of transactions in digital assets that occur through the digital asset trading system4 7#h7 ,procedures ,the establishment of adequate written safeguards and written procedures to protect confidential trading information4 7c7 ,name requirement ,a digital asset trading system may not use the word exchange in the name of the digital asset trading system1 unless the digital asset trading system-- 7#a7 is operated by a registered national securities exchange2 and 7#b7 is clearly indicated as being provided outside of the system's capacity as a national securities exchange4 7d7 ,treatment under the ,bank ,secrecy ,act ,a digital asset trading system shall be treated as a financial institution for purposes of the ,bank ,secrecy ,act4 #f;,b4 ,requirements for qualified digital asset custodians 7a7 ,in general ,a digital asset custodian is a qualified digital asset custodian if the digital asset custodian complies with the requirements of this section4 7b7 ,supervision requirement 7#a7 ,in general ,a digital asset custodian shall-- 7,a7 be subject to adequate supervision and appropriate regulation by-- 7i7 the ,board of ,governors of the ,federal ,reserve ,system2 7ii7 the ,comptroller of the ,currency2 7iii7 the ,federal ,deposit ,insurance ,corporation2 7iv7 the ,commodity ,futures ,trading ,commission2 7v7 the ,securities and ,exchange ,commission2 7vi7 a ,state bank supervisor 7within the meaning of section #c of the ,federal ,deposit ,insurance ,act72 or 7vii7 an appropriate foreign governmental authority in the home country of the digital asset custodian2 and 7,b7 not be prohibited by the applicable supervisor from engaging in an activity with respect to the custody and safekeeping of digital assets4 7#b7 ,adequate supervision and appropriate regulation ,for purposes of paragraph 7#a71 the terms adequate supervision and appropriate regulation mean such minimum standards for supervision and regulation as are reasonably necessary to protect the digital assets of customers of an entity registered with the ,commission1 including minimum standards relating to-- 7,a7 accessibility of customer assets2 7,b7 financial resources2 7,c7 risk management requirements2 7,d7 governance arrangements2 7,e7 fitness standards for officers and directors2 7,f7 recordkeeping2 7,g7 information sharing2 and 7,h7 conflicts of interest4 7#c7 ,deemed compliance ,a digital asset custodian shall be deemed to be subject to adequate supervision and appropriate regulation1 if-- 7,a7 it is supervised by an agency described under any of clauses 7i7 through 7v7 of paragraph 7#a77;,a72 or 7,b7 it is a bank supervised by a ,state bank supervisor 7within the meaning of section #c of the ,federal ,deposit ,insurance ,act74 7#d7 ,rulemaking with respect to definitions ,for purposes of this subsection1 the ,commission may1 by rule1 further define the terms adequate supervision and appropriate regulation as necessary in the public interest1 as appropriate for the protection of investors1 and consistent with the purposes of this ,act4 7c7 ,information sharing ,each digital asset custodian shall periodically share of information with the ,commission1 as the ,commission determines by rule to be reasonably necessary to effectuate any of the provisions1 or to accomplish any of the purposes1 of this ,act4 4 #cje4 ,registration of digital asset brokers and digital asset dealers ,the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 is amended by inserting after section #ae;,g the following3 #ae;,h4 ,registration of digital asset brokers and digital asset dealers 7a7 ,registration 7#a7 ,in general ,it shall be unlawful for any digital asset broker or digital asset dealer 7other than a natural person associated with a digital asset broker or digital asset dealer1 and other than such a digital asset broker or digital asset dealer whose business is exclusively intrastate and who does not make use of any facility of a digital asset trading platform7 to make use of the mails or any means or instrumentality of interstate commerce to effect any transactions in1 or to induce or attempt to induce the purchase or sale of1 any restricted digital asset unless such digital asset broker or digital asset dealer is registered in accordance with this section4 7#b7 ,application ,a person desiring to register as a digital asset broker or digital asset dealer shall submit to the ,commission an application in such form and containing such information as the ,commission may require for the purpose of making the determinations required for approval4 7b7 ,national securities association membership 7#a7 ,in general ,a digital asset broker or digital asset dealer may not register or maintain registration under this section unless such digital asset broker or digital asset dealer is a member of a national securities association registered under section #ae;,a4 7#b7 ,treatment under section #ae;,a 7,a7 ,in general ,for purposes of section #ae;,a-- 7i7 the term broker includes a digital asset broker2 7ii7 the term dealer includes a digital asset dealer2 and 7iii7 the term security includes a restricted digital asset4 7,b7 ,clarification ,notwithstanding subparagraph 7,a71 a national securities association shall only examine for and enforce against a digital asset broker and digital asset dealer rules of such national securities association written specifically for digital asset brokers and a digital asset dealers4 7#c7 ,exception ,a digital asset broker or digital asset dealer may register under this section without obtaining membership in a national securities association until the end of the #cfj-;day period beginning on the date the first national securities association adopts rules to admit digital asset brokers or digital asset dealers as members4 7c7 ,additional registrations with the ,commission 7#a7 ,in general ,a registered digital asset broker or registered digital asset dealer shall be permitted to maintain any other registration with the ,commission relating to the other activities of the registered digital asset broker or registered digital asset dealer1 including as-- 7,a7 a national securities exchange2 7,b7 a broker2 7,c7 a dealer2 7,d7 an alternative trading system1 pursuant to part #bdb of title #ag1 ,code of ,federal ,regulations1 as in effect on the date of enactment of this section2 or 7,e7 a digital asset trading system4 7#b7 ,rulemaking ,the ,commission shall prescribe rules for an entity with multiple registrations described under paragraph 7#a7 to exempt the entity from duplicative1 conflicting1 or unduly burdensome provisions of this ,act and the rules under this ,act1 to the extent such an exemption would protect investors1 maintain fair1 orderly1 and efficient markets1 and facilitate capital formation4 7#c7 ,self-regulatory organizations ,the ,commission shall require any self-regulatory organization with a registered digital asset broker or registered digital asset dealer as a member to provide such rules as may be necessary to further compliance with this section1 protect investors1 maintain fair1 orderly1 and efficient markets1 and facilitate capital formation4 7d7 ,additional registrations with the ,commodity ,futures ,trading ,commission ,a registered digital asset broker or registered digital asset dealer shall be permitted to maintain a registration with the ,commodity ,futures ,trading ,commission as a digital commodity broker or digital commodity dealer1 to list or trade contracts of sale for digital commodities4 4 #cjf4 ,requirements of digital asset brokers and digital asset dealers ,section #ae;,h of the ,securities ,exchange ,act of #aicd1 as added by section #cje1 is amended by adding at the end the following3 7e7 ,anti-fraud ,no digital asset broker or digital asset dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in1 or to induce or attempt to induce the purchase or sale of1 any restricted digital asset by means of any manipulative1 deceptive1 or other fraudulent device or contrivance4 7f7 ,holding of customer assets 7#a7 ,in general ,a digital asset broker or digital asset dealer shall hold customer money1 assets1 and property in a manner to minimize the risk of loss to the customer or unreasonable delay in the access to the money1 assets1 and property of the customer4 7#b7 ,qualified digital asset custodian required ,a digital asset broker or digital asset dealer shall hold customer restricted digital assets described in paragraph 7#a7 with a qualified digital asset custodian described under section #f;,b4 7#c7 ,segregation of funds 7,a7 ,in general ,a digital asset broker or digital asset dealer shall treat and deal with all money1 assets1 and property held for a customer of the digital asset broker or digital asset dealer1 or that accrues to a customer as a result of trading in restricted digital assets1 as belonging to the customer4 7,b7 ,commingling prohibited ,money1 assets1 and property of a customer described in subparagraph 7,a7 shall be separately accounted for and shall not be commingled with the funds of the digital asset broker or digital asset dealer or be used to margin1 secure1 or guarantee any trades of any person other than the customer of the digital asset broker or digital asset dealer for whom the same are held4 7#d7 ,exceptions 7,a7 ,use of funds 7i7 ,in general ,notwithstanding paragraph 7#c71 money1 assets1 and property of customers of a digital asset broker or digital asset dealer described in paragraph 7#c7 may be maintained and deposited in the same account or accounts with any bank1 trust company1 or qualified digital asset custodian described under section #f;,b1 if the money1 assets1 and property remain segregated from the money1 assets1 and property of the digital asset broker or digital asset dealer4 7ii7 ,withdrawal ,notwithstanding paragraph 7#c71 such share of the money1 assets1 and property described in paragraph 7#c7 as in the normal course of business shall be necessary to transfer1 adjust1 or settle a restricted digital asset transaction pursuant to a customer's instruction 7standing or otherwise7 may be withdrawn and applied to such purposes1 including the withdrawal and payment of commissions1 brokerage1 interest1 taxes1 storage1 and other charges lawfully accruing in connection with a restricted digital asset transaction4 7iii7 ,commission action ,in accordance with such terms and conditions as the ,commission may prescribe by rule1 regulation1 or order1 any money1 assets1 or property of a customer of a digital asset broker or digital asset dealer described in paragraph 7#c7 may be commingled and deposited as provided in this section with any other money1 assets1 or property received by the digital asset broker or digital asset dealer and required by the ,commission to be separately accounted for and treated and dealt with as belonging to the customer of the digital asset broker or digital asset dealer4 7,b7 ,participation in blockchain services 7i7 ,in general ,a customer shall have the right to waive the restrictions in paragraph 7#c7 for any unit of a digital asset to be used under clause 7ii71 by affirmatively electing1 in writing to the digital asset broker or digital asset dealer1 to waive the restrictions4 7ii7 ,use of funds ,customer digital assets removed from segregation under clause 7i7 may be pooled and used by the digital asset broker or digital asset dealer or its designee to provide a blockchain service for a blockchain system to which the unit of the digital asset removed from segregation under clause 7i7 relates4 7iii7 ,limitations ,the ,commission may1 by rule1 establish notice and disclosure requirements1 and any other limitations and rules related to the waiving of any restrictions under this subparagraph that are reasonably necessary to protect customers4 7iv7 ,blockchain service defined ,in this subparagraph1 the term blockchain service means any activity relating to validating transactions on a blockchain system1 providing security for a blockchain system1 or other similar activity required for the ongoing operation of a blockchain system4 7#e7 ,further ,limitations ,no person shall treat or deal with a restricted digital asset held on behalf of any customer pursuant to paragraph 7#c7 by utilizing any unit of such restricted digital asset to participate in a blockchain service 7as defined in paragraph 7#d77;,b77iv7 or a decentralized governance system associated with the restricted digital asset or the blockchain system to which the restricted digital asset relates in any manner other than that which is expressly directed by the customer from which such unit of a restricted digital asset was received4 7g7 ,capital requirements 7#a7 ,in general ,each registered digital asset broker and registered digital asset dealer shall meet such minimum capital requirements as the ,commission may prescribe to ensure that the digital asset broker or digital asset dealer is able to-- 7,a7 conduct an orderly wind-down of the activities of the digital asset broker or digital asset dealer2 and 7,b7 fulfill the customer obligations of the digital asset broker or digital asset dealer4 7#b7 ,calculation ,for purposes of any ,commission rule or order adopted under this section or any interpretation thereof regulating a digital asset broker or digital asset dealer's financial responsibility obligations and capital requirements1 a registered digital asset broker or digital asset dealer that maintains control of customer digital assets in a manner that satisfies the rules issued by the ,commission under subsection 7f77#b7 shall not be required to include the value of such digital assets as assets or liabilities of the digital asset broker or digital asset dealer4 7#c7 ,coordination of capital requirements 7,a7 ,commission rule ,the ,commission shall1 by rule1 provide appropriate offsets to any applicable capital requirement for a person with multiple registrations1 including as a broker1 dealer1 digital asset broker1 or digital asset dealer4 7,b7 ,joint rule ,the ,commission and the ,commodity ,futures ,trading ,commission shall jointly1 by rule1 provide appropriate offsets to any applicable capital requirement for a person with multiple registrations1 including as a digital asset broker1 digital asset dealer1 digital asset trading system1 digital commodity broker1 digital commodity dealer1 or digital commodity exchange4 7h7 ,reporting and recordkeeping ,each registered digital asset broker and digital asset dealer-- 7#a7 shall make such reports as are required by the ,commission by rule or regulation regarding the transactions1 positions1 and financial condition of the digital asset broker or digital asset dealer2 7#b7 shall keep books and records in such form and manner and for such period as may be prescribed by the ,commission by rule or regulation2 and 7#c7 shall keep the books and records open to inspection and examination by any representative of the ,commission4 7i7 ,treatment under the ,bank ,secrecy ,act ,a digital asset broker and a digital asset dealer shall be treated as a financial institution for purposes of the ,bank ,secrecy ,act4 4 #cjg4 ,rules related to conflicts of interest ,the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 is amended by inserting after section #aj;,d the following3 #aj;,e4 ,conflicts of interest related to digital assets ,each registered digital asset trading system1 registered digital asset broker1 registered digital asset dealer1 and notice-registered digital asset clearing agency shall establish1 maintain1 and enforce written policies and procedures reasonably designed1 taking into consideration the nature of such person's business1 to mitigate any conflicts of interest and transactions or arrangements with affiliates4 4 #cjh4 ,treatment of certain digital assets in connection with federally regulated intermediaries ,section #ah7;b7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggr7b77 is amended by adding at the end the following3 7#e7 ,exemption for certain digital assets in connection with federally regulated intermediaries ,a restricted digital asset is a covered security with respect to a transaction that is exempt from registration under this ,act when-- 7,a7 it is brokered1 traded1 custodied1 or cleared by a digital asset broker or digital asset dealer registered under section #ae;,h of the ,securities ,exchange ,act of #aicd2 or 7,b7 traded through a digital asset trading system4 4 #cji4 ,exclusion for ancillary activities ,the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq471 as amended by section #cje1 is further amended by inserting after section #ae;,h the following3 #ae;,i4 ,exclusion for ancillary activities 7a7 ,in general ,notwithstanding any other provision of this ,act1 a person shall not be subject to this ,act and the regulations thereunder solely based on the person undertaking any ancillary activities4 7b7 ,exceptions ,subsection 7a7 shall not be construed to apply to the anti-fraud and anti-manipulation authorities of the ,commission4 7c7 ,ancillary activities defined ,in this section1 the term ancillary activities means any of the following activities related to the operation of a blockchain system3 7#a7 ,compiling network transactions1 operating or participating in a liquidity pool1 relaying1 searching1 sequencing1 validating1 or acting in a similar capacity with respect to a digital asset4 7#b7 ,providing computational work1 operating a node1 or procuring1 offering1 or utilizing network bandwidth1 or other similar incidental services with respect to a digital asset4 7#c7 ,providing a user-interface that enables a user to read and access data about a blockchain system1 send messages1 or otherwise interact with a blockchain system4 7#d7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing a blockchain system4 7#e7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing software or systems that create or deploy a hardware or software wallet or other system facilitating an individual user's own personal ability to keep1 safeguard1 or custody the user's digital assets or related private keys4 4 #caj4 ,registration and requirements for notice-registered digital asset clearing agencies ,section #ag;,a7b7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghq-#a7;b77 is amended-- 7#a7 in subsection 7#a71 by inserting 7other than a notice-registered digital asset clearing agency7 after unlawful for any clearing agency2 and 7#b7 by adding at the end the following3 7#i7 ,registration and requirements for notice-registered digital asset clearing agency 7,a7 ,eligibility ,a person may register with the ,commission as a notice-registered digital asset clearing agency if the person-- 7i7 is otherwise registered as a digital asset broker or digital asset dealer with the ,commission and is engaging in a business involving restricted digital assets1 in compliance with ,commission rules pursuant to section #ae;,h7f72 or 7ii7 is a bank engaging in a business involving digital assets1 in compliance with applicable banking law and regulation relating to the custody and safekeeping of such assets4 7,b7 ,registration ,a person may register with the ,commission as a notice-registered digital asset clearing agency by providing the ,commission with notice of the activities of the person or planned activities in such form as the ,commission determines appropriate4 ,such notice shall include information describing the person's policies and procedures relating to the holding of customer assets4 7,c7 ,rulemaking ,the ,commission may adopt rules1 which may not take effect until at least #cfj days following the date of enactment of this paragraph1 with regard to the activities of notice-registered digital asset clearing agencies1 taking into account the nature of restricted digital assets4 4 #caa4 ,treatment of custody activities by banking institutions 7a7 ,treatment of custody activities ,the appropriate ,federal banking agency 7as defined under section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac771 the ,national ,credit ,union ,administration 7in the case of a credit union71 and the ,securities and ,exchange ,commission may not require1 or take supervisory action that would cause1 a depository institution1 national bank1 ,federal credit union1 ,state credit union1 or trust company1 or any affiliate 7as such term is defined under section #b of the ,bank ,holding ,company ,act of #aief7 thereof-- 7#a7 to include assets held in custody or safekeeping1 or the assets associated with a cryptographic key held in custody or safekeeping1 as a liability on such institution's financial statement or balance sheet1 except that cash held for a third party by such institution that is commingled with the general assets of such institution may be reflected as a liability on a financial statement or balance sheet2 7#b7 to hold additional regulatory capital against assets in custody or safekeeping1 or the assets associated with a cryptographic key held in custody or safekeeping1 except as necessary to mitigate against operational risks inherent with the custody or safekeeping services1 as determined by-- 7,a7 the appropriate ,federal banking agency2 7,b7 the ,national ,credit ,union ,administration 7in the case of a credit union72 7,c7 a ,state bank supervisor 7as defined under section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac772 or 7,d7 a ,state credit union supervisor 7as defined under section #fjjc of the ,anti-,money ,laundering ,act of #bjbj72 7#c7 to recognize a liability for any obligations related to activities or services performed for digital assets with respect to which such institution does not have beneficial ownership if that liability would exceed the expense recognized in the income statement as a result of the corresponding obligation4 7b7 ,definitions ,in this section3 7#a7 ,depository institution ,the term depository institution has the meaning given that term under section #c of the ,federal ,deposit ,insurance ,act4 7#b7 ,credit union terms ,the terms ,federal credit union and ,state credit union have the meaning given those terms1 respectively1 under section #aja of the ,federal ,credit ,union ,act4 #cab4 ,effective date2 administration 7a7 ,in general ,except as otherwise provided under this title1 this title and the amendments made by this title shall take effect #cfj days after the date of enactment of this ,act1 except that1 to the extent a provision of this title requires a rulemaking1 the provision shall take effect on the later of-- 7#a7 #cfj days after the date of enactment of this ,act2 or 7#b7 #fj days after the publication in the ,federal ,register of the final rule implementing the provision4 7b7 ,limitation ,during fiscal years #bjbd1 #bjbe1 and #bjbf1 registration fees collected by the ,securities and ,exchange ,commission shall not be deposited in the ,securities and ,exchange ,commission ,reserve ,fund4 ,,iv ,registration for ,digital ,asset ,intermediaries at the ,commodity ,futures ,trading ,commission #dja4 ,commission jurisdiction over digital commodity transactions 7a7 ,in general ,section #b7;a77#a7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;a77#a77 is amended by adding at the end the following3 7,j7 ,except as expressly provided in this ,act1 nothing in the ,financial ,innovation and ,technology for the #bast ,century ,act shall affect or apply to1 or be interpreted to affect or apply to-- 7i7 any agreement1 contract1 or transaction that is subject to regulation under this ,act as-- 7,i7 a contract of sale of a commodity for future delivery or an option on such a contract2 7,,ii7 a swap2 7,,iii7 a security futures product2 7,,iv7 an option authorized under section #d;c of this ,act2 7,v7 an agreement1 contract1 or transaction described in subparagraph 7,c77i7 or 7,d77i7 of subsection 7c77#b7 of this section2 or 7,,vi7 a leverage transaction authorized under section #ai of this ,act2 or 7ii7 the activities of any person with respect to any such an agreement1 contract1 or transaction4 4 7b7 ,in general ,section #b7;c77#a7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;c77#a77 is amended-- 7#a7 in subparagraph 7,f71 by striking or at the end2 7#b7 in subparagraph 7,g71 by striking the period and inserting 2 or2 and 7#c7 by adding at the end the following3 7,h7 permitted payment stablecoins4 4 7c7 ,in general ,section #b7;c77#b7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;c77#b77 is amended-- 7#a7 in subparagraph 7,d77ii7-- 7,a7 in subclause 7,,iii71 in the matter that precedes item 7aa71 by inserting of a commodity1 other than a digital commodity1 before that2 and 7,b7 by redesignating subclauses 7,,iv7 and 7,v7 as subclauses 7,v7 and 7,,vi7 and inserting after subclause 7,,iii7 the following3 7,,iv7 a contract of sale of a digital commodity that-- 7aa7 results in actual delivery1 as the ,commission shall by rule determine1 within #b days or such other period as the ,commission may determine by rule or regulation based upon the typical commercial practice in cash or spot markets for the digital commodity involved2 or 7bb7 is executed with a registered digital commodity dealer-- 7,,aa7 directly2 7,,bb7 through a registered digital commodity broker2 or 7,,cc7 on or subject to the rules of a registered digital commodity exchange2 2 and 7#b7 by adding at the end the following3 7,f7 ,commission jurisdiction with respect to digital commodity transactions 7i7 ,in general ,subject to sections #f;d and #ab7;e71 the ,commission shall have exclusive jurisdiction with respect to any account1 agreement1 contract1 or transaction involving a contract of sale of a digital commodity in interstate commerce1 including in a digital commodity cash or spot market1 that is offered1 solicited1 traded1 facilitated1 executed1 cleared1 reported1 or otherwise dealt in-- 7,i7 on or subject to the rules of a registered entity or an entity that is required to be registered as a registered entity2 or 7,,ii7 by any other entity registered1 or required to be registered1 with the ,commission4 7ii7 ,limitations ,clause 7i7 shall not apply with respect to custodial or depository activities for a digital commodity1 or custodial or depository activities for any promise or right to a future digital commodity1 of an entity regulated by an appropriate ,federal banking agency or a ,state bank supervisor 7within the meaning of section #c of the ,federal ,deposit ,insurance ,act74 7iii7 ,mixed digital asset transactions 7,i7 ,in general ,clause 7i7 shall not apply to a mixed digital asset transaction4 7,,ii7 ,oversight of mixed digital asset transactions 7aa7 ,on a ,,cftc regulated platform ,a mixed digital asset transaction that occurs on or subject to the rules of a registered entity or by any other entity registered with the ,commission-- 7,,aa7 shall not occur except on or subject to the rules of a registered entity or by any other entity that is dually registered with the ,commission and the ,securities and ,exchange ,commission2 and 7,,bb7 shall be subject to the jurisdiction of the ,commission and the ,securities and ,exchange ,commission4 7bb7 ,off exchange ,a mixed digital asset transaction that does not occur on or subject to the rules of a registered entity or by any other entity registered with the ,commission shall be subject to the exclusive jurisdiction of the ,securities and ,exchange ,commission4 7,,iii7 ,reports on mixed digital asset transactions ,a digital asset issuer1 related person1 affiliated person1 or other person registered with the ,securities and ,exchange ,commission that engages in a mixed digital asset transaction1 shall1 on request1 open to inspection and examination by the ,commodity ,futures ,trading ,commission all books and records relating to the mixed digital asset transaction1 subject to the confidentiality and disclosure requirements of section #h4 7,g7 ,agreements1 contracts1 and transactions in stablecoins 7i7 ,treatment of permitted payment stablecoins on commission-registered entities ,except as provided in clauses 7ii7 and 7iii71 the ,commission shall only have jurisdiction over a cash or spot agreement1 contract1 or transaction in a permitted payment stablecoin that is offered1 offered to enter into1 entered into1 executed1 confirmed the execution of1 solicited1 or accepted-- 7,i7 on or subject to the rules of a registered entity2 or 7,,ii7 by any other entity registered by the ,commission4 7ii7 ,permitted payment stablecoin transaction rules ,this ,act shall only apply to a transaction described in clause 7i7 for the purposes of regulating the offer1 execution1 solicitation1 or acceptance of a cash or spot permitted payment stablecoin transaction on a registered entity or other entity registered by the ,commission with respect to requirements imposed with respect to-- 7,i7 recordkeeping2 7,,ii7 custody2 7,,iii7 segregation2 7,,iv7 reporting2 7,v7 trading procedures and trade processing requirements2 7,,vi7 information sharing2 7,,vii7 conflicts of interest2 7,,viii7 antifraud1 antimanipulation1 or false reporting2 or 7,,ix7 any other transaction level requirement imposed on the registered entity or other entity registered by the ,commission that the ,commission by rule determines would foster the development of fair and orderly cash or spot markets in digital commodities1 be necessary or appropriate in the public interest1 and be consistent with the protection of customers4 7iii7 ,no authority over permitted payment stablecoins ,notwithstanding clause 7ii71 the ,commission shall not make a rule or regulation1 impose a requirement or obligation on a registered entity or other entity registered by the ,commission1 or impose a requirement or obligation on a permitted payment stablecoin issuer1 regarding the operation of a permitted payment stablecoin issuer or a permitted payment stablecoin1 including a requirement or obligation regarding-- 7,i7 design2 7,,ii7 structure2 7,,iii7 issuance2 7,,iv7 redemption2 7,v7 financial resources2 7,,vi7 collateral2 or 7,,vii7 any other aspect of such an operation or such a stablecoin4 4 7d7 ,conforming amendment ,section #b7;a77#a77;,a7 of such ,act 7#g ,u4,s4,c4 #b7;a77#a77;,a77 is amended in the #ast sentence by inserting subsection 7c77#b77;,f7 of this section or before section #ai4 #djb4 ,requiring futures commission merchants to use qualified digital commodity custodians ,section #d;d of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #f;d7 is amended-- 7#a7 in subsection 7a77#b7-- 7,a7 in the #ast proviso1 by striking any bank or trust company and inserting any bank1 trust company1 or qualified digital commodity custodian2 and 7,b7 by inserting 3 ,provided further1 ,that any such property that is a digital commodity shall be held in a qualified digital commodity custodian before the period at the end2 and 7#b7 in subsection 7f77#c77;,a77i71 by striking any bank or trust company and inserting any bank1 trust company1 or qualified digital commodity custodian4 #djc4 ,trading certification and approval for digital commodities ,section #e;c of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #g;a-#b7 is amended-- 7#a7 in subsection 7a71 by striking #e7;d7 and #e;b7c77#b7 and inserting #e7;d71 #e;b7c77#b71 and #e;i7c72 7#b7 in subsection 7b7-- 7,a7 in each of paragraphs 7#a7 and 7#b71 by inserting digital commodity exchange1 before derivatives2 and 7,b7 in paragraph 7#c71 by inserting digital commodity exchange1 before derivatives each place it appears2 7#c7 in subsection 7c7-- 7,a7 in paragraph 7#b71 by inserting or participants before 7in2 7,b7 in paragraph 7#d77;,b71 by striking #a;a7#aj7 and inserting #a;a7#i72 and 7,c7 in paragraph 7#e71 by adding at the end the following3 7,d7 ,special rules for digital commodity contracts ,in certifying any new rule or rule amendment1 or listing any new contract or instrument1 in connection with a contract of sale of a commodity for future delivery1 option1 swap1 or other agreement1 contract1 or transaction1 that is based on or references a digital commodity1 a registered entity shall make or rely on a certification under subsection 7d7 for the digital commodity4 2 and 7#d7 by inserting after subsection 7c7 the following3 7d7 ,certifications for digital commodity trading 7#a7 ,in general ,notwithstanding subsection 7c71 for the purposes of listing or offering a digital commodity for trading in a digital commodity cash or spot market1 an eligible entity shall issue a written certification that the digital commodity meets the requirements of this ,act 7including regulations thereunder74 7#b7 ,contents of the certification 7,a7 ,in general ,in making a written certification under this paragraph1 the eligible entity shall furnish to the ,commission-- 7i7 an analysis of how the digital commodity meets the requirements of section #e;i7c77#c72 7ii7 information about the digital commodity regarding-- 7,i7 its purpose and use2 7,,ii7 its unit creation or release process2 7,,iii7 its consensus mechanism2 7,,iv7 its governance structure2 7,v7 its participation and distribution2 and 7,,vi7 its current and proposed functionality2 and 7iii7 any other information1 analysis1 or documentation the ,commission may1 by rule1 require4 7,b7 ,reliance on prior disclosures ,in making a certification under this subsection1 an eligible entity may rely on the records and disclosures of any relevant person registered with the ,securities and ,exchange ,commission or other ,state or ,federal agency4 7#c7 ,modifications 7,a7 ,in general ,an eligible entity shall modify a certification made under paragraph 7#a7 to-- 7i7 account for significant changes in any information provided to the ,commission under paragraph 7#b77;,a77ii72 or 7ii7 permit or restrict trading in units of a digital commodity asset held by a related person or an affiliated person4 7,b7 ,recertification ,modifications required by this subsection shall be subject to the same disapproval and review process as a new certification under paragraphs 7#d7 and 7#e74 7#d7 ,disapproval 7,a7 ,in general ,the written certification described in paragraph 7#a7 shall become effective unless the ,commission finds that the digital asset does not meet the requirements of this ,act or the rules and regulations thereunder4 7,b7 ,analysis required ,the ,commission shall include1 with any findings referred to in subparagraph 7,a71 a detailed analysis of the factors on which the decision was based4 7,c7 ,public findings ,the ,commission shall make public any disapproval decision1 and any related findings and analysis1 made under this paragraph4 7#e7 ,review 7,a7 ,in general ,unless the ,commission makes a disapproval decision under paragraph 7#d71 the written certification described in paragraph 7#a7 shall become effective1 pursuant to the certification by the eligible entity and notice of the certification to the public 7in a manner determined by the ,commission7 on the date that is-- 7i7 #bj business days after the date the ,commission receives the certification 7or such shorter period as determined by the ,commission by rule or regulation71 in the case of a digital commodity that has not been certified under this section or for which a certification is being modified under paragraph 7#c72 or 7ii7 #b business days after the date the ,commission receives the certification 7or such shorter period as determined by the ,commission by rule or regulation7 for any digital commodity that has been certified under this section4 7,b7 ,extensions ,the time for consideration under subparagraph 7,a7 may be extended through notice to the eligible entity that there are novel or complex issues that require additional time to analyze1 that the explanation by the submitting eligible entity is inadequate1 or of a potential inconsistency with this ,act-- 7i7 once1 for #cj business days1 through written notice to the eligible entity by the ,chairman2 and 7ii7 once1 for an additional #cj business days1 through written notice to the digital commodity exchange from the ,commission that includes a description of any deficiencies with the certification1 including any-- 7,i7 novel or complex issues which require additional time to analyze2 7,,ii7 missing information or inadequate explanations2 or 7,,iii7 potential inconsistencies with this ,act4 7#f7 ,certification required ,notwithstanding any other requirement of this ,act1 a registered entity or other entity registered with the ,commission shall not list for trading1 accept for clearing1 offer to enter into1 enter into1 execute1 confirm the execution of1 or conduct any office or business anywhere in the ,united ,states1 its territories or possessions1 for the purpose of soliciting1 or accepting any order for1 or otherwise dealing in1 any transaction in1 or in connection with1 a digital asset1 unless a certification has been made under this section for the digital asset4 7#g7 ,eligible entity defined ,in this subsection1 the term eligible entity means a registered entity or group of registered entities acting jointly4 4 #djd4 ,registration of digital commodity exchanges ,the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq47 is amended by inserting after section #e;h the following3 #e;i4 ,registration of digital commodity exchanges 7a7 ,in general 7#a7 ,registration 7,a7 ,in general ,a trading facility that offers or seeks to offer a cash or spot market in at least #a digital commodity shall register with the ,commission as a digital commodity exchange4 7,b7 ,application ,a person desiring to register as a digital commodity exchange shall submit to the ,commission an application in such form and containing such information as the ,commission may require for the purpose of making the determinations required for approval4 7,c7 ,exemptions ,a trading facility that offers or seeks to offer a cash or spot market in at least #a digital commodity shall not be required to register under this section if the trading facility-- 7i7 permits no more than a de minimis amount of trading activity2 or 7ii7 serves only customers in a single ,state or territory4 7#b7 ,additional registrations 7,a7 ,with the ,commission 7i7 ,in general ,a registered digital commodity exchange may also register as-- 7,i7 a designated contract market2 or 7,,ii7 a swap execution facility4 7ii7 ,rules ,for an entity with multiple registrations under clause 7i71 the ,commission-- 7,i7 shall prescribe rules to exempt the entity from duplicative1 conflicting1 or unduly burdensome provisions of this ,act and the rules under this ,act1 to the extent such an exemption would foster the development of fair and orderly cash or spot markets in digital commodities1 be necessary or appropriate in the public interest1 and be consistent with the protection of customers2 and 7,,ii7 may1 after an analysis of the risks and benefits1 prescribe rules to provide for portfolio margining1 as may be necessary to protect market participants1 promote fair and equitable trading in digital commodity markets1 and promote responsible economic or financial innovation4 7,b7 ,with the ,securities and ,exchange ,commission ,a registered digital commodity exchange may register with the ,securities and ,exchange ,commission as a digital asset trading system to list or trade contracts of sale for digital assets deemed securities4 7,c7 ,with a registered futures association 7i7 ,in general ,a registered digital commodity exchange shall also be a member of a registered futures association and comply with rules related to such activity1 if the registered digital commodity exchange accepts customer funds required to be segregated under subsection 7d74 7ii7 ,rulemaking required ,the ,commission shall require any registered futures association with a digital commodity exchange as a member to provide such rules as may be necessary to further compliance with subsection 7d71 protect customers1 and promote the public interest4 7,d7 ,registration required ,a person required to be registered as a digital commodity exchange under this section shall register with the ,commission as such regardless of whether the person is registered as such with another ,state or ,federal regulator4 7b7 ,trading 7#a7 ,prohibition on certain trading practices 7,a7 ,section #d;b shall apply to any agreement1 contract1 or transaction in a digital commodity as if the agreement1 contract1 or transaction were a contract of sale of a commodity for future delivery4 7,b7 ,section #d;c shall apply to any agreement1 contract1 or transaction in a digital commodity as if the agreement1 contract1 or transaction were a transaction involving the purchase or sale of a commodity for future delivery4 7#b7 ,prohibition on acting as a counterparty ,a registered digital commodity exchange or any affiliate of such an exchange shall not act as counterparty to any transaction executed on or subject to the rules of the registered digital commodity exchange4 7#c7 ,trading securities ,a registered digital commodity exchange that is also registered with the ,securities and ,exchange ,commission may offer a contract of sale of a digital asset deemed a security4 7#d7 ,rules for certain digital asset sales ,the digital commodity exchange shall have in place such rules as may be necessary to reasonably ensure the orderly sale of any unit of a digital commodity sold by a related person or an affiliated person4 7c7 ,core principles for digital commodity exchanges 7#a7 ,compliance with core principles 7,a7 ,in general ,to be registered1 and maintain registration1 as a digital commodity exchange1 a digital commodity exchange shall comply with-- 7i7 the core principles described in this subsection2 and 7ii7 any requirement that the ,commission may impose by rule or regulation pursuant to section #h;a7#e74 7,b7 ,reasonable discretion of a digital commodity exchange ,unless otherwise determined by the ,commission by rule or regulation1 a digital commodity exchange described in subparagraph 7,a7 shall have reasonable discretion in establishing the manner in which the digital commodity exchange complies with the core principles described in this subsection4 7#b7 ,compliance with rules ,a digital commodity exchange shall-- 7,a7 establish and enforce compliance with any rule of the digital commodity exchange1 including-- 7i7 the terms and conditions of the trades traded or processed on or through the digital commodity exchange2 and 7ii7 any limitation on access to the digital commodity exchange2 7,b7 establish and enforce trading1 trade processing1 and participation rules that will deter abuses and have the capacity to detect1 investigate1 and enforce those rules1 including means-- 7i7 to provide market participants with impartial access to the market2 and 7ii7 to capture information that may be used in establishing whether rule violations have occurred2 and 7,c7 establish rules governing the operation of the exchange1 including rules specifying trading procedures to be used in entering and executing orders traded or posted on the facility4 7#c7 ,listing standards for digital commodities 7,a7 ,in general ,a digital commodity exchange shall permit trading only in a digital commodity that is not readily susceptible to manipulation4 7,b7 ,public information requirements 7i7 ,in general ,a digital commodity exchange shall permit trading only in a digital commodity if the information required in clause 7ii7 is correct1 current1 and available to the public4 7ii7 ,required information ,with respect to a digital commodity and each blockchain system to which the digital commodity relates for which the digital commodity exchange will make the digital commodity available to the customers of the digital commodity exchange1 the information required in this clause is as follows3 7,i7 ,source code ,the source code for any blockchain system to which the digital commodity relates4 7,,ii7 ,transaction history ,a narrative description of the steps necessary to independently access1 search1 and verify the transaction history of any blockchain system to which the digital commodity relates4 7,,iii7 ,digital asset economics ,a narrative description of the purpose of any blockchain system to which the digital asset relates and the operation of any such blockchain system1 including-- 7aa7 information explaining the launch and supply process1 including the number of digital assets to be issued in an initial allocation1 the total number of digital assets to be created1 the release schedule for the digital assets1 and the total number of digital assets then outstanding2 7bb7 information detailing any applicable consensus mechanism or process for validating transactions1 method of generating or mining digital assets1 and any process for burning or destroying digital assets on the blockchain system2 7cc7 an explanation of governance mechanisms for implementing changes to the blockchain system or forming consensus among holders of the digital assets2 and 7dd7 sufficient information for a third party to create a tool for verifying the transaction history of the digital asset4 7,,iv7 ,additional information ,such additional information as the ,commission may1 by rule1 determine to be necessary for a customer to understand the financial and operational risks of a digital commodity1 and to be in the public interest or in furtherance of the requirements of this ,act4 7,c7 ,additional listing considerations ,in addition to the requirements of subparagraphs 7,a7 and 7,b71 a digital commodity exchange shall consider-- 7i7 if a sufficient percentage of the units of the digital asset are units of a digital commodity to permit robust price discovery2 7ii7 if it is reasonably unlikely that the transaction history can be fraudulently altered by any person or group of persons acting collectively2 7iii7 if the operating structure and system of the digital commodity is secure from cybersecurity threats2 7iv7 if the functionality of the digital commodity will protect holders from operational failures2 7v7 if sufficient public information about the operation1 functionality1 and use of the digital commodity is available2 and 7vi7 any other factor which the ,commission has1 by rule1 determined to be in the public interest or in furtherance of the requirements of this ,act4 7,d7 ,restricted digital assets ,a digital commodity exchange shall not permit the trading of a unit of a digital asset that is a restricted digital asset4 7#d7 ,treatment of customer assets ,a digital commodity exchange shall establish standards and procedures that are designed to protect and ensure the safety of customer money1 assets1 and property4 7#e7 ,monitoring of trading and trade processing 7,a7 ,in general ,a digital commodity exchange shall provide a competitive1 open1 and efficient market and mechanism for executing transactions that protects the price discovery process of trading on the exchange4 7,b7 ,protection of markets and market participants ,a digital commodity exchange shall establish and enforce rules-- 7i7 to protect markets and market participants from abusive practices committed by any party1 including abusive practices committed by a party acting as an agent for a participant2 and 7ii7 to promote fair and equitable trading on the exchange4 7,c7 ,trading procedures ,a digital commodity exchange shall-- 7i7 establish and enforce rules or terms and conditions defining1 or specifications detailing-- 7,i7 trading procedures to be used in entering and executing orders traded on or through the facilities of the digital commodity exchange2 and 7,,ii7 procedures for trade processing of digital commodities on or through the facilities of the digital commodity exchange2 and 7ii7 monitor trading in digital commodities to prevent manipulation1 price distortion1 and disruptions of the delivery or cash settlement process through surveillance1 compliance1 and disciplinary practices and procedures1 including methods for conducting real-time monitoring of trading and comprehensive and accurate trade reconstructions4 7#f7 ,ability to obtain information ,a digital commodity exchange shall-- 7,a7 establish and enforce rules that will allow the facility to obtain any necessary information to perform any of the functions described in this section2 7,b7 provide the information to the ,commission on request2 and 7,c7 have the capacity to carry out such international information-sharing agreements as the ,commission may require4 7#g7 ,emergency authority ,a digital commodity exchange shall adopt rules to provide for the exercise of emergency authority1 in consultation or cooperation with the ,commission or a registered entity1 as is necessary and appropriate1 including the authority to facilitate the liquidation or transfer of open positions in any digital commodity or to suspend or curtail trading in a digital commodity4 7#h7 ,timely publication of trading information 7,a7 ,in general ,a digital commodity exchange shall make public timely information on price1 trading volume1 and other trading data on digital commodities to the extent prescribed by the ,commission4 7,b7 ,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 exchange4 7#i7 ,recordkeeping and reporting 7,a7 ,in general ,a digital commodity exchange shall-- 7i7 maintain records of all activities relating to the business of the facility1 including a complete audit trail1 in a form and manner acceptable to the ,commission for a period of #e years2 7ii7 report to the ,commission1 in a form and manner acceptable to the ,commission1 such information as the ,commission determines to be necessary or appropriate for the ,commission to perform the duties of the ,commission under this ,act2 and 7iii7 keep any such records of digital commodities which relate to a security open to inspection and examination by the ,securities and ,exchange ,commission4 7,b7 ,information sharing ,subject to section #h1 and on request1 the ,commission shall share information collected under subparagraph 7,a7 with-- 7i7 the ,board2 7ii7 the ,securities and ,exchange ,commission2 7iii7 each appropriate ,federal banking agency2 7iv7 each appropriate ,state bank supervisor 7within the meaning of section #c of the ,federal ,deposit ,insurance ,act72 7v7 the ,financial ,stability ,oversight ,council2 7vi7 the ,department of ,justice2 and 7vii7 any other person that the ,commission determines to be appropriate1 including-- 7,i7 foreign financial supervisors 7including foreign futures authorities72 7,,ii7 foreign central banks2 and 7,,iii7 foreign ministries4 7,c7 ,confidentiality agreement ,before the ,commission may share information with any entity described in subparagraph 7,b71 the ,commission shall receive a written agreement from the entity stating that the entity shall abide by the confidentiality requirements described in section #h relating to the information on digital commodities that is provided4 7,d7 ,providing information ,a digital commodity exchange shall provide to the ,commission 7including any designee of the ,commission7 information under subparagraph 7,a7 in such form and at such frequency as is required by the ,commission4 7#aj7 ,antitrust considerations ,unless necessary or appropriate to achieve the purposes of this ,act1 a digital commodity exchange shall not-- 7,a7 adopt any rules or take any actions that result in any unreasonable restraint of trade2 or 7,b7 impose any material anticompetitive burden on trading4 7#aa7 ,conflicts of interest ,a registered digital commodity exchange shall implement conflict-of-interest systems and procedures that-- 7,a7 establish structural and institutional safeguards-- 7i7 to minimize conflicts of interest that might potentially bias the judgment or supervision of the digital commodity exchange and contravene the principles of fair and equitable trading and the business conduct standards described in this ,act1 including conflicts arising out of transactions or arrangements with affiliates 7including affiliates engaging in digital commodity activities7 which may include information partitions and the legal separation of different persons or entities involved in digital commodity activities2 and 7ii7 to ensure that the activities of any person within the digital commodity exchange or any affiliated entity relating to research or analysis of the price or market for any digital commodity or acting in a role of providing dealing1 brokering1 or advising activities are separated by appropriate informational partitions within the digital commodity exchange or any affiliated entity from the review1 pressure1 or oversight of persons whose involvement in pricing1 trading1 exchange1 or clearing activities might potentially bias their judgment or supervision and contravene the core principles of open access and the business conduct standards described in this ,act2 and 7,b7 address such other issues as the ,commission determines to be appropriate4 7#ab7 ,financial resources 7,a7 ,in general ,a digital commodity exchange shall have adequate financial1 operational1 and managerial resources1 as determined by the ,commission1 to discharge each responsibility of the digital commodity exchange4 7,b7 ,minimum amount of financial resources ,a digital commodity exchange shall possess financial resources that1 at a minimum1 exceed the total amount that would enable the digital commodity exchange to conduct an orderly wind-down of its activities4 7#ac7 ,disciplinary procedures ,a digital commodity exchange shall establish and enforce disciplinary procedures that authorize the digital commodity exchange to discipline1 suspend1 or expel members or market participants that violate the rules of the digital commodity exchange1 or similar methods for performing the same functions1 including delegation of the functions to third parties4 7#ad7 ,governance fitness standards 7,a7 ,governance arrangements ,a digital commodity exchange shall establish governance arrangements that are transparent to fulfill public interest requirements4 7,b7 ,fitness standards ,a digital commodity exchange shall establish and enforce appropriate fitness standards for-- 7i7 directors2 and 7ii7 any individual or entity with direct access to1 or control of1 customer assets4 7#ae7 ,system safeguards ,a digital commodity exchange shall-- 7,a7 establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational and security risks1 through the development of appropriate controls and procedures1 and automated systems1 that-- 7i7 are reliable and secure2 and 7ii7 have adequate scalable capacity2 7,b7 establish and maintain emergency procedures1 backup facilities1 and a plan for disaster recovery that allow for-- 7i7 the timely recovery and resumption of operations2 and 7ii7 the fulfillment of the responsibilities and obligations of the digital commodity exchange2 and 7,c7 periodically conduct tests to verify that the backup resources of the digital commodity exchange are sufficient to ensure continued-- 7i7 order processing and trade matching2 7ii7 price reporting2 7iii7 market surveillance2 and 7iv7 maintenance of a comprehensive and accurate audit trail4 7d7 ,holding of customer assets 7#a7 ,in general ,a digital commodity exchange shall hold customer money1 assets1 and property in a manner to minimize the risk of loss to the customer or unreasonable delay in the access to the money1 assets1 and property of the customer4 7,a7 ,segregation of funds 7i7 ,in general ,a digital commodity exchange shall treat and deal with all money1 assets1 and property that is received by the digital commodity exchange1 or accrues to a customer as the result of trading in digital commodities1 as belonging to the customer4 7ii7 ,commingling prohibited ,money1 assets1 and property of a customer described in clause 7i7 shall be separately accounted for and shall not be commingled with the funds of the digital commodity exchange or be used to margin1 secure1 or guarantee any trades or accounts of any customer or person other than the person for whom the same are held4 7,b7 ,exceptions 7i7 ,use of funds 7,i7 ,in general ,notwithstanding subparagraph 7,a71 money1 assets1 and property of customers of a digital commodity exchange described in subparagraph 7,a7 may1 for convenience1 be commingled and deposited in the same account or accounts with any bank1 trust company1 derivatives clearing organization1 or qualified digital commodity custodian4 7,,ii7 ,withdrawal ,notwithstanding subparagraph 7,a71 such share of the money1 assets1 and property described in item 7aa7 as in the normal course of business shall be necessary to margin1 guarantee1 secure1 transfer1 adjust1 or settle a contract of sale of a digital commodity with a registered entity may be withdrawn and applied to such purposes1 including the payment of commissions1 brokerage1 interest1 taxes1 storage1 and other charges1 lawfully accruing in connection with the contract of sale of a digital commodity4 7ii7 ,commission action ,notwithstanding subparagraph 7,a71 in accordance with such terms and conditions as the ,commission may prescribe by rule1 regulation1 or order1 any money1 assets1 or property of the customers of a digital commodity exchange described in subparagraph 7,a7 may be commingled and deposited in customer accounts with any other money1 assets1 or property received by the digital commodity exchange and required by the ,commission to be separately accounted for and treated and dealt with as belonging to the customer of the digital commodity exchange4 7#b7 ,permitted investments ,money described in subparagraph 7,a7 may be invested in obligations of the ,united ,states1 in general obligations of any ,state or of any political subdivision of a ,state1 and in obligations fully guaranteed as to principal and interest by the ,united ,states1 or in any other investment that the ,commission may by rule or regulation prescribe1 and such investments shall be made in accordance with such rules and regulations and subject to such conditions as the ,commission may prescribe4 7#c7 ,customer protection during bankruptcy 7,a7 ,customer property ,all assets held on behalf of a customer by a digital commodity exchange1 and all money1 assets1 and property of any customer received by a digital commodity exchange registered under section #e;i of this ,act for trading or custody1 or to facilitate1 margin1 guarantee1 or secure contracts of sale of a digital commodity 7including money1 assets1 or property accruing to the customer as the result of the transactions71 shall be considered customer property for purposes of section #gfa of title #aa1 ,united ,states ,code4 7,b7 ,transactions ,a transaction involving a unit of a digital commodity occurring on or subject to the rules of a digital commodity exchange shall be considered a contract for the purchase or sale of a commodity for future delivery1 on or subject to the rules of1 a contract market or board of trade for the purposes of the definition of a commodity contract in section #gfa of title #aa1 ,united ,states ,code4 7,c7 ,exchanges ,a digital commodity exchange shall be considered a futures commission merchant for purposes of section #gfa of title #aa1 ,united ,states ,code4 7#d7 ,misuse of customer property 7,a7 ,in general ,it shall be unlawful-- 7i7 for any digital commodity exchange that has received any customer money1 assets1 or property for custody to dispose of1 or use any such money1 assets1 or property as belonging to the digital commodity exchange2 or 7ii7 for any other person1 including any depository1 other digital commodity exchange1 or digital commodity custodian that has received any customer money1 assets1 or property for deposit1 to hold1 dispose of1 or use any such money1 assets1 or property1 or property1 as belonging to the depositing digital commodity exchange or any person other than the customers of the digital commodity exchange4 7,b7 ,use further defined ,for purposes of this section1 use of a digital commodity includes utilizing any unit of a digital asset to participate in a blockchain service defined in paragraph 7#e7 or a decentralized governance system associated with the digital commodity or the blockchain system to which the digital commodity relates in any manner other than that expressly directed by the customer from whom the unit of a digital commodity was received4 7#e7 ,participation in blockchain services 7,a7 ,in general ,a customer shall have the right to waive the restrictions in paragraph 7#a7 for any unit of a digital commodity1 by affirmatively electing1 in writing to the digital commodity exchange1 to waive the restrictions4 7,b7 ,use of funds ,customer digital commodities removed from segregation under subparagraph 7,a7 may be pooled and used by the digital commodity exchange or its designee to provide a blockchain service for a blockchain system to which the unit of the digital asset removed from segregation in subparagraph 7,a7 relates4 7,c7 ,limitations ,the ,commission may1 by rule1 establish notice and disclosure requirements1 and any other limitations and rules related to the waiving of any restrictions under this paragraph that are reasonably necessary to protect customers1 including eligible contract participants1 non-eligible contract participants1 or any other class of customers4 7,d7 ,blockchain service defined ,in this subparagraph1 the term blockchain service means any activity relating to validating transactions on a blockchain system1 providing security for a blockchain system1 or other similar activity required for the ongoing operation of a blockchain system4 7e7 ,market access requirements 7#a7 ,in general ,a digital commodity exchange shall require any person who is not an eligible contract participant to access trading on the exchange through a digital commodity broker4 7#b7 ,affiliated commodity brokers ,a registered digital commodity exchange may maintain an affiliated digital commodity broker to facilitate access to the digital commodity exchange1 if-- 7,a7 no other digital commodity brokers are permitted to facilitate access to the exchange2 7,b7 the affiliated digital commodity broker limits its activities only to providing customer access to the digital commodity exchange2 and 7,c7 the affiliated digital commodity broker is not also registered as a digital commodity dealer4 7#c7 ,direct access for eligible contract participants ,nothing in this section shall prohibit a digital commodity exchange in compliance with this section from permitting direct access for eligible contract participants4 7#d7 ,additional requirements 7,a7 ,in general ,the ,commission may1 by rule1 impose any additional requirements related to the operations and activities of the digital commodity exchange and the affiliated digital commodity broker necessary to protect market participants1 promote fair and equitable trading on the digital commodity exchange1 and promote responsible economic or financial innovation4 7,b7 ,delegation of authority ,the ,commission may delegate to a registered futures association such oversight and regulatory requirements as the ,commission determines are necessary to-- 7i7 supervise the activities of the digital commodity exchange and an affiliated digital commodity broker2 and 7ii7 protect market participants1 promote fair and equitable trading on the digital commodity exchange1 and promote responsible economic or financial innovation4 7f7 ,designation of chief compliance officer 7#a7 ,in general ,a digital commodity exchange shall designate an individual to serve as a chief compliance officer4 7#b7 ,duties ,the chief compliance officer shall-- 7,a7 report directly to the board or to the senior officer of the exchange2 7,b7 review compliance with the core principles in this subsection2 7,c7 in consultation with the board of the exchange1 a body performing a function similar to that of a board1 or the senior officer of the exchange1 resolve any conflicts of interest that may arise2 7,d7 establish and administer the policies and procedures required to be established pursuant to this section2 7,e7 ensure compliance with this ,act and the rules and regulations issued under this ,act1 including rules prescribed by the ,commission pursuant to this section2 and 7,f7 establish procedures for the remediation of noncompliance issues found during compliance office reviews1 look backs1 internal or external audit findings1 self-reported errors1 or through validated complaints4 7#c7 ,requirements for procedures ,in establishing procedures under paragraph 7#b77;,f71 the chief compliance officer shall design the procedures to establish the handling1 management response1 remediation1 retesting1 and closing of noncompliance issues4 7#d7 ,annual reports 7,a7 ,in general ,in accordance with rules prescribed by the ,commission1 the chief compliance officer shall annually prepare and sign a report that contains a description of-- 7i7 the compliance of the digital commodity exchange with this ,act2 and 7ii7 the policies and procedures1 including the code of ethics and conflict of interest policies1 of the digital commodity exchange4 7,b7 ,requirements ,the chief compliance officer shall-- 7i7 submit each report described in subparagraph 7,a7 with the appropriate financial report of the digital commodity exchange that is required to be submitted to the ,commission pursuant to this section2 and 7ii7 include in the report a certification that1 under penalty of law1 the report is accurate and complete4 7g7 ,appointment of trustee 7#a7 ,in general ,if a proceeding under section #e;e results in the suspension or revocation of the registration of a digital commodity exchange1 or if a digital commodity exchange withdraws from registration1 the ,commission1 on notice to the digital commodity exchange1 may apply to the appropriate ,united ,states district court where the digital commodity exchange is located for the appointment of a trustee4 7#b7 ,assumption of jurisdiction ,if the ,commission applies for appointment of a trustee under paragraph 7#a7-- 7,a7 the court may take exclusive jurisdiction over the digital commodity exchange and the records and assets of the digital commodity exchange1 wherever located2 and 7,b7 if the court takes jurisdiction under subparagraph 7,a71 the court shall appoint the ,commission1 or a person designated by the ,commission1 as trustee with power to take possession and continue to operate or terminate the operations of the digital commodity exchange in an orderly manner for the protection of customers subject to such terms and conditions as the court may prescribe4 7h7 ,qualified digital commodity custodian ,a digital commodity exchange shall hold in a qualified digital commodity custodian each unit of a digital commodity that is-- 7#a7 the property of a customer of the digital commodity exchange2 7#b7 required to be held by the digital commodity exchange under subsection 7c77#ab7 of this section2 or 7#c7 otherwise so required by the ,commission to reasonably protect customers or promote the public interest4 7i7 ,exemptions ,in order to promote responsible economic or financial innovation and fair competition1 or protect customers1 the ,commission may 7on its own initiative or on application of the registered digital commodity exchange7 exempt1 either unconditionally or on stated terms or conditions or for stated periods and either retroactively or prospectively1 or both1 a registered digital commodity exchange from the requirements of this section1 if the ,commission determines that-- 7#a7 7,a7 the exemption would be consistent with the public interest and the purposes of this ,act2 and 7,b7 the exemption will not have a material adverse effect on the ability of the ,commission or the digital commodity exchange to discharge regulatory or self-regulatory duties under this ,act2 or 7#b7 the digital commodity exchange is subject to comparable1 comprehensive supervision and regulation by the appropriate government authorities in the home country of the exchange4 7j7 ,customer defined ,in this section1 the term customer means any person that maintains an account for the trading of digital commodities directly with a digital commodity exchange 7other than a person that is owned or controlled1 directly or indirectly1 by the digital commodity exchange7 for its own behalf or on behalf of other any person4 7k7 ,federal preemption ,notwithstanding any other provision of law1 the ,commission shall have exclusive jurisdiction over any digital commodity exchange registered under this section4 7l7 ,treatment under the ,bank ,secrecy ,act ,a registered digital commodity exchange shall be treated as a financial institution for purposes of the ,bank ,secrecy ,act4 4 #dje4 ,qualified digital commodity custodians ,the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq471 as amended by the preceding provisions of this ,act1 is amended by inserting after section #e;i the following3 #e;j4 ,qualified digital commodity custodians 7a7 ,in general ,for purposes of this ,act1 a qualified digital commodity custodian is a digital commodity custodian who meets the following conditions3 7#a7 ,supervision ,the digital commodity custodian is subject to adequate supervision and appropriate regulation4 7#b7 ,no prohibition ,the digital commodity custodian is-- 7,a7 subject to the supervision of-- 7i7 an appropriate ,federal banking agency2 7ii7 a ,state bank supervisor 7within the meaning of section #c of the ,federal ,deposit ,insurance ,act72 or 7iii7 an appropriate foreign governmental authority in the home country of the digital commodity custodian2 and 7,b7 not prohibited by the applicable supervisor referred to in subparagraph 7,a7 from engaging in any activity with respect to the holding of digital commodities4 7#c7 ,information sharing 7,a7 ,in general ,the digital commodity custodian agrees to such periodic sharing of information regarding customer accounts the digital commodity custodian holds on behalf of an entity registered with the ,commission1 as the ,commission determines by rule shall be reasonably necessary to effectuate any of the provisions1 or to accomplish any of the purposes1 of this ,act4 7,b7 ,provision of information ,any person that is subject to regulation and examination by a prudential regulator may satisfy any information request described in subparagraph 7,a71 by providing the ,commission with a detailed listing1 in writing1 of the digital commodities of a customer within the custody or use of the person4 7b7 ,adequate supervision and appropriate regulation further defined 7#a7 ,in general ,in subsection 7a71 the terms adequate supervision and appropriate regulation mean such minimum standards for supervision and regulation as are reasonably necessary to protect the digital commodities of customers of an entity registered with the ,commission1 including minimum standards relating to-- 7,a7 accessibility of customer assets2 7,b7 financial resources2 7,c7 risk management requirements2 7,d7 governance arrangements2 7,e7 fitness standards2 7,f7 recordkeeping2 7,g7 information sharing2 and 7,h7 conflicts of interest4 7#b7 ,deemed compliance ,for purposes of subsection 7a71 a bank subject to the supervision of an appropriate ,federal banking agency or a ,state bank supervisor 7within the meaning of section #c of the ,federal ,deposit ,insurance ,act7 is deemed to be subject to adequate supervision and appropriate regulation4 7#c7 ,rulemaking authority ,for purposes of subsection 7a71 the ,commission1 by rule or order1 may further define the terms adequate supervision and appropriate regulation as necessary in the public interest1 as appropriate for the protection of customers1 and consistent with the purposes of this ,act4 7c7 ,authority ,to temporarily suspend standards ,the ,commission may1 by rule or order1 temporarily suspend1 in whole or in part1 any requirement imposed under1 or any standard referred to in1 this section if the ,commission determines that the suspension would be consistent with the public interest and the purposes of this ,act4 4 #djf4 ,registration and regulation of digital commodity brokers and dealers ,the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq471 as amended by the preceding provisions of this ,act1 is amended by inserting after section #dt the following3 #du4 ,registration and regulation of digital commodity brokers and dealers 7a7 ,registration ,it shall be unlawful for any person to act as a digital commodity broker or digital commodity dealer unless the person is registered as such with the ,commission4 7b7 ,requirements 7#a7 ,in general ,a person shall register as a digital commodity broker or digital commodity dealer by filing a registration application with the ,commission4 7#b7 ,contents 7,a7 ,in general ,the application shall be made in such form and manner as is prescribed by the ,commission1 and shall contain such information as the ,commission considers necessary concerning the business in which the applicant is or will be engaged4 7,b7 ,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 require4 7#c7 ,transition ,within #ahj days after the date of the enactment of this section1 the ,commission shall prescribe rules providing for the registration of digital commodity brokers and digital commodity dealers under this section4 7#d7 ,statutory disqualification ,except to the extent otherwise specifically provided by rule1 regulation1 or order1 it shall be unlawful for a digital commodity broker or digital commodity dealer to permit any person who is associated with a digital commodity broker or a digital commodity dealer and who is subject to a statutory disqualification to effect or be involved in effecting a contract for sale of a digital commodity on behalf of the digital commodity broker or the digital commodity dealer1 respectively1 if the digital commodity broker or digital commodity dealer1 respectively1 knew1 or in the exercise of reasonable care should have known1 of the statutory disqualification4 7#e7 ,limitations on certain assets ,a registered digital commodity broker or registered digital commodity dealer shall not offer1 offer to enter into1 enter into1 or facilitate any contract for sale of a digital commodity that has not been certified under section #e;c7d74 7c7 ,additional registrations 7#a7 ,with the ,commission ,any person required to be registered as a digital commodity broker or digital commodity dealer may also be registered as a futures commission merchant1 introducing broker1 or swap dealer4 7#b7 ,with the ,securities and ,exchange ,commission ,any person required to be registered as a digital commodity broker or digital commodity dealer under this section may register with the ,securities and ,exchange ,commission as a digital asset broker or digital asset dealer1 pursuant to section #ae7;b7 of the ,securities ,exchange ,act of #aicd1 as applicable1 if the digital asset broker or digital asset dealer limits its solicitation of orders1 acceptance of orders1 or execution of orders1 or placing of orders on behalf of others involving any contract of sale of digital assets4 7#c7 ,with membership in a registered futures association ,any person required to be registered as a digital commodity broker or digital commodity dealer under this section shall be a member of a registered futures association4 7#d7 ,registration required ,any person required to be registered as a digital commodity broker or digital commodity dealer under this section shall register with the ,commission as such regardless of whether the person is registered as such with another ,state or ,federal regulator4 7d7 ,rulemaking 7#a7 ,in general ,the ,commission shall prescribe such rules applicable to registered digital commodity brokers and registered digital commodity dealers as are appropriate to carry out this section1 including rules in the public interest that limit the activities of digital commodity brokers and digital commodity dealers4 7#b7 ,multiple registrants ,the ,commission shall prescribe rules or regulations permitting1 or may otherwise authorize1 exemptions or additional requirements applicable to persons with multiple registrations under this ,act1 including as futures commission merchants1 introducing brokers1 digital commodity brokers1 digital commodity dealers1 or swap dealers1 as may be in the public interest to reduce compliance costs and promote customer protection4 7e7 ,capital requirements 7#a7 ,in general ,each registered digital commodity broker and registered digital commodity dealer shall meet such minimum capital requirements as the ,commission may prescribe to ensure that the digital commodity broker or digital commodity dealer1 respectively1 is able to-- 7,a7 meet1 and continue to meet1 at all times1 the obligations of such a registrant2 7,b7 conduct an orderly wind-down of the activities of the digital commodity broker or digital commodity dealer1 respectively2 and 7,c7 in the case of a digital commodity dealer1 fulfill the customer obligations of the digital commodity dealer for any margined1 leveraged1 or financed transactions4 7#b7 ,rule of construction ,nothing in this section shall limit1 or be construed to limit1 the authority of the ,securities and ,exchange ,commission to set financial responsibility rules for a broker or dealer registered pursuant to section #ae7;b7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho7b77 7except for section #ae7;b77#aa7 of such ,act 7#ae ,u4,s4,c4 #gho7b77#aa77 in accordance with section #ae7;c77#c7 of such ,act 7#ae ,u4,s4,c4 #gho7c77#c774 7#c7 ,futures commission merchants and other dealers 7,a7 ,in general ,each futures commission merchant1 introducing broker1 digital commodity broker1 digital commodity dealer1 broker1 and dealer shall maintain sufficient capital to comply with the stricter of any applicable capital requirements to which the futures commission merchant1 introducing broker1 digital commodity broker1 digital commodity dealer1 broker1 or dealer1 respectively1 is subject under this ,act or the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq474 7,b7 ,coordination of capital requirements 7i7 ,commission rule ,the ,commission shall1 by rule1 provide appropriate offsets to any applicable capital requirement for a person with multiple registrations as a digital commodity dealer1 digital commodity broker1 futures commission merchant1 or introducing broker4 7ii7 ,joint rule ,the ,commission and the ,securities and ,exchange ,commission shall jointly1 by rule1 provide appropriate offsets to any applicable capital requirement for a person with multiple registrations as a digital commodity dealer1 digital commodity broker1 futures commission merchant1 introducing broker1 broker1 or dealer4 7f7 ,reporting and recordkeeping ,each registered digital commodity broker and registered digital commodity dealer-- 7#a7 shall make such reports as are required by the ,commission by rule or regulation regarding the transactions1 positions1 and financial condition of the digital commodity broker or digital commodity dealer1 respectively2 7#b7 shall keep books and records in such form and manner and for such period as may be prescribed by the ,commission by rule or regulation2 and 7#c7 shall keep the books and records open to inspection and examination by any representative of the ,commission4 7g7 ,daily trading records 7#a7 ,in general ,each registered digital commodity broker and registered digital commodity dealer shall maintain daily trading records of the transactions of the digital commodity broker or digital commodity dealer1 respectively1 and all related records 7including related forward or derivatives transactions7 and recorded communications1 including electronic mail1 instant messages1 and recordings of telephone calls1 for such period as the ,commission may require by rule or regulation4 7#b7 ,information requirements ,the daily trading records shall include such information as the ,commission shall require by rule or regulation4 7#c7 ,counterparty records ,each registered digital commodity broker and registered digital commodity dealer shall maintain daily trading records for each customer or counterparty in a manner and form that is identifiable with each digital commodity transaction4 7#d7 ,audit trail ,each registered digital commodity broker and registered digital commodity dealer shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions4 7h7 ,business conduct standards 7#a7 ,in general ,each registered digital commodity broker and registered digital commodity dealer shall conform with such business conduct standards as the ,commission1 by rule or regulation1 prescribes related to-- 7,a7 fraud1 manipulation1 and other abusive practices involving spot or margined1 leveraged1 or financed digital commodity transactions 7including transactions that are offered but not entered into72 7,b7 diligent supervision of the business of the registered digital commodity broker or digital commodity dealer1 respectively2 and 7,c7 such other matters as the ,commission deems appropriate4 7#b7 ,business conduct requirements ,the ,commission shall1 by rule1 prescribe business conduct requirements which-- 7,a7 require disclosure by a registered digital commodity broker and registered digital commodity dealer to any counterparty to the transaction 7other than an eligible contract participant7 of-- 7i7 information about the material risks and characteristics of the digital commodity2 and 7ii7 information about the material risks and characteristics of the transaction2 7,b7 establish a duty for such a digital commodity broker and such a digital commodity dealer to communicate in a fair and balanced manner based on principles of fair dealing and good faith2 7,c7 establish standards governing digital commodity platform marketing and advertising1 including testimonials and endorsements2 and 7,d7 establish such other standards and requirements as the ,commission may determine are-- 7i7 in the public interest2 7ii7 appropriate for the protection of customers2 or 7iii7 otherwise in furtherance of the purposes of this ,act4 7#c7 ,prohibition on fraudulent practices ,it shall be unlawful for a registered digital commodity broker or registered digital commodity dealer to-- 7,a7 employ any device1 scheme1 or artifice to defraud any customer or counterparty2 7,b7 engage in any transaction1 practice1 or course of business that operates as a fraud or deceit on any customer or counterparty2 or 7,c7 engage in any act1 practice1 or course of business that is fraudulent1 deceptive1 or manipulative4 7i7 ,duties 7#a7 ,risk management procedures ,each registered digital commodity broker and registered digital commodity dealer shall establish robust and professional risk management systems adequate for managing the day-to-day business of the digital commodity broker or digital commodity dealer1 respectively4 7#b7 ,disclosure of general information ,each registered digital commodity broker and registered digital commodity dealer shall disclose to the ,commission information concerning-- 7,a7 the terms and conditions of the transactions of the digital commodity broker or digital commodity dealer1 respectively2 7,b7 the trading operations1 mechanisms1 and practices of the digital commodity broker or digital commodity dealer1 respectively2 7,c7 financial integrity protections relating to the activities of the digital commodity broker or digital commodity dealer1 respectively2 and 7,d7 other information relevant to trading in digital commodities by the digital commodity broker or digital commodity dealer1 respectively4 7#c7 ,ability to obtain information ,each registered digital commodity broker and registered digital commodity dealer shall-- 7,a7 establish and enforce internal systems and procedures to obtain any necessary information to perform any of the functions described in this section2 and 7,b7 provide the information to the ,commission1 on request4 7#d7 ,conflicts of interest ,each registered digital commodity broker and digital commodity dealer shall implement conflict-of-interest systems and procedures that-- 7,a7 establish structural and institutional safeguards-- 7i7 to minimize conflicts of interest that might potentially bias the judgment or supervision of the digital commodity broker or digital commodity dealer1 respectively1 and contravene the principles of fair and equitable trading and the business conduct standards described in this ,act1 including conflicts arising out of transactions or arrangements with affiliates 7including affiliates acting as digital asset issuers1 digital commodity dealers1 or qualified digital commodity custodians71 which may include information partitions and the legal separation of different digital commodity transaction intermediaries2 and 7ii7 to ensure that the activities of any person within the digital commodity broker or digital commodity dealer relating to research or analysis of the price or market for any digital commodity or acting in a role of providing exchange activities or making determinations as to accepting exchange customers are separated by appropriate informational partitions within the digital commodity broker or digital commodity dealer from the review1 pressure1 or oversight of persons whose involvement in pricing1 trading1 exchange1 or clearing activities might potentially bias their judgment or supervision and contravene the core principles of open access and the business conduct standards described in this ,act2 and 7,b7 address such other issues as the ,commission determines to be appropriate4 7#e7 ,antitrust considerations ,unless necessary or appropriate to achieve the purposes of this ,act1 a digital commodity broker or digital commodity dealer shall not-- 7,a7 adopt any process or take any action that results in any unreasonable restraint of trade2 or 7,b7 impose any material anticompetitive burden on trading or clearing4 7j7 ,designation of chief compliance officer 7#a7 ,in general ,each registered digital commodity broker and registered digital commodity dealer shall designate an individual to serve as a chief compliance officer4 7#b7 ,duties ,the chief compliance officer shall-- 7,a7 report directly to the board or to the senior officer of the registered digital commodity broker or registered digital commodity dealer2 7,b7 review the compliance of the registered digital commodity broker or registered digital commodity dealer with respect to the registered digital commodity broker and registered digital commodity dealer requirements described in this section2 7,c7 in consultation with the board of directors1 a body performing a function similar to the board1 or the senior officer of the organization1 resolve any conflicts of interest that may arise2 7,d7 be responsible for administering each policy and procedure that is required to be established pursuant to this section2 7,e7 ensure compliance with this ,act 7including regulations71 including each rule prescribed by the ,commission under this section2 7,f7 establish procedures for the remediation of noncompliance issues identified by the chief compliance officer through any-- 7i7 compliance office review2 7ii7 look-back2 7iii7 internal or external audit finding2 7iv7 self-reported error2 or 7v7 validated complaint2 and 7,g7 establish and follow appropriate procedures for the handling1 management response1 remediation1 retesting1 and closing of noncompliance issues4 7#c7 ,annual reports 7,a7 ,in general ,in accordance with rules prescribed by the ,commission1 the chief compliance officer shall annually prepare and sign a report that contains a description of-- 7i7 the compliance of the registered digital commodity broker or registered digital commodity dealer with respect to this ,act 7including regulations72 and 7ii7 each policy and procedure of the registered digital commodity broker or registered digital commodity dealer of the chief compliance officer 7including the code of ethics and conflict of interest policies74 7,b7 ,requirements ,the chief compliance officer shall ensure that a compliance report under subparagraph 7,a7-- 7i7 accompanies each appropriate financial report of the registered digital commodity broker or registered digital commodity dealer that is required to be furnished to the ,commission pursuant to this section2 and 7ii7 includes a certification that1 under penalty of law1 the compliance report is accurate and complete4 7k7 ,segregation of digital commodities 7#a7 ,holding of customer assets 7,a7 ,in general ,each registered digital commodity broker and registered digital commodity dealer shall hold customer money1 assets1 and property in a manner to minimize the risk of loss to the customer or unreasonable delay in customer access to the money1 assets1 and property of the customer4 7,b7 ,qualified digital commodity custodian ,each registered digital commodity broker and registered digital commodity dealer shall hold in a qualified digital commodity custodian each unit of a digital commodity that is-- 7i7 the property of a customer or counterparty of the digital commodity broker or digital commodity dealer1 respectively2 or 7ii7 otherwise so required by the ,commission to reasonably protect customers or promote the public interest4 7#b7 ,segregation of funds 7,a7 ,in general ,each registered digital commodity broker and registered digital commodity dealer shall treat and deal with all money1 assets1 and property that is received by the registered digital commodity broker or registered digital commodity dealer1 or accrues to a customer as the result of trading in digital commodities1 as belonging to the customer4 7,b7 ,commingling prohibited 7i7 ,in general ,except as provided in clause 7ii71 each registered digital commodity broker and registered digital commodity dealer shall separately account for money1 assets1 and property of a digital commodity customer1 and shall not commingle any such money1 assets1 or property with the funds of the digital commodity broker or digital commodity dealer1 respectively1 or use any such money1 assets1 or property to margin1 secure1 or guarantee any trades or accounts of any customer or person other than the person for whom the money1 assets1 or property are held4 7ii7 ,exceptions 7,i7 ,use of funds 7aa7 ,in general ,a registered digital commodity broker or registered digital commodity dealer may1 for convenience1 commingle and deposit in the same account or accounts with any bank1 trust company1 derivatives clearing organization1 or qualified digital commodity custodian money1 assets1 and property of customers4 7bb7 ,withdrawal ,the share of the money1 assets1 and property described in item 7aa7 as in the normal course of business shall be necessary to margin1 guarantee1 secure1 transfer1 adjust1 or settle a contract for sale of a digital commodity with a registered entity may be withdrawn and applied to such purposes1 including the payment of commissions1 brokerage1 interest1 taxes1 storage1 and other charges1 lawfully accruing in connection with the contract4 7,,ii7 ,commission action ,in accordance with such terms and conditions as the ,commission may prescribe by rule1 regulation1 or order1 any money1 assets1 or property of the customers of a registered digital commodity broker or registered digital commodity dealer may be commingled and deposited in customer accounts with any other money1 assets1 or property received by the digital commodity broker or digital commodity dealer1 respectively1 and required by the ,commission to be separately accounted for and treated and dealt with as belonging to the customer of the digital commodity broker or digital commodity dealer1 respectively4 7#c7 ,permitted investments ,money described in paragraph 7#b7 may be invested in obligations of the ,united ,states1 in general obligations of any ,state or of any political subdivision of a ,state1 in obligations fully guaranteed as to principal and interest by the ,united ,states1 or in any other investment that the ,commission may by rule or regulation allow4 7#d7 ,customer protection during bankruptcy 7,a7 ,customer property ,all money1 assets1 or property described in paragraph 7#b7 shall be considered customer property for purposes of section #gfa of title #aa1 ,united ,states ,code4 7,b7 ,transactions ,a transaction involving a unit of a digital commodity occurring with a digital commodity dealer shall be considered a contract for the purchase or sale of a commodity for future delivery1 on or subject to the rules of1 a contract market or board of trade for purposes of the definition of a commodity contract in section #gfa of title #aa1 ,united ,states ,code4 7,c7 ,brokers and dealers ,a registered digital commodity dealer and a registered digital commodity broker shall be considered a futures commission merchant for purposes of section #gfa of title #aa1 ,united ,states ,code4 7,d7 ,assets removed from segregation ,assets removed from segregation due to a customer election under paragraph 7#e7 shall not be considered customer property for purposes of section #gfa of title #aa1 ,united ,states ,code4 7#e7 ,misuse of customer property 7,a7 ,in general ,it shall be unlawful-- 7i7 for any digital commodity broker or digital commodity dealer that has received any customer money1 assets1 or property for custody to dispose of1 or use any such money1 assets1 or property as belonging to the digital commodity broker or digital commodity dealer1 respectively2 or 7ii7 for any other person1 including any depository1 digital commodity exchange1 other digital commodity broker1 other digital commodity dealer1 or digital commodity custodian that has received any customer money1 assets1 or property for deposit1 to hold1 dispose of1 or use any such money1 assets1 or property1 as belonging to the depositing digital commodity broker or digital commodity dealer or any person other than the customers of the digital commodity broker or digital commodity dealer1 respectively4 7,b7 ,use further defined ,for purposes of this section1 use of a digital commodity includes utilizing any unit of a digital asset to participate in a blockchain service defined in paragraph 7#e7 or a decentralized governance system associated with the digital commodity or the blockchain system to which the digital commodity relates in any manner other than that expressly directed by the customer from whom the unit of a digital commodity was received4 7#f7 ,participation in blockchain services 7,a7 ,in general ,a customer shall have the right to waive the restrictions in paragraph 7#a7 for any unit of a digital commodity1 by affirmatively electing1 in writing to the digital commodity broker or digital commodity dealer1 to waive the restrictions4 7,b7 ,use of funds ,customer digital commodities removed from segregation under subparagraph 7,a7 may be pooled and used by the digital commodity broker or digital commodity dealer1 or one of their designees1 to provide a blockchain service for a blockchain system to which the unit of the digital asset removed from segregation in subparagraph 7,a7 relates4 7,c7 ,limitations ,the ,commission may1 by rule1 establish notice and disclosure requirements1 and any other limitations and rules related to the waiving of any restrictions under this paragraph that are reasonably necessary to protect customers1 including eligible contract participants1 non-eligible contract participants1 or any other class of customers4 7,d7 ,blockchain service defined ,in this subparagraph1 the term blockchain service means any activity relating to validating transactions on a blockchain system1 providing security for a blockchain system1 or other similar activity required for the ongoing operation of a blockchain system4 7l7 ,federal preemption ,notwithstanding any other provision of law1 the ,commission shall have exclusive jurisdiction over any digital commodity broker or digital commodity dealer registered under this section4 7m7 ,exemptions ,in order to promote responsible economic or financial innovation and fair competition1 or protect customers1 the ,commission may 7on its own initiative or on application of the registered digital commodity broker or registered digital commodity dealer7 exempt1 unconditionally or on stated terms or conditions1 or for stated periods1 and retroactively or prospectively1 or both1 a registered digital commodity broker or registered digital commodity dealer from the requirements of this section1 if the ,commission determines that-- 7#a7 7,a7 the exemption would be consistent with the public interest and the purposes of this ,act2 and 7,b7 the exemption will not have a material adverse effect on the ability of the ,commission or the digital commodity broker or digital commodity dealer to discharge regulatory duties under this ,act2 or 7#b7 the registered digital commodity broker or registered digital commodity dealer is subject to comparable1 comprehensive supervision and regulation by the appropriate government authorities in the home country of the registered digital commodity broker or registered digital commodity dealer1 respectively4 7n7 ,treatment under the ,bank ,secrecy ,act ,a registered digital commodity broker and a registered digital commodity dealer shall be treated as a financial institution for purposes of the ,bank ,secrecy ,act4 4 #djg4 ,registration of associated persons 7a7 ,in general ,section #dk of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #fk7 is amended-- 7#a7 by redesignating subsections 7#d7 through 7#f7 as subsections 7#e7 through 7#g71 respectively2 and 7#b7 by inserting after subsection 7#c7 the following3 7#d7 ,it shall be unlawful for any person to act as an associated person of a digital commodity broker or an associated person of a digital commodity dealer unless the person is registered with the ,commission under this ,act and such registration shall not have expired1 been suspended 7and the period of suspension has not expired71 or been revoked4 ,it shall be unlawful for a digital commodity broker or a digital commodity dealer to permit such a person to become or remain associated with the digital commodity broker or digital commodity dealer if the digital commodity broker or digital commodity dealer knew or should have known that the person was not so registered or that the registration had expired1 been suspended 7and the period of suspension has not expired71 or been revoked4 2 and 7#c7 in subsection 7#e7 7as so redesignated71 by striking or of a commodity trading advisor and inserting of a commodity trading advisor1 of a digital commodity broker1 or of a digital commodity dealer4 7b7 ,conforming amendments ,the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a et seq47 is amended by striking section #dk7#f7 each place it appears and inserting section #dk7#g74 #djh4 ,registration of commodity pool operators and commodity trading advisors ,section #dm7#c7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #fm7#c77 is amended-- 7#a7 in subparagraph 7,a7-- 7,a7 by striking any commodity trading advisor and inserting a commodity pool operator or commodity trading advisor2 and 7,b7 by striking acting as a commodity trading advisor and inserting acting as a commodity pool operator or commodity trading advisor2 and 7#b7 in subparagraph 7,c71 by inserting digital commodities1 after physical commodities14 #dji4 ,exclusion for ancillary activities ,the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq471 as amended by the preceding provisions of this ,act1 is amended by inserting after section #du the following3 #dv4 ,exclusion for ancillary activities 7a7 ,in general ,notwithstanding any other provision of this ,act1 a person shall not be subject to this ,act and the regulations promulgated under this ,act solely based on the person undertaking any ancillary activities4 7b7 ,exceptions ,subsection 7a7 shall not be construed to apply to the antimanipulation1 antifraud1 or false reporting enforcement authorities of the ,commission4 7c7 ,ancillary activities defined ,in this section1 the term ancillary activities means any of the following activities related to the operation of a blockchain system3 7#a7 ,compiling network transactions1 operating a pool1 relaying1 searching1 sequencing1 validating1 or acting in a similar capacity with respect to a digital commodity transaction4 7#b7 ,providing computational work1 operating a node1 or procuring1 offering1 or utilizing network bandwidth1 or other similar incidental services with respect to a digital commodity transaction4 7#c7 ,providing a user interface that enables a user to read1 and access data about a blockchain system1 send messages1 or otherwise interact with a blockchain system4 7#d7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing a blockchain system4 7#e7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing software or systems that create or deploy hardware or software1 including wallets or other systems1 facilitating an individual user's own personal ability to keep1 safeguard1 or custody a user's digital commodities or related private keys4 4 #daj4 ,effective date ,unless otherwise provided in this title1 this title and the amendments made by this title shall take effect #cfj days after the date of enactment of this ,act1 except that1 to the extent a provision of this title requires a rulemaking1 the provision shall take effect on the later of-- 7#a7 #cfj days after the date of enactment of this ,act2 or 7#b7 #fj days after the publication in the ,federal ,register of the final rule implementing the provision4 ,v ,innovation and ,technology ,improvements #eja4 ,codification of the ,,sec ,strategic ,hub for ,innovation and ,financial ,technology ,section #d of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;d7 is amended by adding at the end the following3 7l7 ,strategic ,hub for ,innovation and ,financial ,technology 7#a7 ,office established ,there is established within the ,commission the ,strategic ,hub for ,innovation and ,financial ,technology 7referred to in this section as the ,fin,hub74 7#b7 ,purposes ,the purposes of ,fin,hub are as follows3 7,a7 ,to assist in shaping the approach of the ,commission to technological advancements in the financial industry4 7,b7 ,to examine financial technology innovations within capital markets1 market participants1 and investors4 7,c7 ,to coordinate the response of the ,commission to emerging technologies in financial1 regulatory1 and supervisory systems4 7#c7 ,director of ,fin,hub ,fin,hub shall have a ,director who shall be appointed by the ,commission1 from among individuals having experience in both emerging technologies and ,federal securities law and serve at the pleasure of the ,commission4 ,the ,director shall report directly to the ,commission and perform such functions and duties as the ,commission may prescribe4 7#d7 ,responsibilities ,fin,hub shall-- 7,a7 foster responsible technological innovation and fair competition within the ,commission1 including around financial technology1 regulatory technology1 and supervisory technology2 7,b7 provide internal education and training to the ,commission regarding financial technology2 7,c7 advise the ,commission regarding financial technology that would serve the ,commission's oversight functions2 7,d7 analyze technological advancements and the impact of regulatory requirements on financial technology companies2 7,e7 advise the ,commission with respect to rulemakings or other agency or staff action regarding financial technology2 7,f7 provide businesses working in emerging financial technology fields with information on the ,commission1 its rules and regulations2 and 7,g7 encourage firms working in emerging technology fields to engage with the ,commission and obtain feedback from the ,commission on potential regulatory issues4 7#e7 ,access to documents ,the ,commission shall ensure that ,fin,hub has full access to the documents and information of the ,commission and any self-regulatory organization1 as necessary to carry out the functions of ,fin,hub4 7#f7 ,report to ,congress 7,a7 ,in general ,not later than ,october #ca of each year after #bjbd1 ,fin,hub shall submit to the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate and the ,committee on ,financial ,services of the ,house of ,representatives a report on the activities of ,fin,hub during the immediately preceding fiscal year4 7,b7 ,contents ,each report required under subparagraph 7,a7 shall include-- 7i7 the total number of persons that met with ,fin,hub2 7ii7 the total number of market participants ,fin,hub met with1 including the classification of those participants2 7iii7 a summary of general issues discussed during meetings with persons2 7iv7 information on steps ,fin,hub has taken to improve ,commission services1 including responsiveness to the concerns of persons2 7v7 recommendations-- 7,i7 with respect to the regulations of the ,commission and the guidance and orders of the ,commission2 and 7,,ii7 for such legislative actions as the ,fin,hub determines appropriate2 and 7vi7 any other information1 as determined appropriate by the ,director of ,fin,hub4 7,c7 ,confidentiality ,a report under subparagraph 7,a7 may not contain confidential information4 7#g7 ,systems of records 7,a7 ,in general ,the ,commission shall establish a detailed system of records 7as defined under section #eeb;a of title #e1 ,united ,states ,code7 to assist ,fin,hub in communicating with interested parties4 7,b7 ,entities covered by the system ,entities covered by the system required under subparagraph 7,a7 include entities or persons submitting requests or inquiries and other information to ,commission through ,fin,hub4 7,c7 ,security and storage of records ,fin,hub shall store-- 7i7 electronic records-- 7,i7 in the system required under subparagraph 7,a72 or 7,,ii7 on the secure network or other electronic medium1 such as encrypted hard drives or back-up media1 of the ,commission2 and 7ii7 paper records in secure facilities4 7#h7 ,effective date ,this subsection shall take effect on the date that is #ahj days after the date of the enactment of this subsection4 4 #ejb4 ,codification of ,lab,c,f,t,c 7a7 ,in general ,section #ah of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #bb7 is amended by adding at the end the following3 7c7 ,lab,c,f,t,c 7#a7 ,establishment ,there is established in the ,commission ,lab,c,f,t,c4 7#b7 ,purpose ,the purposes of ,lab,c,f,t,c are to-- 7,a7 promote responsible financial technology innovation and fair competition for the benefit of the ,american public2 7,b7 serve as an information platform to inform the ,commission about new financial technology innovation2 and 7,c7 provide outreach to financial technology innovators to discuss their innovations and the regulatory framework established by this ,act and the regulations promulgated thereunder4 7#c7 ,director ,lab,c,f,t,c shall have a ,director1 who shall be appointed by the ,commission and serve at the pleasure of the ,commission4 ,notwithstanding section #b7;a77#f77;,a71 the ,director shall report directly to the ,commission and perform such functions and duties as the ,commission may prescribe4 7#d7 ,duties ,lab,c,f,t,c shall-- 7,a7 advise the ,commission with respect to rulemakings or other agency or staff action regarding financial technology2 7,b7 provide internal education and training to the ,commission regarding financial technology2 7,c7 advise the ,commission regarding financial technology that would bolster the ,commission's oversight functions2 7,d7 engage with academia1 students1 and professionals on financial technology issues1 ideas1 and technology relevant to activities under this ,act2 7,e7 provide persons working in emerging technology fields with information on the ,commission1 its rules and regulations1 and the role of a registered futures association2 and 7,f7 encourage persons working in emerging technology fields to engage with the ,commission and obtain feedback from the ,commission on potential regulatory issues4 7#e7 ,access to documents ,the ,commission shall ensure that ,lab,c,f,t,c has full access to the documents and information of the ,commission and any self-regulatory organization or registered futures association1 as necessary to carry out the functions of ,lab,c,f,t,c4 7#f7 ,report to ,congress 7,a7 ,in general ,not later than ,october #ca of each year after #bjbd1 ,lab,c,f,t,c shall submit to the ,committee on ,agriculture of the ,house of ,representatives and the ,committee on ,agriculture1 ,nutrition1 and ,forestry of the ,senate a report on its activities4 7,b7 ,contents ,each report required under paragraph 7#a7 shall include-- 7i7 the total number of persons that met with ,lab,c,f,t,c2 7ii7 a summary of general issues discussed during meetings with the person2 7iii7 information on steps ,lab,c,f,t,c has taken to improve ,commission services1 including responsiveness to the concerns of persons2 7iv7 recommendations made to the ,commission with respect to the regulations1 guidance1 and orders of the ,commission and such legislative actions as may be appropriate2 and 7v7 any other information determined appropriate by the ,director of ,lab,c,f,t,c4 7,c7 ,confidentiality ,a report under paragraph 7,a7 shall abide by the confidentiality requirements in section #h4 7#g7 ,systems of records 7,a7 ,in general ,the ,commission shall establish a detailed system of records 7as defined in section #eeb;a of title #e1 ,united ,states ,code7 to assist ,lab,c,f,t,c in communicating with interested parties4 7,b7 ,persons covered by the system ,the persons covered by the system of records shall include persons submitting requests or inquiries and other information to the ,commission through ,lab,c,f,t,c4 7,c7 ,security and storage of records ,the system of records shall store records electronically or on paper in secure facilities1 and shall store electronic records on the secure network of the ,commission and on other electronic media1 such as encrypted hard drives and back-up media1 as needed4 4 7b7 ,conforming amendments ,section #b7;a77#f77;,a7 of such ,act 7#g ,u4,s4,c4 #b7;a77#f77;,a77 is amended-- 7#a7 by striking paragraph and in and inserting paragraph12 and 7#b7 by inserting and section #ah7;c77#c71 before the executive4 7c7 ,effective date ,the ,commodity ,futures ,trading ,commission shall implement the amendments made by this section 7including complying with section #ah7;c77#g7 of the ,commodity ,exchange ,act7 within #ahj days after the date of the enactment of this ,act4 #ejc4 ,,cftc-,,sec ,joint ,advisory ,committee on ,digital ,assets 7a7 ,establishment ,the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission 7in this section referred to as the ,commissions7 shall jointly establish the ,joint ,advisory ,committee on ,digital ,assets 7in this section referred to as the ,committee74 7b7 ,purpose 7#a7 ,in general ,the ,committee shall-- 7,a7 provide the ,commissions with advice on the rules1 regulations1 and policies of the ,commissions related to digital assets2 7,b7 further the regulatory harmonization of digital asset policy between the ,commissions2 7,c7 examine and disseminate methods for describing1 measuring1 and quantifying digital asset-- 7i7 decentralization2 7ii7 functionality2 7iii7 information asymmetries2 and 7iv7 transaction and network security2 7,d7 examine the potential for digital assets1 blockchain systems1 and distributed ledger technology to improve efficiency in the operation of financial market infrastructure and better protect financial market participants1 including services and systems which provide-- 7i7 improved customer protections2 7ii7 public availability of information2 7iii7 greater transparency regarding customer funds2 7iv7 reduced transaction cost2 and 7v7 increased access to financial market services2 and 7,e7 discuss the implementation by the ,commissions of this ,act and the amendments made by this ,act4 7#b7 ,review by ,agencies ,each ,commission shall-- 7,a7 review the findings and recommendations of the ,committee2 7,b7 promptly issue a public statement each time the ,committee submits a finding or recommendation to a ,commission-- 7i7 assessing the finding or recommendation of the ,committee2 7ii7 disclosing the action or decision not to take action made by the ,commission in response to a finding or recommendation2 and 7iii7 explaining the reasons for the action or decision not to take action2 and 7,c7 each time the ,committee submits a finding or recommendation to a ,commission1 provide the ,committee with a formal response to the finding or recommendation not later than #c months after the date of the submission of the finding or recommendation4 7c7 ,membership and leadership 7#a7 ,non-federal members 7,a7 ,in general ,the ,commissions shall appoint at least #bj nongovernmental stakeholders with a wide diversity of opinion and who represent a broad spectrum of interests representing the digital asset ecosystem1 equally divided between the ,commissions1 to serve as members of the ,committee4 ,the appointees shall include-- 7i7 digital asset issuers2 7ii7 persons registered with the ,commissions and engaged in digital asset related activities2 7iii7 individuals engaged in academic research relating to digital assets2 and 7iv7 digital asset users4 7,b7 ,members not ,commission employees ,members appointed under subparagraph 7,a7 shall not be deemed to be employees or agents of a ,commission solely by reason of membership on the ,committee4 7#b7 ,co-designated ,federal officers 7,a7 ,number2 appointment ,there shall be #b co-designated ,federal officers of the ,committee1 as follows3 7i7 ,the ,director of ,lab,c,f,t,c of the ,commodity ,futures ,trading ,commission4 7ii7 ,the ,director of the ,strategic ,hub for ,innovation and ,financial ,technology of the ,securities and ,exchange ,commission4 7,b7 ,duties ,the duties required by chapter #aj of title #e1 ,united ,states ,code1 to be carried out by a designated ,federal officer with respect to the ,committee shall be shared by the co-designated ,federal officers of the ,committee4 7#c7 ,committee leadership 7,a7 ,composition2 election ,the ,committee members shall elect1 from among the ,committee members-- 7i7 a chair2 7ii7 a vice chair2 7iii7 a secretary2 and 7iv7 an assistant secretary4 7,b7 ,term of office ,each member elected under subparagraph 7,a7 in a #b-year period referred to in section #ajac7;b77#b7 of title #e1 ,united ,states ,code1 shall serve in the capacity for which the member was so elected1 until the end of the #b-year period4 7d7 ,no compensation for ,committee members 7#a7 ,non-,federal members ,all ,committee members appointed under subsection 7c77#a7 shall-- 7,a7 serve without compensation2 and 7,b7 while away from the home or regular place of business of the member in the performance of services for the ,committee1 be allowed travel expenses1 including per diem in lieu of subsistence1 in the same manner as persons employed intermittently in the ,government service are allowed expenses under section #egjc7;b7 of title #e1 ,united ,states ,code4 7#b7 ,no compensation for co-designated ,federal officers ,the co-designated ,federal officers shall serve without compensation in addition to that received for their services as officers or employees of the ,united ,states4 7e7 ,frequency of meetings ,the ,committee shall meet-- 7#a7 not less frequently than twice annually2 and 7#b7 at such other times as either ,commission may request4 7f7 ,duration ,section #ajac7;a77#b7 of title #e1 ,united ,states ,code1 shall not apply to the ,committee4 7g7 ,time limits ,the ,commissions shall-- 7#a7 adopt a joint charter for the ,committee within #ij days after the date of the enactment of this section2 7#b7 appoint members to the ,committee within #abj days after such date of enactment2 and 7#c7 hold the initial meeting of the ,committee within #ahj days after such date of enactment4 7h7 ,funding ,the ,commissions shall jointly fund the ,committee4 #ejd4 ,study on decentralized finance 7a7 ,in general ,the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly carry out a study on decentralized finance that analyzes-- 7#a7 the nature1 size1 role1 and use of decentralized finance blockchain protocols2 7#b7 the operation of blockchain protocols that comprise decentralized finance2 7#c7 the interoperability of blockchain protocols and blockchain systems2 7#d7 the interoperability of blockchain protocols and software-based systems1 including websites and wallets2 7#e7 the decentralized governance systems through which blockchain protocols may be developed1 published1 constituted1 administered1 maintained1 or otherwise distributed1 including-- 7,a7 whether the systems enhance or detract from-- 7i7 the decentralization of the decentralized finance2 and 7ii7 the inherent risks of the decentralized governance system2 and 7,b7 any procedures or requirements that would mitigate the risks identified in subparagraph 7,a77ii72 7#f7 the benefits of decentralized finance1 including-- 7,a7 operational resilience and interoperability of blockchain-based systems2 7,b7 market competition and innovation2 7,c7 transaction efficiency2 7,d7 transparency and traceability of transactions2 and 7,e7 disintermediation2 7#g7 the risks of decentralized finance1 including-- 7,a7 pseudonymity of users and transactions2 7,b7 disintermediation2 and 7,c7 cybersecurity vulnerabilities2 7#h7 the extent to which decentralized finance has integrated with the traditional financial markets and any potential risks to stability of the markets2 7#i7 how the levels of illicit activity in decentralized finance compare with the levels of illicit activity in traditional financial markets2 7#aj7 how decentralized finance may increase the accessibility of cross-border transactions2 and 7#aa7 the feasibility of embedding self-executing compliance and risk controls into decentralized finance4 7b7 ,report ,not later than #a year after the date of enactment of this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly submit to the relevant congressional committees a report that includes the results of the study required by subsection 7a74 7c7 ,,gao ,study ,the ,comptroller ,general of the ,united ,states shall-- 7#a7 carry out a study on decentralized finance that analyzes the information described under paragraphs 7#a7 through 7#aa7 of subsection 7a72 and 7#b7 not later than #a year after the date of enactment of this ,act1 submit to the relevant congressional committees a report that includes the results of the study required by paragraph 7#a74 7d7 ,definitions ,in this section3 7#a7 ,decentralized finance 7,a7 ,in general ,the term decentralized finance means blockchain protocols that allow users to engage in financial transactions in a self-directed manner so that a third-party intermediary does not effectuate the transactions or take custody of digital assets of a user during any part of the transactions4 7,b7 ,relationship to ancillary activities ,the term decentralized finance shall not be interpreted to limit or exclude any activity from the meaning of ancillary activities1 as defined in section #ae;,h7c7 of the ,securities ,exchange ,act of #aicd or section #dv7c7 of the ,commodity ,exchange ,act4 7#b7 ,relevant congressional committees ,the term relevant congressional committees means-- 7,a7 the ,committees on ,financial ,services and ,agriculture of the ,house of ,representatives2 and 7,b7 the ,committees on ,banking1 ,housing1 and ,urban ,affairs and ,agriculture1 ,nutrition1 and ,forestry of the ,senate4 #eje4 ,study on non-fungible digital assets 7a7 ,the ,comptroller ,general of the ,united ,states shall carry out a study of non-fungible digital assets that analyzes-- 7#a7 the nature1 size1 role1 purpose1 and use of non-fungible digital assets2 7#b7 the similarities and differences between non-fungible digital assets and other digital assets1 including digital commodities and payment stablecoins1 and how the markets for those digital assets intersect with each other2 7#c7 how non-fungible digital assets are minted by issuers and subsequently administered to purchasers2 7#d7 how non-fungible digital assets are stored after being purchased by a consumer2 7#e7 the interoperability of non-fungible digital assets between different blockchain systems2 7#f7 the scalability of different non-fungible digital asset marketplaces2 7#g7 the benefits of non-fungible digital assets1 including verifiable digital ownership2 7#h7 the risks of non-fungible tokens1 including-- 7,a7 intellectual property rights2 7,b7 cybersecurity risks2 and 7,c7 market risks2 7#i7 whether and how non-fungible digital assets have integrated with traditional marketplaces1 including those for music1 real estate1 gaming1 events1 and travel2 7#aj7 whether non-fungible tokens can be used to facilitate commerce or other activities through the representation of documents1 identification1 contracts1 licenses1 and other commercial1 government1 or personal records2 7#aa7 any potential risks to traditional markets from such integration2 and 7#ab7 the levels and types of illicit activity in non-fungible digital asset markets4 7b7 ,report ,not later than #a year after the date of the enactment of this ,act1 the ,secretary of ,commerce1 shall make publicly available a report that includes the results of the study required by subsection 7a74 #ejf4 ,study on expanding financial literacy amongst digital asset holders 7a7 ,in general ,the ,commodity ,futures ,trading ,commission with the ,securities and ,exchange ,commission shall jointly conduct a study to identify-- 7#a7 the existing level of financial literacy among retail digital asset holders1 including subgroups of investors identified by the ,commodity ,futures ,trading ,commission with the ,securities and ,exchange ,commission2 7#b7 methods to improve the timing1 content1 and format of financial literacy materials regarding digital assets provided by the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission2 7#c7 methods to improve coordination between the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission with other agencies1 including the ,financial ,literacy and ,education ,commission as well as nonprofit organizations and ,state and local jurisdictions1 to better disseminate financial literacy materials2 7#d7 the efficacy of current financial literacy efforts with a focus on rural communities and communities with majority minority populations2 7#e7 the most useful and understandable relevant information that retail digital asset holders need to make informed financial decisions before engaging with or purchasing a digital asset or service that is typically sold to retail investors of digital assets2 7#f7 the most effective public-private partnerships in providing financial literacy regarding digital assets to consumers2 7#g7 the most relevant metrics to measure successful improvement of the financial literacy of an individual after engaging with financial literacy efforts2 and 7#h7 in consultation with the ,financial ,literacy and ,education ,commission1 a strategy 7including to the extent practicable1 measurable goals and objectives7 to increase financial literacy of investors regarding digital assets4 7b7 ,report ,not later than #a year after the date of the enactment of this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly submit a written report on the study required by subsection 7a7 to the ,committees on ,financial ,services and on ,agriculture of the ,house of ,representatives and the ,committees on ,banking1 ,housing1 and ,urban ,affairs and on ,agriculture1 ,nutrition1 and ,forestry of the ,senate4 #ejg4 ,study on financial market infrastructure improvements 7a7 ,in general ,the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly conduct a study to assess whether additional guidance or rules are necessary to facilitate the development of tokenized securities and derivatives products1 and to the extent such guidance or rules would foster the development of fair and orderly financial markets1 be necessary or appropriate in the public interest1 and be consistent with the protection of investors and customers4 7b7 ,report 7#a7 ,time limit ,not later than #a year after the date of enactment of this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly submit to the relevant congressional committees a report that includes the results of the study required by subsection 7a74 7#b7 ,relevant congressional committees defined ,in this section1 the term relevant congressional committees means-- 7,a7 the ,committees on ,financial ,services and on ,agriculture of the ,house of ,representatives2 and 7,b7 the ,committees on ,banking1 ,housing1 and ,urban ,affairs and on ,agriculture1 ,nutrition1 and ,forestry of the ,senate4 ,,vi ,miscellaneous #fja4 ,findings2 sense of ,congress 7a7 ,findings ,congress finds the following3 7#a7 ,entrepreneurs and innovators are building and deploying this next generation of the internet4 7#b7 ,digital asset networks represent a new way for people to join together and cooperate with one another to undertake certain activities4 7#c7 ,digital assets have the potential to be the foundational building blocks of these networks1 aligning the economic incentive for individuals to cooperate with one another to achieve a common purpose4 7#d7 ,the digital asset ecosystem has the potential to grow our economy and improve everyday lives of ,americans by facilitating collaboration through the use of technology to manage activities1 allocate resources1 and facilitate decision making4 7#e7 ,blockchain networks and the digital assets they empower provide creator control1 enhance transparency1 reduce transaction costs1 and increase efficiency if proper protections are put in place for investors1 consumers1 our financial system1 and our national security4 7#f7 ,blockchain technology facilitates new types of network participation which businesses in the ,united ,states may utilize in innovative ways4 7#g7 ,other digital asset companies are setting up their operations outside of the ,united ,states1 where countries are establishing frameworks to embrace the potential of blockchain technology and digital assets and provide safeguards for consumers4 7#h7 ,digital assets1 despite the purported anonymity1 provide law enforcement with an exceptional tracing tool to identify illicit activity and bring criminals to justice4 7#i7 ,the ,financial ,services ,committee of the ,house of ,representatives has held multiple hearings highlighting various risks that digital assets can pose to the financial markets1 consumers1 and investors that must be addressed as we seek to harness the benefits of these innovations4 7b7 ,sense of ,congress ,it is the sense of ,congress that-- 7#a7 the ,united ,states should seek to prioritize understanding the potential opportunities of the next generation of the internet2 7#b7 the ,united ,states should seek to foster advances in technology that have robust evidence indicating they can improve our financial system and create more fair and equitable access to financial services for everyday ,americans while protecting our financial system1 investors1 and consumers2 7#c7 the ,united ,states must support the responsible development of digital assets and the underlying technology in the ,united ,states or risk the shifting of the development of such assets and technology outside of the ,united ,states1 to less regulated countries2 7#d7 ,congress should consult with public and private sector stakeholders to understand how to enact a functional framework tailored to the specific risks and unique benefits of different digital asset-related activities1 distributed ledger technology1 distributed networks1 and decentralized systems2 and 7#e7 enact a functional framework tailored to the specific risks of different digital asset-related activities and unique benefits of distributed ledger technology1 distributed networks1 and decentralized systems2 and 7#f7 consumers and market participants will benefit from a framework for digital assets consistent with longstanding investor protections in securities and commodities markets1 yet tailored to the unique benefits and risks of the digital asset ecosystem4 ,may #f1 #bjbd ,reported from the ,committee on ,agriculture with an amendment ,may #f1 #bjbd ,reported from the ,committee on ,financial ,services with an amendment2 committed to the ,committee of the ,whole ,house on the ,state of the ,union and ordered to be printed