,,ib ,union ,calendar ,no4 #acd #aaith ,,congress #ast ,session ,h4 ,r4 #cfcc ,report ,no4 #aai-afh1 ,parts ,i and ,,ii ,,in ,,the ,,house ,,of ,,representatives ,may #bi1 #bjbe ,mr4 ,hill of ,arkansas 7for himself1 ,mr4 ,thompson of ,pennsylvania1 ,ms4 ,craig1 ,mr4 ,emmer1 ,mr4 ,johnson of ,south ,dakota1 ,mr4 ,davis of ,north ,carolina1 ,mr4 ,steil1 ,mr4 ,torres of ,new ,york1 and ,mr4 ,davidson7 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 ,june #bc1 #bjbe ,additional sponsors3 ,mr4 ,gottheimer1 ,mr4 ,huizenga1 ,mr4 ,nunn of ,iowa1 ,mr4 ,lawler1 ,mr4 ,meuser1 ,mr4 ,carter of ,georgia1 ,mr4 ,moore of ,west ,virginia1 ,mr4 ,begich1 ,ms4 ,mc,donald ,rivet1 ,mr4 ,thanedar1 ,mr4 ,messmer1 ,mr4 ,bresnahan1 and ,ms4 ,stevens ,june #bc1 #bjbe ,reported from the ,committee on ,agriculture with an amendment ,strike out all after the enacting clause and insert the part printed in italic ,june #bc1 #bjbe ,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 ,may #bi1 #bjbe ,a ,,bill ,to provide for a system of regulation of the offer and sale of digital commodities by the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission1 and for other purposes4 #a4 ,short title2 table of contents 7a7 ,short title ,this ,act may be cited as the ,digital ,asset ,market ,clarity ,act of #bjbe or the ,,clarity ,act of #bjbe4 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 ,provisional registration ,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 ,rulemakings4 ,sec4 #ajf4 ,registration for digital commodity exchanges1 brokers1 and dealers2 provisional status4 ,sec4 #ajg4 ,commodity ,exchange ,act and securities laws savings provisions4 ,sec4 #ajh4 ,administrative requirements4 ,sec4 #aji4 ,international cooperation4 ,sec4 #aaj4 ,application of the ,bank ,secrecy ,act4 ,sec4 #aaa4 ,implementation4 ,title ,,ii--,offers and ,sales of ,digital ,commodities ,sec4 #bja4 ,treatment of investment contract assets4 ,sec4 #bjb4 ,exempted primary transactions in digital commodities4 ,sec4 #bjc4 ,treatment of secondary transactions in digital commodities that originally involved investment contracts4 ,sec4 #bjd4 ,requirements for offers and sales of digital commodities by digital commodity related persons and digital commodity affiliated persons4 ,sec4 #bje4 ,mature blockchain system requirements4 ,sec4 #bjf4 ,effective date4 ,title ,,iii--,registration for ,intermediaries at the ,securities and ,exchange ,commission ,sec4 #cja4 ,treatment of digital commodities and permitted payment stablecoins4 ,sec4 #cjb4 ,anti-fraud authority over permitted payment stablecoins and certain digital commodity transactions4 ,sec4 #cjc4 ,eligibility of alternative trading systems4 ,sec4 #cjd4 ,operation of alternative trading systems4 ,sec4 #cje4 ,modernization of recordkeeping requirements4 ,sec4 #cjf4 ,exemptive authority4 ,sec4 #cjg4 ,additional registrations with the ,commodity ,futures ,trading ,commission4 ,sec4 #cjh4 ,exempting digital commodities from ,state securities laws4 ,sec4 #cji4 ,exclusion for decentralized finance activities4 ,sec4 #caj4 ,treatment of custody activities by banking institutions4 ,sec4 #caa4 ,digital commodity activities that are financial in nature4 ,sec4 #cab4 ,effective date2 administration4 ,sec4 #cac4 ,studies on foreign adversary participation4 ,title ,,iv--,registration for ,digital ,commodity ,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 asset custodians4 ,sec4 #djc4 ,trading certification and approval for digital commodities4 ,sec4 #djd4 ,registration of digital commodity exchanges4 ,sec4 #dje4 ,qualified digital asset 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 decentralized finance activities4 ,sec4 #daj4 ,resources for implementation and enforcement4 ,sec4 #daa4 ,digital commodity activities by ,,sec-registered entities4 ,sec4 #dab4 ,requirements related to control persons4 ,sec4 #dac4 ,other tradable assets4 ,sec4 #dad4 ,effective date4 ,sec4 #dae4 ,sense of ,congress4 ,title ,v--,innovation and ,technology ,improvements ,sec4 #eja4 ,findings2 sense of ,congress4 ,sec4 #ejb4 ,modernization of the ,securities and ,exchange ,commission mission4 ,sec4 #ejc4 ,strategic ,hub for ,innovation and ,financial ,technology4 ,sec4 #ejd4 ,codification of ,lab,c,f,t,c4 ,sec4 #eje4 ,study on decentralized finance4 ,sec4 #ejf4 ,study on non-fungible tokens4 ,sec4 #ejg4 ,study on expanding financial literacy amongst digital commodity holders4 ,sec4 #ejh4 ,study on financial market infrastructure improvements4 ,sec4 #eji4 ,study on illicit use of digital assets4 ,sec4 #eaj4 ,conflict of interest rulemaking4 ,i ,definitions2 ,rulemaking2 ,provisional registration #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 ,blockchain ,the term blockchain means-- 7,a7 any technology-- 7i7 where data is-- 7,i7 shared across a network to create a distributed ledger of independently verifiable transactions or information among network participants2 7,,ii7 linked using cryptography to maintain the integrity of the distributed ledger and to execute other functions2 and 7,,iii7 propagated among network participants to reach consensus on the state of the distributed ledger and any other functions2 and 7ii7 composed of source code that is publicly available2 and 7,b7 any similar technology to the technology described in subparagraph 7,a74 7#ba7 ,blockchain application ,the term blockchain application means any executable software deployed to a blockchain composed of source code that is publicly available1 including a smart contract or any network of smart contracts1 or other similar technology4 7#bb7 ,blockchain protocol ,the term #8blockchain protocol' means the freely and publicly available source code of a blockchain that is executed by the network participants of a blockchain to facilitate its functioning1 or other similar technology4 7#bc7 ,blockchain system ,the term blockchain system means any blockchain1 together with its blockchain protocol or any blockchain application or network of blockchain applications4 7#bd7 ,decentralized governance system 7,a7 ,in general ,the term decentralized governance system means1 with respect to a blockchain system1 any transparent1 rules-based system permitting persons to form consensus or reach agreement in the development1 provision1 publication1 management1 or administration of such blockchain system1 where participation is not limited to1 or under the effective control of1 any person or group of persons under common control4 7,b7 ,relationship of persons to decentralized governance systems ,with respect to a decentralized governance system1 the decentralized governance system and any persons participating in the decentralized governance system shall be treated as separate persons unless such persons are under common control4 7,c7 ,legal entities for decentralized governance systems ,the term decentralized governance system shall include a legal entity used to implement the rules-based system described in subparagraph 7,a71 provided that the organizing and governing laws of such legal entity do not create or require centralized and hierarchical management of such legal entity4 ,for the purposes of this subparagraph1 the delegation of ministerial or administrative authority at the direction of the participants in a decentralized governance system shall not be construed to be centralized and hierarchical management4 7#be7 ,digital asset ,the term digital asset means any digital representation of value which is recorded on a cryptographically-secured distributed ledger or other similar technology4 7#bf7 ,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#bg7 ,digital commodity affiliated person ,the term digital commodity affiliated person means a person 7including a digital commodity related person7 that1 with respect to any digital commodity-- 7,a7 acquires #e percent or more of the total outstanding units of such digital commodity from a digital commodity issuer2 7,b7 is a founder of the digital commodity issuer2 or 7,c7 is an executive director1 director1 trustee1 or general partner of the digital commodity issuer or held such role at any point in the previous #ab-month period4 7#bh7 ,digital commodity issuer ,with respect to a digital commodity1 the term digital commodity issuer means any person that-- 7,a7 proposes1 issues1 or causes to be issued a unit of such digital commodity to a person2 or 7,b7 offers or sells a right to a future issuance of a unit of such digital commodity to a person4 7#bi7 ,digital commodity related person 7,a7 ,in general ,with respect to a digital commodity issuer1 the term digital commodity related person means-- 7i7 a person that is or was in the previous #f-month period a promoter1 senior employee1 advisory board member1 consultant1 advisor1 or person serving in a similar capacity2 and 7ii7 a person that acquires #a percent or more of the total outstanding units of such digital commodity from a digital commodity issuer4 7,b7 ,senior employee defined ,in this paragraph and with respect to a digital commodity issuer1 the term senior employee means any employee materially involved in the management or planning of the digital commodity issuer or the development of the blockchain system to which the digital commodity relates4 7#cj7 ,end user distribution ,the term end user distribution means a distribution of a unit of a digital commodity 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 broad and equitable 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 commodity or any blockchain system to which the digital commodity 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 commodity1 in proportion to the total units of such other digital commodity as are held by each person4 7#ca7 ,mature blockchain system ,the term #8mature blockchain system' means a blockchain system1 together with its related digital commodity1 that is not controlled by any person or group of persons under common control4 7#cb7 ,permitted payment stablecoin 7,a7 ,in general ,the term permitted payment stablecoin means a digital asset-- 7i7 that is or is designed to be used as a means of payment or settlement2 7ii7 that is denominated in a national currency2 7iii7 the issuer of which is subject to the regulatory and supervisory authority of a ,state or ,federal agency2 7iv7 the issuer of which-- 7,i7 is obligated to convert1 redeem1 or repurchase for a fixed amount of monetary value2 or 7,,ii7 represents that the digital asset will maintain or creates the reasonable expectation that the digital asset will maintain a stable value relative to the value of a fixed amount of monetary value2 and 7v7 that is not-- 7,i7 a national currency2 7,,ii7 a security issued by-- 7aa7 an investment company registered under section #h7;a7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#h7;a772 or 7bb7 a person that would be an investment company under the ,investment ,company ,act of #aidj but for paragraphs 7#a7 and 7#g7 of section #c7;c7 of that ,act 7#ae ,u4,s4,c4 #hj;a-#c7;c772 7,,iii7 a deposit 7as defined under section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac771 regardless of the technology used to record such deposit2 or 7,,iv7 an account 7as defined in section #aja of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageb771 regardless of the technology used to record such account4 7,b7 ,monetary value defined ,the term monetary value-- 7i7 means-- 7,i7 a national currency2 7,,ii7 a deposit 7as defined in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac77 that is denominated in a national currency2 or 7,,iii7 an account 7as defined in section #aja of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageb772 and 7ii7 does not include any agricultural or other physical commodity 7as defined in section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a774 7#cc7 ,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 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#a7 by redesignating the second paragraph 7#hj7 7relating to funding portals7 as paragraph 7#ha72 and 7#b7 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 ,additional digital commodity-related terms 7,a7 ,securities ,act of #aicc ,the terms blockchain system1 decentralized governance system1 digital asset1 digital commodity affiliated person1 digital commodity issuer1 digital commodity related person1 end user distribution1 mature blockchain system1 and permitted payment stablecoin1 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 digital commodity exchange1 decentralized finance messaging system1 and decentralized finance trading protocol 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 7a7 ,in general ,section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a7 is amended-- 7#a7 in paragraph 7#aj7-- 7,a7 in subparagraph 7,a7-- 7i7 by redesignating clauses 7iii7 and 7iv7 as clauses 7iv7 and 7v71 respectively2 and 7ii7 by inserting after clause 7ii7 the following3 7iii7 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 ,for purposes of this paragraph1 the term trading in commodity interests shall not include transacting in digital commodities for the purpose of-- 7i7 acting as a digital commodity custodian2 7ii7 establishing1 maintaining1 or managing inventory or payment instruments for commercial purposes2 or 7iii7 maintaining or supporting the operation of1 or validating transactions on1 a blockchain system4 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 ,for purposes of this paragraph1 the term trading in commodity interests shall not include transacting in digital commodities for the purpose of-- 7i7 acting as a digital commodity custodian2 7ii7 establishing1 maintaining1 or managing inventory or payment instruments for commercial purposes2 or 7iii7 maintaining or supporting the operation of1 or validating transactions on1 a blockchain system4 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 by redesignating paragraphs 7#af7 through 7#ea7 as paragraphs 7#ag7 through 7#eb71 respectively1 and inserting after paragraph 7#ae7 the following3 7#af7 ,terms related to digital commodities 7,a7 ,associated person of a digital commodity broker 7i7 ,in general ,except as provided in clause 7ii71 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-- 7,i7 the solicitation or acceptance of an order for the purchase or sale of a digital commodity2 or 7,,ii7 the supervision of any person engaged in the solicitation or acceptance of an order for the purchase or sale of a digital commodity4 7ii7 ,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,b7 ,associated person of a digital commodity dealer 7i7 ,in general ,except as provided in clause 7ii71 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-- 7,i7 the solicitation or acceptance of a contract for the purchase or sale of a digital commodity2 or 7,,ii7 the supervision of any person engaged in the solicitation or acceptance of a contract for the purchase or sale of a digital commodity4 7ii7 ,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,c7 ,bank ,secrecy ,act ,the term ,bank ,secrecy ,act means-- 7i7 section #ba of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahbi;b72 7ii7 chapter #b of title ,i of ,public ,law #ia-ejh 7#ab ,u4,s4,c4 #aiea et seq472 and 7iii7 subchapter ,,ii of chapter #ec of title #ca1 ,united ,states ,code4 7,d7 ,decentralized finance messaging system 7i7 ,in general ,the term decentralized finance messaging system means a software application that provides a user with the ability to create or submit an instruction1 communication1 or message to a decentralized finance trading protocol for the purpose of executing a transaction by the user4 7ii7 ,additional requirements ,the term decentralized finance messaging system does not include any system that provides any person other than the user with control over-- 7,i7 the funds of the user2 or 7,,ii7 the execution of the transaction of the user4 7,e7 ,decentralized finance trading protocol 7i7 ,in general ,the term decentralized finance trading protocol means a blockchain system through which multiple participants can execute a financial transaction-- 7,i7 in accordance with an automated rule or algorithm that is predetermined and non-discretionary2 and 7,,ii7 without reliance on any other person to maintain control of the digital assets of the user during any part of the financial transaction4 7ii7 ,exclusions 7,i7 ,in general ,the term decentralized finance trading protocol does not include a blockchain system if-- 7aa7 a person or group of persons under common control or acting pursuant to an agreement to act in concert has the authority1 directly or indirectly1 through any contract1 arrangement1 understanding1 relationship1 or otherwise1 to control or materially alter the functionality1 operation1 or rules of consensus or agreement of the blockchain system2 or 7bb7 the blockchain system does not operate1 execute1 and enforce its operations and transactions based solely on pre-established1 transparent rules encoded directly within the source code of the blockchain system4 7,,ii7 ,special rule ,for purposes of subclause 7,i71 a decentralized governance system shall not be considered to be a person or a group of persons under common control or acting pursuant to an agreement to act in concert4 7,f7 ,digital commodity 7i7 ,in general ,the term digital commodity means a digital asset that is intrinsically linked to a blockchain system1 and the value of which is derived from or is reasonably expected to be derived from the use of the blockchain system4 7ii7 ,relationship to a blockchain system ,for purposes of this subparagraph1 a digital asset is intrinsically linked to a blockchain system if the digital asset is directly related to the functionality or operation of the blockchain system or to the activities or services for which the blockchain system is created or utilized1 including where the digital asset is-- 7,i7 issued or generated by the programmatic functioning of the blockchain system2 7,,ii7 used to transfer value between participants in the blockchain system2 7,,iii7 used to access the activities or services of the blockchain system2 7,,iv7 used to participate in the decentralized governance system of the blockchain system2 7,v7 used or removed from circulation in whole or in part to pay fees or otherwise verify or validate transactions on the blockchain system2 7,,vi7 used as payment or incentive to participants in the blockchain system to engage in the activities of the blockchain system1 provide services to other participants in the blockchain system1 or otherwise participate in the functionality of the blockchain system2 or 7,,vii7 used as payment or incentive to participants in the blockchain system to validate transactions1 secure the blockchain system1 provide computational services1 maintain or distribute information1 or otherwise participate in the operations of the blockchain system4 7iii7 ,exclusion ,the term digital commodity does not include any of the following3 7,i7 ,security 7aa7 ,any security1 other than a note1 an investment contract1 or a certificate of interest or participation in any profit-sharing agreement4 7bb7 ,a note1 an investment contract1 or a certificate of interest or participation in any profit-sharing agreement that-- 7,,aa7 represents or gives the holder an ownership interest or other interest in the revenues1 profits1 obligations1 debts1 assets1 or assets or debts to be acquired of the issuer of the digital asset or another person 7other than a decentralized governance system72 7,,bb7 makes the holder a creditor of the issuer of the digital asset or another person2 or 7,,cc7 represents or gives the holder the right to receive interest or the return of principal from the issuer of the digital asset or another person4 7,,ii7 ,security derivative ,a digital asset that1 based on its terms and other characteristics1 is1 represents1 or is functionally equivalent to an agreement1 contract1 or transaction that is-- 7aa7 a security future1 as defined in section #b;a of the ,securities ,act of #aicc2 7bb7 a security-based swap1 as defined in section #b;a of the ,securities ,act of #aicc2 7cc7 a put1 call1 straddle1 option1 or privilege on any security1 certificate of deposit1 or group or index of securities 7including any interest therein or based on the value thereof71 as defined in section #b;a of the ,securities ,act of #aicc2 or 7dd7 a put1 call1 straddle1 option1 or privilege on any security1 as defined in section #b;a of the ,securities ,act of #aicc4 7,,iii7 ,permitted payment stablecoin ,a digital asset that is a permitted payment stablecoin4 7,,iv7 ,banking deposit 7aa7 ,a deposit 7as defined under section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac771 regardless of the technology used to record the deposit4 7bb7 ,an account 7as defined in section #aja of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageb771 regardless of the technology used to record the account4 7,v7 ,commodity ,a digital asset that references1 represents an interest in1 or is functionally equivalent to-- 7aa7 an agricultural commodity2 7bb7 an excluded commodity1 other than a security2 or 7cc7 an exempt commodity1 other than the digital commodity itself1 as shall be further defined by the ,commission4 7,,vi7 ,commodity derivative ,a digital asset that1 based on its terms and other characteristics1 is1 represents1 or is functionally equivalent to an agreement1 contract1 or transaction that is-- 7aa7 a contract of sale of a commodity for future delivery or an option thereon2 7bb7 a security futures product2 7cc7 a swap2 7dd7 an agreement1 contract1 or transaction described in section #b7;c77#b77;,c77i7 or #b7;c77#b77;,d77i72 7ee7 a commodity option authorized under section #d;c2 or 7ff7 a leverage transaction authorized under section #ai4 7,,vii7 ,pooled investment vehicle 7aa7 ,in general ,a digital asset that1 based on its terms and other characteristics1 is1 represents1 or is functionally equivalent to-- 7,,aa7 a commodity pool1 as defined in this ,act2 or 7,,bb7 a pooled investment vehicle4 7bb7 ,pooled investment vehicle defined ,in this subclause1 the term pooled investment vehicle means-- 7,,aa7 any investment company as defined in section #c7;a7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#c7;a772 7,,bb7 any company that would be an investment company under section #c7;a7 of such ,act but for the exclusion provided from that definition by paragraph 7#a71 7#g71 or 7#i7 of section #c7;c7 of such ,act 7#ae ,u4,s4,c4 #hj;a-#c7;c77#a71 7#g71 or 7#i772 or 7,,cc7 any entity or person that is not an investment company but holds or will hold assets other than securities4 7,,viii7 ,good1 collectible1 and other non-commodity asset ,a digital asset that has value1 utility1 or significance beyond its mere existence as a digital asset1 including the digital equivalent of a tangible or intangible good1 such as-- 7aa7 a work of art1 a musical composition1 a literary work1 or other intellectual property2 7bb7 collectibles1 merchandise1 virtual land1 and video game assets2 7cc7 affinity1 rewards1 or loyalty points1 including airline miles or credit card points1 that are not primarily speculative in nature2 or 7dd7 rights1 licenses1 and tickets4 7iv7 ,rule of construction ,no presumption shall exist that a digital asset is a security1 nor shall a digital asset be excluded from being a digital commodity pursuant to clause 7iii77,i71 solely due to-- 7,i7 the digital asset providing voting or economic rights with respect to the blockchain system to which the digital asset relates or the decentralized governance system of the blockchain system to which the digital asset relates2 7,,ii7 the value of the digital asset having the potential to appreciate or depreciate in response to the efforts1 operations1 or financial performance of the blockchain system to which the digital asset relates or the decentralized governance system of the blockchain system to which the digital asset relates2 or 7,,iii7 the value of the digital asset appreciating or depreciating due to the use of the blockchain system to which the digital asset relates or the decentralized governance system of the blockchain system to which the digital asset relates4 7,g7 ,digital commodity broker 7i7 ,in general ,the term digital commodity broker means any person who1 as a regular business-- 7,i7 is engaged in-- 7aa7 soliciting or accepting an order from a customer for-- 7,,aa7 the purchase or sale of a digital commodity2 or 7,,bb7 an agreement1 contract1 or transaction described in section #b7;c77#b77;,d77iv72 and 7bb7 in conjunction with the activities in item 7aa71 accepts or maintains control over-- 7,,aa7 the funds of any customer2 or 7,,bb7 the execution of any transaction of a customer2 7,,ii7 is engaged in soliciting or accepting orders from a customer for the purchase or sale of a unit of a digital commodity on or subject to the rules of a registered entity2 or 7,,iii7 is registered with the ,commission as a digital commodity broker4 7ii7 ,exceptions ,the term #8digital commodity broker' does not include a person solely because the person-- 7,i7 solicits or accepts an order described in clause 7i77,i77aa77,,aa7 from a customer who is an eligible contract participant2 7,,ii7 enters into #a or more digital commodity transactions that are attributable or solely incidental to making1 sending1 receiving1 or facilitating payments1 whether involving a payment service provider or on a peer-to-peer basis2 or 7,,iii7 is a bank 7as defined under section #c7;a7 of the ,securities ,exchange ,act of #aicd7 engaging in certain banking activities with respect to a digital commodity in the same or a similar manner as a bank is excluded from the definition of a broker under such section1 as determined by the ,commission4 7iii7 ,further definition ,the ,commission1 by rule or regulation1 may exclude from the term digital commodity broker any person or class of persons if the ,commission determines that the rule or regulation will effectuate the purposes of this ,act4 7,h7 ,digital commodity dealer 7i7 ,in general ,the term digital commodity dealer means any person who1 as a regular business-- 7,i7 is1 or offers to be a counterparty to a person for the purchase or sale of a digital commodity as a regular business1 and in conjunction with the activities1 accepts or maintains control over the funds of any counterparty2 or 7,,ii7 is registered with the ,commission as a digital commodity dealer4 7ii7 ,exception ,the term digital commodity dealer does not include a person solely because the person-- 7,i7 is or offers to be a counterparty to a person who is an eligible contract participant2 7,,ii7 enters into a digital commodity transaction with an eligible contract participant2 7,,iii7 enters into a digital commodity transaction on or through a registered digital commodity exchange1 with a registered digital commodity broker1 or through a decentralized finance trading protocol2 7,,iv7 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 7,v7 enters into #a or more digital commodity transactions that are attributable or solely incidental to making1 sending1 receiving1 or facilitating payments1 whether involving a payment service provider or on a peer-to-peer basis2 or 7,,vi7 is a bank 7as defined under section #c7;a7 of the ,securities ,exchange ,act of #aicd7 engaging in certain banking activities with respect to a digital commodity in the same or a similar manner as a bank is excluded from the definition of a dealer under section #c7;a77#e7 of such ,act1 as determined by the ,commission4 7iii7 ,further definition ,the ,commission1 by rule or regulation1 may exclude from the term digital commodity dealer any person or class of persons if the ,commission determines that the rule or regulation will effectuate the purposes of this ,act4 7,i7 ,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,j7 ,mixed digital asset transaction ,the term mixed digital asset transaction means a transaction in which a digital commodity is traded for a security4 7,k7 ,terms defined under the ,securities ,act of #aicc ,the terms blockchain system1 decentralized governance system1 digital asset1 digital commodity issuer1 digital commodity affiliated person1 digital commodity related person1 end user distribution1 mature blockchain system1 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 2 and 7#e7 in paragraph 7#da7 7as so redesignated by paragraph 7#d7 of this subsection7-- 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 4 7b7 ,conforming amendments 7#a7 ,each of the following provisions of law is amended by striking #a;a7#ah7 and inserting #a;a7#ai73 7,a7 ,section #ds7h77#e77;,a77i7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #fs7h77#e77;,a77i774 7,b7 ,section #e7;e7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;e7e774 7,c7 ,section #f7;g77#e77;,b7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;f7g77#e77;,b774 7,d7 ,section #ae;,f7h77#e77;,a77i7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#aj7;h77#e77;,a77i774 7#b7 ,section #geb of the ,wall ,street ,transparency and ,accountability ,act of #bjaj 7#ae ,u4,s4,c4 #hcbe7 is amended by striking #a;a7#ci7 and inserting #a;a7#dj74 7#c7 ,section #ds7f77#a77;,d7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #fs7f77#a77;,d77 is amended by striking #a;a7#dg77;,a7 and inserting #a;a7#dh77;,a74 7#d7 ,each of the following provisions of the ,commodity ,exchange ,act is amended by striking #a;a7#dg77;,a77v7 and inserting #a;a7#dh77;,a77v73 7,a7 ,section #dt7b77#a77;,c7 7#g ,u4,s4,c4 #ft7b77#a77;,c774 7,b7 ,section #e7;d77#bc7 7#g ,u4,s4,c4 #g7;d77#bc774 7,c7 ,section #e;b7k77#c7 7#g ,u4,s4,c4 #g;a-#a7k77#c774 7,d7 ,section #e;h7f77#aj77;,a77iii7 7#g ,u4,s4,c4 #g;b-#c7;f77#aj77;,a77iii774 7#e7 ,section #ba7;f77#d77;,c7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #bd;a7f77#d77;,c77 is amended by striking #a;a7#dh7 and inserting #a;a7#di74 7#f7 ,section #djc of the ,legal ,certainty for ,bank ,products ,act of #bjjj 7#g ,u4,s4,c4 #bg;a7 is amended-- 7,a7 in subsection 7a77#b71 by striking #a;a7#dg77;,a77v7 and inserting #a;a7#dh77;,a77v72 and 7,b7 in each of subsections 7b77#a7 and 7c77#b71 by striking #a;a7#dg7 and inserting #a;a7#dh74 7#g7 ,section #gab of the ,wall ,street ,transparency and ,accountability ,act of #bjaj 7#ae ,u4,s4,c4 #hcjb7 is amended-- 7,a7 in subsection 7a77#h71 by striking #a;a7#dg77;,d7 each place it appears and inserting #a;a7#dh77;,d72 and 7,b7 in subsection 7d77#a71 by striking #a;a7#dg77;,a77v7 each place it appears and inserting #a;a7#dh77;,a77v74 #ajd4 ,definitions under this ,act ,in this ,act3 7#a7 ,definitions under the ,commodity ,exchange ,act ,the terms decentralized finance messaging system1 decentralized finance trading protocol1 digital commodity1 digital commodity broker1 digital commodity dealer1 digital commodity exchange1 and mixed digital asset transaction 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 blockchain1 blockchain system1 blockchain protocol1 decentralized governance system1 digital asset1 digital commodity issuer1 end user distribution1 mature blockchain system1 permitted payment stablecoin1 and securities laws 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 securities laws1 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 ,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-- 7,a7 blockchain1 blockchain application1 blockchain system1 blockchain protocol1 decentralized governance system1 digital commodity affiliated person1 digital commodity issuer1 digital commodity related person1 end user distribution1 and mature blockchain system1 as defined under section #b7;a7 of the ,securities ,act of #aicc2 7,b7 unilateral authority1 as such term is used in section #db of the ,securities ,exchange ,act of #aicd and section #a;a of the ,commodity ,exchange ,act2 and 7,c7 programmatic functioning1 as such term is used in sections #d;,c of the ,securities ,act of #aicc1 section #db of the ,securities ,exchange ,act of #aicd1 and section #a;a of the ,commodity ,exchange ,act4 7#b7 ,the terms digital commodity1 decentralized finance messaging system1 and decentralized finance trading protocol as defined under section #a;a of the ,commodity ,exchange ,act4 7b7 ,joint rulemaking for mixed digital asset transactions ,the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission shall jointly issue rules applicable to mixed digital asset transactions under this ,act and the amendments made by this ,act1 including by further defining such term4 7c7 ,protection of self-,custody 7#a7 ,in general ,a ,united ,states individual shall retain the right to-- 7,a7 maintain a hardware wallet or software wallet for the purpose of facilitating the individual's own lawful custody of digital assets2 and 7,b7 engage in direct1 peer-to-peer transactions in digital assets with another individual or entity for the individual's own lawful purposes using a hardware wallet or software wallet1 if-- 7i7 such other individual or entity is not a financial institution 7as defined in section #ecab of title #ca1 ,united ,states ,code72 and 7ii7 the transactions do not involve any property or interests in property that are blocked pursuant to1 or are otherwise prohibited by1 ,united ,states sanctions4 7#b7 ,application ,this subsection-- 7,a7 applies solely to personal use by individuals2 and 7,b7 does not apply to individuals acting in a custodial or fiduciary capacity for others4 7#c7 ,rule of construction ,nothing in this subsection shall be construed to limit the authority of the ,secretary of the ,treasury1 the ,securities and ,exchange ,commission1 the ,commodity ,futures ,trading ,commission1 the ,board of ,governors of the ,federal ,reserve ,system1 the ,comptroller of the ,currency1 the ,federal ,deposit ,insurance ,corporation1 or the ,national ,credit ,union ,administration to carry out any enforcement action or special measure authorized under applicable law1 including-- 7,a7 the ,bank ,secrecy ,act1 section #igad of the ,combating ,russian ,money ,laundering ,act 7#ca ,u4,s4,c4 #ecah;,a note71 and section #gbac;,a of the ,fentanyl ,sanctions ,act 7#ba ,u4,s4,c4 #bcac;a72 or 7,b7 any other law relating to illicit finance1 money laundering1 terrorism financing1 or ,united ,states sanctions4 7d7 ,joint rulemaking1 procedures1 or guidance for delisting ,not later than #ahj 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 section #ajf 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 7e7 ,joint rules for portfolio margining determinations 7#a7 ,in general ,not later than #cfj days after the date of the enactment of this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly issue rules describing the process for persons registered with either such ,commission to seek a joint order or determination with respect to margin1 customer protection1 segregation1 or other requirements as necessary to facilitate portfolio margining of securities 7including related extensions of credit71 security-based swaps1 contracts for future delivery1 options on a contract for future delivery1 swaps1 and digital commodities1 or any subset thereof1 in-- 7,a7 a securities account carried by a registered broker or dealer or a security-based swap account carried by a registered security-based swap dealer2 7,b7 a futures or cleared swap account carried by a registered futures commission merchant2 7,c7 a swap account carried by a swap dealer2 or 7,d7 a digital commodity account carried by a registered digital commodity broker or digital commodity dealer that is also registered in such other capacity as is necessary to also carry the other customer or counterparty positions being held in the account4 7#b7 ,process ,with respect to a joint order or determination described in paragraph 7#a71 the rules required to be issued pursuant to paragraph 7#a7 shall require-- 7,a7 the joint order or determination to be issued only if the order or determination is in the public interest and provides for the appropriate protection of customers2 7,b7 applicants to file a standard application1 in a form and manner determined by the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission1 which shall include the information necessary to make the joint order or determination2 7,c7 the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission to make a final determination not later than #bgj days after the filing of a completed application2 7,d7 the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission to consider the public interest of the joint order or determination through the solicitation of public comments2 and 7,e7 the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission to consult with other relevant foreign or domestic regulators1 including the ,board of ,governors of the ,federal ,reserve ,system1 the ,federal ,deposit ,insurance ,corporation1 and the ,office of the ,comptroller of the ,currency1 as appropriate4 #ajf4 ,registration for digital commodity exchanges1 brokers1 and dealers2 provisional status 7a7 ,registration 7#a7 ,in general ,unless exempted from registration under section #ek of the ,commodity ,exchange ,act1 a person shall not act as a digital commodity broker1 digital commodity dealer1 or digital commodity exchange after the end of the #bgj-;day period beginning on the date of the enactment of this ,act1 unless1 as the case may be1 the person is registered as a-- 7,a7 digital commodity broker pursuant to section #du of the ,commodity ,exchange ,act2 7,b7 digital commodity dealer pursuant to section #du of the ,commodity ,exchange ,act2 or 7,c7 digital commodity exchange pursuant to section #e;i of the ,commodity ,exchange ,act4 7#b7 ,expedited process ,not less than #bgj days after the date of the enactment of this ,act1 the ,commodity ,futures ,trading ,commission shall adopt1 by rule1 regulation1 or order1 a process for expedited registration of persons in provisional status pursuant to subsection 7b74 7b7 ,provisional status 7#a7 ,in general ,a person who is registered in accordance with subsection 7a7 of this section shall be in provisional status until-- 7,a7 in the case of a digital commodity broker or dealer1 #bgj days after the final effective date of the rulemakings required under section #du of the ,commodity ,exchange ,act2 or 7,b7 in the case of a digital commodity exchange1 #bgj days after the final effective date of the rulemakings required under section #e;i of such ,act4 7#b7 ,payment of fees ,a person in provisional status shall pay all fees and penalties required under section #daj4 7c7 ,operations prior to regulations 7#a7 ,requirements ,a person in provisional status shall apply and be subject to the statutory requirements of this ,act and any rules or regulations promulgated under this ,act1 as applicable4 7#b7 ,listings 7,a7 ,in general ,except as provided in subparagraph 7,b71 a person in provisional status may continue to offer1 solicit1 trade1 facilitate1 execute1 clear1 report1 or otherwise deal in any digital asset offered on or through the facilities of the person before the date of registration under this section1 until such time as the joint rulemaking on definitions required under section #aje7;a7 is effective4 7,b7 ,delisting ,before the effective date of the joint rulemaking on definitions under section #aje7;a71 person in provisional status shall cease offering1 soliciting1 trading1 facilitating1 executing1 clearing1 reporting1 or otherwise dealing in any digital asset required to be delisted pursuant to a joint delisting process established under section #aje7;d74 7#c7 ,exemptive authority ,in order to promote responsible innovation and fair competition1 or protect customers1 the ,commodity ,futures ,trading ,commission may exempt any persons or class of persons registered pursuant to subsection 7a7 and in provisional status pursuant to subsection 7b7 from any requirements of this ,act and any rules and regulations promulgated under this ,act4 7d7 ,customer disclosure before registration 7#a7 ,in general ,beginning #cj days after the date of the enactment of this ,act1 any person acting as a digital commodity exchange1 digital commodity broker1 or digital commodity dealer shall disclose to the customers of the person so acting1 in the disclosure documents1 offering documents1 and promotional material of the person so acting1 in a prominent manner1 that the person is not registered with or regulated by the ,commodity ,futures ,trading ,commission4 7#b7 ,expiration ,paragraph 7#a7 of this subsection shall not apply to any person who registers pursuant to subsection 7a74 #ajg4 ,commodity ,exchange ,act and securities laws 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 7#b7 any agreement1 contract1 or transaction that is subject to the securities laws as-- 7,a7 a security-based swap2 7,b7 a security futures product2 or 7,c7 an option on or based on the value of a security2 or 7#c7 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 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 ,administrative requirements ,section #d;c7a7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #f;c7a77 is amended-- 7#a7 in paragraph 7#c7-- 7,a7 in subparagraph 7,b71 by striking or at the end2 7,b7 in subparagraph 7,c71 by striking the period and inserting 2 or2 and 7,c7 by adding at the end the following3 7,d7 a contract of sale of a digital commodity4 2 7#b7 in paragraph 7#d7-- 7,a7 in subparagraph 7,a7-- 7i7 in clause 7ii71 by striking or at the end2 7ii7 in clause 7iii71 by striking the period and inserting 2 or2 and 7iii7 by adding at the end the following3 7iv7 a contract of sale of a digital commodity4 2 7,b7 in subparagraph 7,b7-- 7i7 in clause 7ii71 by striking or at the end2 7ii7 in clause 7iii71 by striking the period and inserting 2 or2 and 7iii7 by adding at the end the following3 7iv7 a contract of sale of a digital commodity4 2 and 7,c7 in subparagraph 7,c7-- 7i7 in clause 7ii71 by striking or at the end2 7ii7 by striking 7iii7 a swap1 provided however1 and inserting the following3 7iii7 a swap2 or 7iv7 a contract of sale of a digital commodity1 provided1 however1 2 and 7iii7 by striking clauses 7i71 7ii71 or 7iii7 and insert any of clauses 7i7 through 7iv74 #aji4 ,international cooperation ,in order to promote greater consistency in 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 application of consistent international standards with respect to the regulation of digital assets2 and 7#b7 may enter into 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 ,application of the ,bank ,secrecy ,act 7a7 ,in general ,section #ecab7;c77#a77;,a7 of title #ca1 ,united ,states ,code1 is amended-- 7#a7 by inserting digital commodity broker1 digital commodity dealer1 after futures commission merchant12 and 7#b7 by inserting before the period the following3 and any digital commodity exchange registered1 or required to register1 under the ,commodity ,exchange ,act which permits direct customer access4 7b7 ,,gao study 7#a7 ,in general ,the ,comptroller ,general of the ,united ,states1 in consultation with the ,secretary of the ,treasury1 shall conduct a study to-- 7,a7 assess the risks posed by centralized intermediaries that are primarily located in foreign jurisdictions that provide services to ,u4,s4 persons without regulatory requirements that are substantially similar to the requirements of the ,bank ,secrecy ,act2 and 7,b7 provide any regulatory or legislative recommendations to address these risks under subparagraph 7,a74 7#b7 ,report ,not later than #a year after the date of enactment of this ,act1 the ,comptroller ,general shall issue a report to ,congress containing all findings and determinations made in carrying out the study required under paragraph 7#a74 #aaa4 ,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 ,commodities #bja4 ,treatment of investment contract assets 7a7 ,securities ,act of #aicc ,section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a771 as amended by section #aja1 is further amended-- 7#a7 in paragraph 7#a71 by adding at the end the following3 ,the term investment contract does not include an investment contract asset42 and 7#b7 by adding at the end the following3 7#cf7 ,the term investment contract asset means a digital commodity-- 7,a7 that can be exclusively possessed and transferred1 person to person1 without necessary reliance on an intermediary1 and is recorded on a blockchain2 and 7,b7 sold or otherwise transferred1 or intended to be sold or otherwise transferred1 pursuant to an investment contract4 4 7b7 ,investment ,advisers ,act of #aidj ,section #bjb7;a77#ah7 of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#b7;a77#ah77 is amended by adding at the end the following3 ,the term investment contract does not include an investment contract asset 7as such term is defined under section #b7;a7 of the ,securities ,act of #aicc744 7c7 ,investment ,company ,act of #aidj ,section #b7;a77#cf7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#b7;a77#cf77 is amended by adding at the end the following3 ,the term investment contract does not include an investment contract asset 7as such term is defined under section #b7;a7 of the ,securities ,act of #aicc744 7d7 ,securities ,exchange ,act of #aicd ,section #c7;a77#aj7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a77#aj77 is amended by adding at the end the following3 ,the term investment contract does not include an investment contract asset 7as such term is defined under section #b7;a7 of the ,securities ,act of #aicc744 7e7 ,securities ,investor ,protection ,act of #aigj ,section #af7ad7 of the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #ghlll7#ad77 is amended by adding at the end the following3 ,the term investment contract does not include an investment contract asset 7as such term is defined under section #b7;a7 of the ,securities ,act of #aicc744 #bjb4 ,exempted primary transactions in digital commodities 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 the offer or sale of an investment contract involving units of a digital commodity by its digital commodity issuer 7including all entities controlled by or under common control with the issuer71 if-- 7,a7 the blockchain system to which the digital commodity relates1 together with the digital commodity1 is certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd or the issuer intends for the blockchain system to which the digital commodity relates to be a mature blockchain system by the later of-- 7i7 the date that is four years after the first sale of the investment contract involving such digital commodity2 or 7ii7 the date that is four years after the effective date of this paragraph2 7,b7 the sum of all cash and other consideration to be received by the digital commodity issuer in reliance on the exemption provided under this paragraph1 during the #ab-month period preceding the date of such offering1 including the amount received in such offering1 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,c7 after the completion of the transaction1 a purchaser does not own more than #aj percent of the total amount of the outstanding units of the digital commodity2 7,d7 the transaction does not involve the offer or sale of an investment contract involving units of a digital commodity by its digital commodity issuer that-- 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,e7 the issuer meets the requirements of section #d;,b7b74 2 and 7#b7 by inserting after section #d;,a the following3 #d;,b4 ,requirements with respect to certain digital commodity transactions 7a7 ,commission jurisdiction ,for the purposes of this section3 7#a7 ,the ,commission shall have jurisdiction and enforcement authority with respect to disclosures described in this section4 7#b7 ,section #ag shall apply to a statement made in an offering statement1 disclosure1 or report filed under this section to the same extent as such section #ag applies to a statement made in any other offering statement1 disclosure1 or report filed under this ,act4 7b7 ,requirements for digital commodity issuers 7#a7 ,terms and conditions ,a digital commodity issuer offering or selling an investment contract involving units of a digital commodity in reliance on section #d7;a77#h7 shall file with the ,commission an offering statement and any related documents1 in such form and with such content as prescribed by the ,commission1 including financial information1 a description of the issuer and the operations of the issuer1 the financial condition of the issuer1 a description of the plan of distribution of any unit of a digital commodity that is to be offered as well as the intended use of the offering proceeds1 and a description of the development plan for the blockchain system1 and the related digital commodity1 to become a mature blockchain system1 if such blockchain system is not already certified as a mature blockchain system pursuant to section #db of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq474 7#b7 ,information required for purchasers ,a digital commodity issuer that has filed a statement under paragraph 7#a7 to offer and sell an investment contract involving a unit of a digital commodity in reliance on section #d7;a77#h7 shall include in such statement the following information3 7,a7 ,maturity status ,whether the blockchain system to which the digital commodity relates has been certified as a mature blockchain system pursuant to section #db of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 and1 where such blockchain system is not so certified1 a statement of the digital commodity issuer's intent for the blockchain system to which the digital commodity relates to be a mature blockchain system within the time period described in section #d7;a77#h77;,a74 7,b7 ,source code ,the source code1 or a publicly accessible webpage displaying such source code1 for any blockchain system to which the digital commodity relates1 and whether the source code was sourced from an external third party1 whether there are any existing external dependencies1 and whether the code underwent a third-party security audit4 7,c7 ,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 commodity relates1 to the extent any such independent access1 search1 and verification activities are technically feasible with respect to such blockchain system4 7,d7 ,digital commodity economics ,a description of the purpose of any blockchain system to which the digital commodity relates and the operation of any such blockchain system1 including-- 7i7 information explaining the launch and supply process1 including the number of units of the digital commodity to be issued in an initial allocation1 the total number of units of the digital commodity to be created1 the release schedule for the units of the digital commodity1 and the total number of units of the digital commodity outstanding2 7ii7 information explaining the technical requirements for holding1 accessing1 and transferring the digital commodity2 7iii7 information on any applicable consensus mechanism or process for validating transactions1 method of generating or mining digital commodities1 and any process for burning or destroying units of the digital commodity on the blockchain system2 7iv7 an explanation of any mechanism for driving value to the digital commodity of such blockchain system2 and 7v7 an explanation of governance mechanisms for implementing changes to the blockchain system or forming consensus among holders of units of such digital commodity4 7,e7 ,plan of development ,the current state and timeline for the development of any blockchain system to which the digital commodity relates1 detailing how and when the blockchain system is intended to be a mature blockchain system1 if the blockchain system is not yet certified as a mature blockchain system1 and the various roles that exist or are intended to exist in connection with the blockchain system1 such as users1 service providers1 developers1 transaction validators1 and governance participants1 including a discussion of any mechanisms by which control or authority are exerted with respect to the blockchain system or its related digital commodity1 and any critical operational dependencies of the blockchain system or its related digital commodity4 7,f7 ,ownership disclosures 7i7 ,in general ,a list of all persons who are digital commodity related persons or digital commodity affiliated persons who have been issued a unit of the digital commodity by the digital commodity issuer or have a right to a unit of the digital commodity from the digital commodity issuer4 7ii7 ,confidentiality ,the ,commission shall keep each list described under clause 7i7 confidential1 consistent with what is necessary or appropriate in the public interest or for the protection of investors4 7,g7 ,risk factor disclosures ,a description of the material risks surrounding ownership of a unit of a digital commodity4 7#c7 ,ongoing disclosure requirements for maturing blockchain systems ,subject to paragraph 7#e71 the issuer of a digital commodity related to a blockchain system that is not yet certified as a mature blockchain system that has filed a statement under paragraph 7#a7 to offer and sell an investment contract involving a unit of a digital commodity in reliance on section #d7;a77#h7 shall file the following with the ,commission3 7,a7 ,semiannual reports ,every #f months1 a report containing-- 7i7 an updated description of the current state and timeline for the development of the blockchain system to which the digital commodity relates1 showing how and when the blockchain is intended to be a mature blockchain system2 7ii7 a description of the efforts of the issuer and digital commodity related persons in developing the blockchain system to which the digital commodity relates2 and 7iii7 the amount of money raised by the digital commodity issuer in reliance on section #d7;a77#h71 how much of that money has been spent1 and the general categories of activities for which that money has been spent and amounts spent per category4 7,b7 ,current reports ,a current report reflecting any material changes relevant to the information previously reported to the ,commission by the digital commodity issuer1 which shall be filed as soon as practicable after the material change occurred1 in accordance with such rules as the ,commission may prescribe as necessary or appropriate in the public interest or for the protection of investors4 7#d7 ,rulemaking ,not later than #cfj days after the date of the enactment of this section1 the ,commission shall prescribe rules on requirements applicable to issuers of digital commodities in reliance on section #d7;a77#h74 7#e7 ,termination of certain reporting requirements2 post-maturity reporting requirements 7,a7 ,in general ,the ongoing reporting requirements under paragraph 7#c7 shall not apply to a digital commodity issuer #ahj days after the end of the covered fiscal year1 if the information with respect to the digital commodity and the blockchain system to which it relates described in subparagraphs 7,a7 through 7,c7 of paragraph 7#b7 is made publicly available and the disclosure requirements under subparagraph 7,c7 of this paragraph are satisfied4 7,b7 ,covered fiscal year defined ,in this paragraph1 the term covered fiscal year means1 with respect to a digital commodity1 the first fiscal year of a digital commodity issuer in which the blockchain system to which such digital commodity relates is certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd4 7,c7 ,post-maturity reporting requirements ,after the blockchain system to which a digital commodity relates is certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd1 any digital commodity issuer that has filed a statement under paragraph 7#a7 to offer and sell an investment contract involving a unit of a digital commodity in reliance on section #d7;a77#h7 and is engaged in material ongoing efforts related to the mature blockchain system shall disclose1 in a manner reasonably calculated to inform the public1 and at such frequency as the ,commission may prescribe1 by rule1 a description of such efforts1 including-- 7i7 any participation in a decentralized governance system of such blockchain system2 7ii7 any participation in alterations or proposed alterations to the functionality or operation of such blockchain system2 7iii7 the use or planned use of any funds raised in reliance on section #d7;a77#h7 or any rulemaking pursuant to section #bjb7;d7 of the ,,clarity ,act of #bjbe in such efforts2 7iv7 the amount of units of the digital commodity1 or rights thereto1 owned and controlled by such issuer and any use1 sale1 trading1 or other disposition thereof2 and 7v7 any affiliations of such issuer material to the efforts of such issuer4 7,d7 ,rule of construction ,nothing in subparagraph 7,c7 may be construed to make any digital commodity described in such subparagraph a security4 7c7 ,requirements for intermediaries ,a person acting as an intermediary in connection with the offer or sale of an investment contract involving units of a digital commodity in reliance on section #d7;a77#h7 shall-- 7#a7 register with the ,commission as a broker or dealer2 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 7d7 ,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 7e7 ,failure ,to mature 7#a7 ,in general ,not later than #bgj days after the date of the enactment of this section1 the ,commission shall issue rules applying such additional obligations and disclosures for the digital commodity issuers1 digital commodity related persons1 and digital commodity affiliated persons of a blockchain system described under subsection 7b77#a7 that does not become a mature blockchain system within the time period described in section #d7;a77#h77;,a7 as are necessary or appropriate in the public interest or for the protection of investors4 ,such obligations and disclosures shall include the following3 7,a7 ,disclosures ,disclosures regarding the following3 7i7 ,failure to mature ,the material reasons that the blockchain system has not become a mature blockchain system within the time period described in section #d7;a77#h77;,a74 7ii7 ,development plans ,the future plans of development of the blockchain system1 including information required under subsection 7b77#c74 7iii7 ,risk factor disclosures ,the material risks surrounding ownership of a unit of a digital commodity that relates to a blockchain system described under subsection 7b77#a7 that has not become a mature blockchain system within the time period described in section #d7;a77#h77;,a74 7,b7 ,obligations ,transaction reporting and beneficial ownership disclosure obligations applicable to digital commodity related persons and digital commodity affiliated persons of such blockchain system4 7#b7 ,qualification required ,the ,commission may not permit any additional raising of capital by the issuer of a digital commodity related to a blockchain system described under subsection 7a77#a7 that has not become a mature blockchain system within the time period described in section #d7;a77#h77;,a7 unless the ,commission has qualified any offering statement related to such additional raising of capital4 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 and 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 7c7 ,prior issuers 7#a7 ,reporting exception ,with respect to a digital commodity1 the digital commodity issuer shall not be required to file the reports otherwise required under section #d;,b7b77#c7 of the ,securities ,act of #aicc 7or1 with respect to a digital commodity not issued in reliance on section #d7;a77#h7 of the ,securities ,act of #aicc1 a comparable set of reports specified by the ,securities and ,exchange ,commission71 if the digital commodity issuer-- 7,a7 last offered or sold an investment contract involving a unit of the digital commodity prior to ,january #a1 #bjbj2 or 7,b7 both-- 7i7 last offered or sold an investment contract involving a unit of the digital commodity between ,january #a1 #bjbj1 and ,june #a1 #bjbe2 and 7ii7 is no longer engaged in material ongoing efforts related to the blockchain system to which the digital commodity relates4 7#b7 ,reporting application date for certain prior issuers ,with respect to a digital commodity1 if the digital commodity issuer is engaged in material ongoing efforts related to the blockchain system to which the digital commodity relates and last offered and sold an investment contract involving a unit of the digital commodity between ,january #a1 #bjbj1 and ,june #a1 #bjbe1 the digital commodity issuer shall file with the ,commission a comparable set of reports to the reports described under1 as applicable1 section #d;,b7b77#c7 or #d;,b7b77#e77;,c7 of the ,securities ,act of #aicc1 where required by the ,commission1 not later than one year after the effective date of this section4 7d7 ,use of other exemptions 7#a7 ,rule of construction ,nothing in this section or the amendments made by this section may be construed as prohibiting the offer or sale of an investment contract involving units of a digital commodity in reliance on an exemption provided under section #c1 #d7;a71 or #ai of the ,securities ,act of #aicc other than that provided under section #d7;a77#h7 of the ,securities ,act of #aicc4 7#b7 ,rulemaking ,the ,securities and ,exchange ,commission may issue rules-- 7,a7 to permit the issuer of a digital commodity related to a blockchain system described under section #d;,b7b77#a7 of the ,securities ,act of #aicc that has not become a mature blockchain system within the time period described in section #d7;a77#h77;,a7 of such ,act to raise capital pursuant to an exempt offering1 if the ,commission qualifies any offering statement related to such raising of capital2 and 7,b7 for the offer and sale of investment contracts involving units of a digital commodity by issuers that are not organized under the laws of a ,state1 a territory of the ,united ,states1 or the ,district of ,columbia4 #bjc4 ,treatment of secondary transactions in digital commodities that originally involved investment contracts 7a7 ,secondary market treatment ,notwithstanding any other provision of law1 the offer or sale of a digital commodity that originally involved an investment contract by a person other than the issuer of such digital commodity1 or an agent or underwriter thereof1 shall be deemed not to be an offer or sale of the investment contract originally involving the digital commodity between the issuer of the investment contract involving the digital commodity1 or an agent or underwriter thereof1 and the purchaser of such digital commodity under-- 7#a7 the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;a et seq472 7#b7 the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#a et seq472 7#c7 the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#a et seq472 7#d7 the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq472 7#e7 the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #gh;aaa et seq472 and 7#f7 any applicable provisions of ,state law4 7b7 ,end user distributions not an offer or sale of a security ,an end user distribution does not involve the offer or sale of a security4 7c7 ,agent defined ,in this section and with respect to a digital commodity issuer1 the term agent means any person directly or indirectly controlled by the issuer or under direct or indirect common control with the issuer4 #bjd4 ,requirements for offers and sales of digital commodities by digital commodity related persons and digital commodity affiliated persons ,the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;a et seq471 as amended by section #bjb1 is further amended by inserting after section #d;,b the following3 #d;,c4 ,requirements for offers and sales of digital commodities by digital commodity related persons and digital commodity affiliated persons 7a7 ,in general ,it shall be a violation of this ,act for a digital commodity affiliated person or a digital commodity related person to offer or sell a digital commodity acquired directly from its issuer1 or an agent or underwriter thereof1 pursuant to an investment contract in reliance on section #d7;a77#h7 or another exemption under this ,act1 other than as provided in this section4 7b7 ,commission jurisdiction 7#a7 ,where a digital commodity affiliated person or a digital commodity related person offers or sells a digital commodity acquired directly from its issuer1 or an agent or underwriter thereof1 pursuant to an investment contract in reliance on section #d7;a77#h71 or another exemption under this ,act1 other than as provided in this section1 such digital commodity affiliated person or digital commodity related person shall be considered an issuer of such investment contract4 7#b7 ,for the purposes of this section1 the ,commission shall have jurisdiction and enforcement authority with respect to an offer or sale of a digital commodity described in subsection 7a74 7c7 ,restrictions on digital commodity related persons and digital commodity affiliated persons 7#a7 ,prior to being a mature blockchain system ,prior to the blockchain system to which a digital commodity relates being certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd1 units of the digital commodity acquired by a digital commodity related person or digital commodity affiliated person directly from its issuer1 or an agent or underwriter thereof1 pursuant to an investment contract in reliance on section #d7;a77#h71 or another exemption under this ,act1 may be offered or sold by such digital commodity related person or digital commodity affiliated person if-- 7,a7 reports with respect to such digital commodity1 where required under section #d;,b7b77#c7 7or1 with respect to a digital commodity not issued in reliance on section #d7;a77#h71 a comparable set of reports where required by the ,commission7 have been filed with the ,commission2 7,b7 the digital commodity related person or digital commodity affiliated person has held the units for not less than #ab months from the date the units were delivered2 and 7,c7 the aggregate amount of the units of the digital commodity offered or sold by the digital commodity related person or digital commodity affiliated person is-- 7i7 in any #ab-month period1 not greater than #ae percent of the total units of the digital commodity acquired directly from its issuer by the digital commodity related person or digital commodity affiliated person2 and 7ii7 not greater than #ej percent of the total units of the digital commodity acquired directly from its issuer by the digital commodity related person or digital commodity affiliated person4 7#b7 ,after becoming a mature blockchain system ,after the blockchain system to which a digital commodity relates is certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd1 units of the digital commodity acquired by a digital commodity related person or digital commodity affiliated person directly from its issuer1 or the issuer's agent or underwriter1 pursuant to an investment contract in reliance on section #d7;a77#h7 or another exemption under this ,act1 may be-- 7,a7 offered or sold by a digital commodity related person2 or 7,b7 offered or sold by a digital commodity affiliated person if-- 7i7 information described in section #d;,b7b77#e77;,c71 where required 7or1 with respect to a digital commodity not issued in reliance on section #d7;a77#h71 a comparable set of information1 where required7 is publicly available2 7ii7 the digital commodity affiliated person has held the units for not less than the earlier of-- 7,i7 #ab months from the date the units were delivered2 or 7,,ii7 #c months following the date on which the blockchain system is certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd2 and 7iii7 the aggregate amount of the units of the digital commodity offered or sold by the digital commodity affiliated person in any #ab-month period does not exceed the greater of-- 7,i7 #h percent of the total outstanding amount of the digital commodity2 or 7,,ii7 #be percent of the total units of the digital commodity acquired directly from its issuer by the digital commodity affiliated person4 7d7 ,use of a digital commodity in the programmatic functioning of the blockchain system ,for purposes of this section1 the use of a digital commodity in the programmatic functioning of the blockchain system to which it relates is not an offer or sale of a digital commodity4 7e7 ,manipulative and deceptive devices2 reporting 7#a7 ,in general ,it shall be unlawful for any digital commodity issuer1 digital commodity related person1 or digital commodity affiliated person1 directly or indirectly1 by the use of any means or instrumentality of interstate commerce or of the mails1 to use or employ1 in connection with the purchase or sale of any digital commodity1 any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the ,commission may prescribe as necessary or appropriate in the public interest or for the protection of investors4 7#b7 ,affirmative defense ,not later than #bgj days after the date of the enactment of this section1 the ,commission shall issue rules to implement paragraph 7#a71 including by providing any affirmative defenses to an enforcement action thereunder as the ,commission may prescribe as necessary or appropriate in the public interest or for the protection of investors4 7#c7 ,reporting ,not later than #bgj days after the date of the enactment of this section1 the ,commission shall issue rules to prescribe such transaction reporting and beneficial ownership disclosure obligations applicable to digital commodity related persons and digital commodity affiliated persons1 as necessary or appropriate in the public interest or for the protection of investors4 7#d7 ,differentiation between persons ,in issuing rules required under paragraphs 7#b7 and 7#c71 the ,commission shall differentiate between digital commodity related persons and digital commodity affiliated persons as necessary or appropriate in the public interest or for the protection of investors4 7f7 ,rules for previously-,issued digital commodities 7#a7 ,units received prior to ,january #a1 #bjbj ,if a unit of a digital commodity was received by a digital commodity related person or digital commodity affiliated person prior to ,january #a1 #bjbj1 the unit of the digital commodity may be offered or sold by the digital commodity related person or digital commodity affiliated person without condition4 7#b7 ,certain units related to a non-mature blockchain system ,if a unit of a digital commodity was received by a digital commodity related person or digital commodity affiliated person between ,january #a1 #bjbj1 and ,june #a1 #bjbe1 and the blockchain system to which the digital commodity relates is not certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd1 the unit of the digital asset may be offered or sold by a digital commodity related person or digital commodity affiliated person if-- 7,a7 reports with respect to such digital commodity comparable to the reports described under section #d;,b7b77#c71 where required by the ,commission1 have been filed with the ,commission2 7,b7 the digital commodity related person or digital commodity affiliated person meets any requirements pursuant to subsection 7e77#c72 and 7,c7 the digital commodity related person or digital commodity affiliated person has held the units for not less than #ab months from the date the units were delivered4 7#c7 ,certain units related to a mature blockchain system ,if a unit of a digital commodity was received by a digital commodity related person or digital commodity affiliated person between ,january #a1 #bjbj1 and ,june #a1 #bjbe1 and the blockchain system to which the digital commodity relates is certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd1 it may be offered or sold by a digital commodity related person or digital commodity affiliated person if-- 7,a7 information described in section #d;,b7b77#e77;,c7 or comparable thereto1 where required by the ,commission1 is publicly available2 and 7,b7 the digital commodity related person or digital commodity affiliated person has held the units for not less than #ab months from the date the units were delivered4 7g7 ,rulemaking on further usage of digital commodities ,not later than #bgj days after the date of enactment of this section1 the ,commission may issue rules to exempt1 unconditionally or on stated terms or conditions1 a digital commodity related person or a digital commodity affiliated person from the requirements of this section for the offer or sale of a digital commodity in order to foster the development of mature blockchain systems and fair and orderly markets4 4 #bje4 ,mature blockchain system requirements ,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 ,mature blockchain systems 7a7 ,certification of blockchain systems 7#a7 ,certification ,for purposes of sections #d7;a77#h71 #d;,b1 and #d;,c of the ,securities ,act of #aicc any digital commodity issuer1 digital commodity related person1 digital commodity affiliated person1 or decentralized governance system of the blockchain system may certify to the ,securities and ,exchange ,commission that the blockchain system to which a digital commodity relates is a mature blockchain system4 7#b7 ,filing requirements ,a certification described under paragraph 7#a7 shall be filed with the ,commission1 and include such information that is reasonably necessary to establish that the blockchain system is not controlled by any person or group of persons under common control1 which may include information regarding-- 7,a7 the operation of the blockchain system2 7,b7 the functionality of the related digital commodity2 7,c7 how the market value of the digital commodity is substantially derived from the programmatic functioning of such blockchain system2 7,d7 any decentralized governance system which relates to the blockchain system2 and 7,e7 the current roles1 if any1 of the digital commodity issuer1 digital commodity affiliated persons1 and digital commodity related persons where such roles are material to the development or operation of such blockchain system or the decentralized governance system of such blockchain system4 7#c7 ,rebuttable presumption ,the ,commission may rebut a certification described under paragraph 7#a7 with respect to a blockchain system if the ,commission1 within #fj days of receiving such certification1 determines that the blockchain system is not a mature blockchain system4 7#d7 ,certification review 7,a7 ,in general ,any blockchain system that relates to a digital commodity for which a certification has been made under paragraph 7#a7 shall be considered a mature blockchain system #fj days after the date on which the ,commission receives a certification under paragraph 7#a71 unless the ,commission notifies the person who made the certification within such time that the ,commission is staying the certification due to-- 7i7 an inadequate explanation by the person making the certification2 or 7ii7 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 7i7 ,each certification received under paragraph 7#a74 7ii7 ,each stay of the ,commission under this subsection1 and the reasons therefor4 7iii7 ,any response from a person making a certification under paragraph 7#a7 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 paragraph 7#a7 for the same blockchain system which relates to a digital commodity which are received during the review period provided under this paragraph4 7#e7 ,stay of certification 7,a7 ,in general ,a notification by the ,commission pursuant to paragraph 7#d77;,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 paragraph 7#d77;,a71 the ,commission may begin a public comment period of at least #cj days in conjunction with a stay under this subsection4 7#f7 ,disposition of certification ,a certification made under paragraph 7#a7 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#g7 ,recertification ,with respect to a blockchain system for which a certification has been rebutted under this subsection1 no person may make a certification under paragraph 7#a7 with respect to such blockchain system during the #ij-;day period beginning on the date of such rebuttal4 7#h7 ,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 subparagraph 7,a71 the court shall have de novo review of the determination to rebut the certification4 7b7 ,maturity criteria 7#a7 ,sense of ,congress ,it is the sense of the ,congress that protecting investors1 maintaining fair1 orderly1 and efficient markets1 and facilitating capital formation necessitates establishing clear criteria for blockchain systems to be deemed mature1 as well as enabling the ,commission to develop1 without prejudice to any such criteria codified in statute1 alternative criteria by which blockchain systems may be considered not to be controlled by any person or group of persons under common control in order to accommodate changes in markets and technology4 7#b7 ,in general ,the ,commission may issue rules identifying conditions by which a blockchain system1 together with its related digital commodity1 shall be considered a mature blockchain system1 consistent with the protection of investors1 maintenance of fair1 orderly1 and efficient markets1 and the facilitation of capital formation4 7#c7 ,rules of construction 7,a7 ,nothing in this subsection may be construed to permit the ,commission to impose additional criteria to the criteria in subsection 7c7 for certifying that a blockchain system is a mature blockchain system pursuant to subsection 7c74 7,b7 ,nothing in this subsection or subsection 7c7 may be construed to limit the ,commission's ability to identify alternative conditions and criteria by which a blockchain system may be considered a mature blockchain system4 7c7 ,deemed mature 7#a7 ,in general ,notwithstanding subsection 7b71 for the purposes of subsection 7a71 a digital commodity issuer1 digital commodity related person1 digital commodity affiliated person1 or decentralized governance system of the blockchain system may establish that a blockchain system1 together with its related digital commodity1 is not controlled by any person or group of persons under common control1 if the blockchain system1 together with its related digital asset1 meets the requirements described in paragraph 7#b7 or 7#c74 7#b7 ,criteria for any blockchain system ,the requirements described in this paragraph are the following3 7,a7 ,system value 7i7 ,market value ,the digital commodity has a value that is substantially derived from the adoption1 use1 and functioning of the blockchain system4 7ii7 ,development of value mechanism substantially completed ,where the digital commodity issuer has made public a development plan describing how the digital commodity's value is reasonably expected to be derived from the programmatic functioning of the blockchain system1 the development of such mechanisms has been substantially completed4 7,b7 ,functional system ,the blockchain system allows network participants to engage in the activities the blockchain system is intended to provide1 including-- 7i7 using1 transmitting1 or storing value1 or otherwise executing transactions1 on the blockchain system2 7ii7 deploying1 executing1 or accessing software or services1 or otherwise offering or participating in services1 deployed on or integrated with the blockchain system2 7iii7 participating in the consensus mechanism1 transaction validation process1 or decentralized governance system of the blockchain system2 or 7iv7 operating any client1 node1 validator1 sequencer1 or other form of computational infrastructure with respect to the blockchain system4 7,c7 ,open and interoperable system ,the blockchain system-- 7i7 is composed of source code that is open source2 and 7ii7 does not restrict or prohibit based on the exercise of unilateral authority any person1 other than a digital commodity issuer1 digital commodity related person1 or a digital commodity affiliated person from engaging in the activities the blockchain system is intended to provide1 including the activities described in subparagraph 7,b74 7,d7 ,programmatic system ,the blockchain system operates1 executes1 and enforces its operations and transactions based solely on pre-established1 transparent rules encoded directly within the source code of the blockchain system4 7,e7 ,system governance ,no person or group of persons under common control-- 7i7 has the unilateral authority1 directly or indirectly1 through any contract1 arrangement1 understanding1 relationship1 or otherwise1 to control or materially alter the functionality1 operation1 or rules of consensus or agreement of the blockchain system or its related digital commodity2 or 7ii7 has the unilateral authority to direct the voting1 in the aggregate1 of #bj percent or more of the outstanding voting power of such blockchain system by means of a related digital commodity1 nodes or validators1 a decentralized governance system1 or otherwise1 in a blockchain system which can be altered by a voting system4 7,f7 ,impartial system ,no person or group of persons under common control possesses a unique permission or privilege to alter the functionality1 operation1 or rules of consensus or agreement of the blockchain system or its related digital commodity1 unless such alteration-- 7i7 addresses errors1 regular maintenance1 or cybersecurity risks of the blockchain system that affect the programmatic functioning of the blockchain system2 and 7ii7 is adopted through the consensus or agreement of a decentralized governance system4 7,g7 ,distributed ownership ,no digital commodity issuer1 digital commodity related person1 or digital commodity affiliated person beneficially owns1 in the aggregate1 #bj percent or more of the total amount of units of the digital commodity4 7#c7 ,optional criteria for preexisting blockchain systems ,the requirements described in this paragraph are that the blockchain system-- 7,a7 was created prior to the date of enactment of this section2 7,b7 met the requirements of subparagraphs 7,a7 through 7,f7 of paragraph 7#b7 prior to ,january #a1 #bjbj2 and 7,c7 at least #ej percent of the units of the digital commodity related to the blockchain system are held by persons other than the digital commodity issuer1 a digital commodity related person1 or a digital commodity affiliated person4 7d7 ,decentralized governance system 7#a7 ,for the purposes of this section1 a decentralized governance system is not a person or a group of persons under common control4 7#b7 ,a blockchain system1 together with its digital commodity1 shall not be precluded from being considered a mature blockchain system solely based on a functional1 administrative1 clerical1 or ministerial action of a decentralized governance system1 including any such action taken by a person acting on behalf of and at the direction of the decentralized governance system1 as determined by the ,commission and consistent with the protection of investors1 maintenance of fair1 orderly1 and efficient markets1 and the facilitation of capital formation4 7e7 ,rulemaking ,not more than #bgj days after the date of enactment of this section1 the ,commission shall issue rules to carry out this section4 4 #bjf4 ,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 ,intermediaries at the ,securities and ,exchange ,commission #cja4 ,treatment of digital commodities and permitted payment stablecoins 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;a77#aj7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a77 is amended by adding at the end the following3 ,the term does not include a digital commodity or permitted payment stablecoin4 7c7 ,investment ,advisers ,act of #aidj ,section #bjb7;a7 of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#b7;a77 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 and 7#c7 by adding at the end1 the following3 7#cb7 ,digital commodity-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 commodity-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 7e7 ,securities ,investor ,protection ,act of #aigj ,section #af7ad7 of the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #ghlll7#ad77 is amended by adding at the end the following3 ,the term does not include a digital commodity or permitted payment stablecoin1 as such terms are defined1 respectively1 under section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a774 #cjb4 ,anti-fraud authority over permitted payment stablecoins and certain digital commodity transactions 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 with respect to permitted payment stablecoin and digital commodity transactions engaged in by a broker or dealer or through an alternative trading system or1 as applicable1 a national securities exchange to the same extent as they apply to securities transactions4 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 and digital commodities with respect to those circumstances in which the permitted payment stablecoins and digital commodities are brokered1 traded1 or custodied by a broker or dealer or through an alternative trading system or1 as applicable1 a national securities exchange to the same extent as they apply to securities4 4 7b7 ,treatment of permitted payment stablecoins ,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 ,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 dealer or through an alternative trading system or national securities exchange4 7b7 ,commission jurisdiction ,the ,commission shall only have jurisdiction over a transaction in a permitted payment stablecoin with respect to those circumstances in which a permitted payment stablecoin is brokered1 traded1 or custodied-- 7#a7 by a broker or dealer2 7#b7 through a national securities exchange2 or 7#c7 through an alternative 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 broker or dealer2 7#b7 through a national securities exchange2 or 7#c7 through an alternative trading system4 7d7 ,rule of construction ,nothing in this section may be construed to prohibit permitted payment stablecoins from being custodied by any person or entity that is not a broker1 dealer1 alternative trading system1 or national securities exchange4 4 #cjc4 ,eligibility of alternative trading systems 7a7 ,in general ,section #e of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;e7 is amended-- 7#a7 by striking ,it and inserting the following3 7a7 ,in general ,it 2 7#b7 by adding at the end the following3 7b7 ,digital commodity protections 7#a7 ,in general ,the ,commission may not preclude a trading platform from operating pursuant to a covered exemption on the basis that the assets traded or to be traded on such platform include-- 7,a7 digital commodities or permitted payment stablecoins2 and 7,b7 securities4 7#b7 ,covered exemption ,in this subsection1 the term covered exemption means an exemption-- 7,a7 described in subsection 7a77#b72 or 7,b7 with respect to any other rule of the ,commission relating to the definition of exchange4 4 7b7 ,securities ,exchange ,act of #aicd ,section #c7;a77#b7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a77#b77 is amended by adding at the end the following3 ,an alternative trading system primarily facilitating the trading of digital commodities1 permitted payment stablecoins1 or both1 is not a facility of an exchange44 7c7 ,rule of construction ,nothing in this section1 the amendments made by this section1 or section #cjd may be construed to-- 7#a7 prohibit a national securities exchange from owning or operating any other type of alternative trading system2 or 7#b7 create a presumption that any other type of alternative trading system owned or operated by a national securities exchange is a facility of that exchange4 #cjd4 ,operation of alternative trading systems 7a7 ,commission authority ,the ,securities and ,exchange ,commission shall have jurisdiction over digital commodity activities and transactions engaged in by-- 7#a7 a registered broker or registered dealer exempt from registration with the ,commodity ,futures ,trading ,commission pursuant to section #ek of the ,commodity ,exchange ,act2 and 7#b7 a national securities exchange4 7b7 ,rulemaking authority ,the ,securities and ,exchange ,commission shall have authority to issue rules governing any digital commodity activities and transactions engaged in by a broker1 dealer1 or national securities exchange registered with the ,securities and ,exchange ,commission and exempt from registration with the ,commodity ,futures ,trading ,commission pursuant to section #ek of the ,commodity ,exchange ,act1 consistent with this section and what is necessary or appropriate in the public interest or for the protection of investors4 7c7 ,national securities exchanges ,not later than #bgj days after the date of the enactment of this ,act1 the ,securities and ,exchange ,commission shall revise the covered regulations to permit a national securities exchange or affiliate thereof to operate an alternative trading system that permits the trading of digital commodities1 permitted payment stablecoins1 or both by registered brokers or registered dealers that are exempt from registration with the ,commodity ,futures ,trading ,commission pursuant section #ek of the ,commodity ,exchange ,act1 consistent with this section and what is necessary or appropriate in the public interest or for the protection of investors4 7d7 ,registered brokers and registered dealers ,not later than #bgj days after the date of the enactment of this ,act1 the ,securities and ,exchange ,commission shall revise the covered regulations to permit a registered broker or registered dealer that is exempt from registration with the ,commodity ,futures ,trading ,commission pursuant to section #ek of the ,commodity ,exchange ,act to operate an alternative trading system that permits the trading of digital commodities1 permitted payment stablecoins1 or both1 consistent with this section and what is necessary or appropriate in the public interest or for the protection of investors4 7e7 ,permitted trading 7#a7 ,in general ,an alternative trading system operated pursuant to this section and the regulations promulgated hereunder shall be permitted to trade upon notice to the ,securities and ,exchange ,commission in a manner prescribed by the ,securities and ,exchange ,commission any digital commodity that has been listed by a digital commodity exchange in compliance with section #e;i7c77#c7 of the ,commodity ,exchange ,act4 7#b7 ,commission authority ,digital commodity transactions offered on an alternative trading system operating pursuant to this section shall be subject to the jurisdiction of the ,securities and ,exchange ,commission4 ,the ,securities and ,exchange ,commission shall have authority to promulgate rules governing such digital commodity transactions of alternative trading systems1 consistent with this section and what is necessary or appropriate in the public interest or for the protection of investors4 7#c7 ,suspension of trading ,the ,securities and ,exchange ,commission may suspend the trading of a digital commodity by an alternative trading system operating pursuant to this section as is necessary or appropriate in the public interest and is consistent with the protection of investors4 7f7 ,order display and execution reporting ,not later than #bgj days after the date of the enactment of this ,act1 the ,securities and ,exchange ,commission shall issue and revise rules1 as necessary or appropriate in the public interest or for the protection of investors1 regarding whether alternative trading systems operating pursuant to subsections 7c7 and 7d7 have an obligation to provide the prices and sizes of orders displayed to more than one person in such alternative trading system of digital commodities to self-regulatory organizations with members who trade in digital commodities or permitted payment stablecoins4 7g7 ,principles of trade ,not later than #bgj days after the date of the enactment of this ,act1 the ,securities and ,exchange ,commission shall issue and revise rules1 as necessary or appropriate in the public interest or for the protection of investors1 to-- 7#a7 apply the rules and standards promulgated pursuant to paragraph 7#b7 to the appropriate market participants1 including-- 7,a7 national securities exchanges operating an alternative trading system described in subsection 7c72 and 7,b7 registered brokers and registered dealers operating or subscribing to an alternative trading system described in subsection 7d72 and 7#b7 apply1 as appropriate to the market participants described in subparagraph 7#a7 and customers thereof rules and standards to-- 7,a7 prevent fraudulent and manipulative acts and practices2 7,b7 foster cooperation and coordination with persons engaged in regulating1 settling1 processing information with respect to1 and facilitating transactions in digital commodities or permitted payment stablecoins traded1 as applicable1 on or by any alternative trading system operating pursuant to subsection 7c7 or 7d71 or any registered broker or registered dealer2 7,c7 remove impediments to and perfect the mechanism of a free and open market in digital commodities or permitted payment stablecoins traded1 as applicable1 on or by any alternative trading system operating pursuant to subsection 7c7 or 7d71 or any registered broker or registered dealer2 7,d7 in general1 protect investors and the public interest2 and 7,e7 prohibit any unfair discrimination between-- 7i7 customers2 7ii7 any market participants described in subparagraphs 7,a7 and 7,b7 of paragraph 7#a72 or 7iii7 issuers of digital commodities4 7h7 ,implementing organizations ,the ,securities and ,exchange ,commission shall require any registered national securities association that has as a member a registered broker or registered dealer that operates an alternative trading system pursuant to subsection 7d7 or otherwise transacts in digital commodities or permitted payment stablecoins to adopt such rules as may be necessary to further compliance with this section1 including subsection 7g77#b71 protect investors1 maintain fair1 orderly1 and efficient markets1 and facilitate capital formation4 7i7 ,rule of construction ,the enumeration of any category of rules or regulations in this section shall not be construed to limit the authority of the ,securities and ,exchange ,commission to promulgate such rules as may be necessary or appropriate to implement this section and the purposes of this ,act1 including over-- 7#a7 system capacity1 integrity1 and security2 7#b7 examinations1 inspections1 and investigations2 7#c7 trade reporting2 or 7#d7 written procedures for the confidential treatment of trading information4 7j7 ,memorandum of understanding ,consistent with section #ek of the ,commodity ,exchange ,act and to carry out this ,act1 the ,securities and ,exchange ,commission shall enter into a memorandum of understanding with the ,commodity ,futures ,trading ,commission to ensure-- 7#a7 requirements imposed on registered brokers or registered dealers operating an alternative trading system pursuant to subsection 7c7 or otherwise transacting in digital commodities or permitted payment stablecoins are consistent with the substantive requirements under section #du of the ,commodity ,exchange ,act2 7#b7 requirements imposed on alternative trading systems operating pursuant to subsection 7c7 or 7d7 are not inconsistent with core principles of and are consistent with the other substantive requirements under section #e;i of the ,commodity ,exchange ,act2 and 7#c7 non-duplicative supervision and enforcement with respect to registrants of the ,securities and ,exchange ,commission notice registered with the ,commodity ,futures ,trading ,commission4 7k7 ,covered regulations defined ,in this section1 the term covered regulations means sections #bdb4cjj1 #bdb4cja1 #bdb4cjb1 #bdb4cjc1 #bdb4cjd1 and #bdb4ajjj through #bdb4ajjg of title #ag1 ,code of ,federal ,regulations4 7l7 ,rule of construction ,nothing in this section shall be construed to limit the anti-fraud1 anti-manipulation1 or false reporting enforcement authorities of the ,commodity ,futures ,trading ,commission with respect to a contract of sale of a commodity and persons effecting such contracts4 #cje4 ,modernization of recordkeeping requirements 7a7 ,in general ,for purposes of books and records requirements for brokers1 dealers1 and exchanges under the ,securities and ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq471 a person may consider records from a blockchain system4 7b7 ,revision of rules ,not later than #ahj days after the date of enactment of this ,act1 the ,securities and ,exchange ,commission shall issue and revise such rules as may be necessary to implement this section4 #cjf4 ,exemptive authority ,section #bh of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggz-#c7 is amended by striking by rule or regulation and inserting by rule1 regulation1 or order4 #cjg4 ,additional registrations with the ,commodity ,futures ,trading ,commission ,section #ae of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho7 is amended by adding at the end the following3 7p7 ,additional registrations with the ,commodity ,futures ,trading ,commission ,a registered broker or registered dealer shall be permitted to maintain a registration with the ,commodity ,futures ,trading ,commission as a digital commodity broker or digital commodity dealer1 to list or trade contracts of sale for digital commodities4 4 #cjh4 ,exempting digital commodities from ,state securities laws ,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 in connection with digital commodities ,a digital commodity shall be treated as a covered security4 4 #cji4 ,exclusion for decentralized finance 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 ,decentralized finance activities not subject to this ,act 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 based on the person directly or indirectly engaging in any of the following activities1 whether singly or in combination1 in relation to the operation of a blockchain system or in relation to a decentralized finance trading protocol3 7#a7 ,compiling network transactions or relaying1 searching1 sequencing1 validating1 or acting in a similar capacity4 7#b7 ,providing computational work1 operating a node or oracle service1 or procuring1 offering1 or utilizing network bandwidth1 or providing other similar incidental services4 7#c7 ,providing a user-interface that enables a user to read and access data about a blockchain system4 7#d7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing a blockchain system or a decentralized finance trading protocol4 7#e7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing a decentralized finance messaging system1 or operating or participating in a liquidity pool1 for the purpose of executing a contract of sale of a digital commodity4 7#f7 ,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 the user's digital assets or related private keys4 7b7 ,exceptions ,subsection 7a7 shall not apply to the anti-fraud and anti-manipulation authorities of the ,commission4 4 #caj4 ,treatment of custody activities by banking institutions 7a7 ,treatment of custody activities ,the appropriate ,federal banking agency1 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 trust company1 broker1 or dealer1 or any affiliate thereof 7the entity7-- 7#a7 to include assets held in custody that are not owned by the entity as a liability on the financial statement or balance sheet of the entity1 including digital commodity or permitted payment stablecoin custody or safekeeping services2 7#b7 to hold regulatory capital against assets1 including reserves backing such assets1 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 supervisor2 7,d7 a ,state credit union supervisor 7as defined in section #fjjc of the ,anti-,money ,laundering ,act of #bjbj 7#ca ,u4,s4,c4 #ecaa note772 or 7,e7 the ,securities and ,exchange ,commission 7in the case of a broker or dealer72 and 7#c7 to recognize a liability for any obligations related to activities or services performed with respect to digital commodities 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 ,banking terms ,the terms appropriate ,federal banking agency1 depository institution1 national bank1 and ,state bank supervisor have the meaning given those terms1 respectively1 under section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac74 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 ,act 7#ab ,u4,s4,c4 #ageb74 #caa4 ,digital commodity activities that are financial in nature ,section #d7k77#d7 of the ,bank ,holding ,company ,act of #aief 7#ab ,u4,s4,c4 #ahdc7k77#d77 is amended-- 7#a7 in subparagraph 7,a71 by striking or securities and inserting 1 securities1 or digital commodities2 and 7#b7 in subparagraph 7,e71 by inserting or digital commodities before the period at the end4 #cab4 ,effective date2 administration ,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 #cac4 ,studies on foreign adversary participation 7a7 ,in general ,the ,secretary of the ,treasury1 in consultation with the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission1 shall1 not later than #a year after date of the enactment of this section1 conduct a study and submit a report to the relevant congressional committees that-- 7#a7 identifies any digital commodity registrants which are owned by governments of foreign adversaries2 7#b7 determines whether any governments of foreign adversaries are collecting personal data or trading data about ,united ,states persons in the digital commodity markets2 and 7#c7 evaluates whether any proprietary intellectual property of digital commodity registrants is being misused or stolen by any governments of foreign adversaries4 7b7 ,,gao study and report 7#a7 ,in general ,the ,comptroller ,general shall1 not later than #a year after date of the enactment of this section1 conduct a study and submit a report to the relevant congressional committees that-- 7,a7 identifies any digital commodity registrants which are owned by governments of foreign adversaries2 7,b7 determines whether any governments of foreign adversaries are collecting personal data or trading data about ,united ,states persons in the digital commodity markets2 and 7,c7 evaluates whether any proprietary intellectual property of digital commodity registrants is being misused or stolen by any governments of foreign adversaries4 7c7 ,definitions ,in this section3 7#a7 ,digital commodity registrant ,the term digital commodity registrant means any person required to register as a digital commodity exchange1 digital commodity broker1 or digital commodity dealer under the ,commodity ,exchange ,act4 7#b7 ,foreign adversaries ,the term foreign adversaries means the foreign governments and foreign non-government persons determined by the ,secretary of ,commerce to be foreign adversaries under section #g4d7;a7 of title #ae1 ,code of ,federal ,regulations4 7#c7 ,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 ,,iv ,registration for ,digital ,commodity ,intermediaries at the ,commodity ,futures ,trading ,commission #dja4 ,commission jurisdiction over digital commodity transactions 7a7 ,savings clause ,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 ,,clarity ,act of #bjbe 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 #ai2 or 7ii7 the activities of any person with respect to any such an agreement1 contract1 or transaction4 4 7b7 ,limitation on authority over permitted payment stablecoins ,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 ,commission jurisdiction over financing agreements ,section #b7;c77#b7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;c77#b77 is amended-- 7#a7 in subparagraph 7,d7-- 7,a7 in clause 7ii77,i71 by inserting after paragraph 7#a7 the following3 7other than an agreement1 contract1 or transaction in a permitted payment stablecoin72 and 7,b7 by redesignating clause 7iv7 as clause 7v7 and inserting after clause 7iii7 the following3 7iv7 ,agreements for margin financing ,notwithstanding clause 7iii71 a digital commodity broker may1 subject to the requirements of section #du7c77#b71 offer to or enter into an agreement for margin financing with a customer for the purchase or sale of a digital commodity1 provided any purchase or sale made pursuant to the agreement shall result in the delivery of the digital commodity into or from an account carried for the customer1 as determined by the ,commission by rule or regulation1 based on commercial spot market practices4 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-- 7,i7 custodial or depository activities for a digital commodity 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 ,act72 or 7,,ii7 an offer or sale of an investment contract involving a digital commodity or of a securities offer or sale involving a digital commodity4 7iii7 ,mixed digital asset transactions 7,i7 ,in general ,clause 7i7 shall not apply to a mixed digital asset transaction4 7,,ii7 ,reports on mixed digital asset transactions ,a digital commodity issuer1 digital commodity related person1 digital commodity affiliated person1 or other person registered with the ,securities and ,exchange ,commission that engages in a mixed digital asset transaction1 shall1 on request of the ,commission1 open to inspection and examination by the ,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 clauses 7i7 and 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 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 asset 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 asset custodian1 as applicable12 and 7,b7 by inserting 3 ,provided further1 ,that any such property that is a digital asset shall be held in a qualified digital asset 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 asset 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 submit a written certification to the ,commission that the digital commodity meets the requirements of this ,act 7including the regulations prescribed under this ,act74 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 an analysis of how the digital commodity meets the requirements of section #e;i7c77#c74 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 held by a digital commodity related person or a digital commodity 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 listing of the digital commodity is inconsistent with the requirements of this ,act or the rules and regulations prescribed under this ,act4 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 #a business day 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 ,commission2 and 7ii7 once1 for an additional #cj business days1 through written notice to the eligible entity 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 ,prior approval before registration 7,a7 ,in general ,a person applying for registration with the ,commission for the purposes of listing or offering a digital commodity for trading in a digital commodity cash or spot market may request that the ,commission grant prior approval for the person to list or offer the digital commodity on being registered with the ,commission4 7,b7 ,request for prior approval ,a person seeking prior approval under subparagraph 7,a7 shall furnish the ,commission with a written certification that the digital commodity meets the requirements of this ,act 7including the regulations prescribed under this ,act7 and the information described in paragraph 7#b74 7,c7 ,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,d7 ,disapproval 7i7 ,in general ,the ,commission shall approve the listing of the digital commodity unless the ,commission finds that the listing is inconsistent with this ,act 7including any regulation prescribed under this ,act74 7ii7 ,analysis required ,the ,commission shall include1 with any findings made under clause 7i71 a detailed analysis of the factors on which the decision is based4 7iii7 ,public findings ,the ,commission shall make public any disapproval decision1 and any related findings and analysis1 made under this paragraph4 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 activity1 as the ,commission may determine by rule or regulation1 in a digital commodity2 or 7ii7 serves only customers in a single ,state1 territory1 or possession of the ,united ,states4 7#b7 ,additional registrations 7,a7 ,with the ,commission ,in order to foster the development of fair and orderly markets1 protect customers1 and promote responsible innovation1 the ,commission-- 7i7 shall prescribe rules to exempt an entity registered with the ,commission under more than #a section of this ,act from duplicative1 conflicting1 or unduly burdensome provisions of this ,act and the rules under this ,act2 7ii7 shall prescribe rules to address conflicts of interests and activities of the entity2 and 7iii7 may1 after an analysis of the risks and benefits1 prescribe rules to provide for portfolio margining4 7,b7 ,with a registered futures association 7i7 ,in general ,a registered digital commodity exchange shall become and remain a member of a registered futures association and comply with rules related to such 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,c7 ,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,c7 ,section #d;b-#a 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 ,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 ,subject to any conditions1 requirements1 or limitations imposed by the ,commission pursuant to subparagraph 7,c71 a digital commodity exchange may engage in trading on the exchange so long as the trading is not solely for the purpose of the profit of the 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 credit1 market1 and liquidity risks associated with the digital commodity business of the exchange4 7iii7 ,operational needs ,a transaction related to the operational needs of the business of the digital commodity exchange or its affiliate4 7iv7 ,functional use ,a transaction related to the functional operation of a blockchain system4 7,c7 ,rulemaking ,the ,commission may1 by rule1 establish conditions1 requirements1 or other limitations on the activities of a digital commodity exchange and its affiliate permitted pursuant to subparagraph 7,b7 that are necessary for the protection of customers1 the promotion of innovation1 or the maintenance of fair1 orderly1 and efficient markets4 7,d7 ,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 purposes of this ,act4 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 establish policies and procedures to permit trading in a digital commodity only if-- 7i7 reports with respect to the digital commodity required under1 as applicable1 section #d;,b7b77#c7 or #d;,b7b77#e77;,c7 of the ,securities ,act of #aicc 7or1 with respect to a digital commodity not issued in reliance on section #d7;a77#h7 of the ,securities ,act of #aicc1 a comparable set of reports1 where required by the ,securities and ,exchange ,commission7 have been filed with the ,securities and ,exchange ,commission2 7ii7 such other similar information as the ,commission may1 by rule or regulation require1 that is related to the ongoing development plan of the blockchain system and is able to be publicly ascertained1 has been provided to the public2 or 7iii7 the blockchain system to which the digital commodity relates1 together with the digital commodity1 is certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd4 7,b7 ,public information requirements 7i7 ,in general ,a digital commodity exchange shall-- 7,i7 permit trading in a digital commodity only if the digital commodity exchange reasonably determines that the information required by clause 7ii7 is correct1 current1 and available to the public2 and 7,,ii7 establish policies and procedures to determine that the information provided pursuant to 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 following information3 7,i7 ,source code ,the source code for any blockchain system to which the digital commodity relates4 7,,ii7 ,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 commodity relates1 to the extent any such independent access1 search1 and verification activities are technically feasible with respect to the blockchain system4 7,,iii7 ,digital commodity economics ,a narrative description of the purpose of any blockchain system to which the digital commodity relates and the operation of any such blockchain 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 commodities to be created1 the release schedule for the digital commodities1 and the total number of digital commodities then outstanding2 7bb7 information detailing any applicable consensus mechanism or process for validating transactions1 method of generating or mining digital commodities1 and any process for burning or destroying digital commodities 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 commodities2 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 commodity on the exchange4 7,v7 ,additional information ,such additional information as the ,commission may determine by rule to be necessary for a customer to understand the financial and operational risks of a digital commodity1 and to be practically feasible to provide4 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 7,,iii7 are not drafted in a way that presumes the customer already has a base knowledge1 familiarity1 or understanding of the basic terminology1 operation1 and function of blockchain systems2 and 7,,iv7 succinctly explain the information that is required to be communicated to the customer4 7iv7 ,reliance on previous disclosures ,in complying with this subparagraph1 a digital commodity exchange may rely on and make available to the public relevant information publicly disclosed to the ,commission1 the ,securities and ,exchange ,commission1 or an appropriate ,federal banking agency4 7,c7 ,digital commodities held by related and digital commodity affiliated persons ,a digital commodity exchange shall establish policies and procedures designed to permit the trading of a unit of a digital commodity acquired from the issuer and held by a digital commodity affiliated person or a digital commodity related person1 only in accordance with the requirements of section #d;,c of the ,securities ,act of #aicc4 7#d7 ,treatment of customer assets ,a digital commodity exchange shall establish policies 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 disruptions1 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 relating to the business of the exchange1 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 ,the digital commodity exchange shall establish and enforce rules-- 7,a7 to minimize conflicts of interest in the decision making processes of the contract market2 and 7,b7 to establish a process for resolving conflicts of interest referred to in subparagraph 7,a74 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 sum of-- 7i7 the total amount that would enable the digital commodity exchange to cover the operating costs of the digital commodity exchange for a #a-year period1 as calculated on a rolling basis2 and 7ii7 the total amount necessary to meet the financial obligations of the digital commodity exchange to all customers of the digital commodity exchange4 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 and designed to permit consideration of the views of market participants4 7,b7 ,fitness standards ,a digital commodity exchange shall establish and enforce appropriate fitness standards for-- 7i7 officers and 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 systems in accordance with industry standards1 that-- 7i7 are reliable and secure2 and 7ii7 have adequate scalable capacity2 7,b7 establish and maintain emergency procedures1 backup resources1 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 customer access to the money1 assets1 and property of the customer4 7#b7 ,segregation of funds 7,a7 ,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 7,b7 ,commingling prohibited ,money1 assets1 and property described in subparagraph 7,a7 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,c7 ,exceptions 7i7 ,use of funds 7,i7 ,in general ,notwithstanding subparagraph 7,a71 money1 assets1 and property 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 asset custodian4 7,,ii7 ,withdrawal ,notwithstanding subparagraph 7,a71 such share of the money1 assets1 and property described in subparagraph 7,a7 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 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 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#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 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#d7 ,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 the sale of a unit of a digital commodity occurring on or subject to the rules of a digital commodity exchange shall be considered a contract for the purchase or sale of a commodity for future delivery1 on or subject to the rules of1 a contract market or board of trade for purposes of the definition of 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 ,assets removed from segregation ,assets removed from segregation due to a customer election under paragraph 7#f7 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 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 exchange or any person other than a customer of the digital commodity exchange2 or 7ii7 for any other person1 including any depository1 other digital commodity exchange1 or digital asset 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#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#b7 for any unit of a digital commodity to be used under subparagraph 7,b7 of this paragraph1 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 shall1 by rule1 establish notice and disclosure requirements1 and may1 by rule1 establish 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 paragraph1 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 ,the ,commission may1 by rule1 impose any additional requirements related to the operations and activities of the digital commodity exchange and an affiliated digital commodity broker necessary to protect market participants1 promote fair and equitable trading on the digital commodity exchange1 and promote responsible 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 conflicts 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 asset custodian ,a digital commodity exchange shall hold in a qualified digital asset custodian each unit of a digital asset 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 customers4 7i7 ,exemptions 7#a7 ,in general ,in order to promote responsible 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 ,foreign exchanges ,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 section with respect to activities and transactions subject to this ,act4 4 #dje4 ,qualified digital asset 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 asset custodians 7a7 ,in general ,a person is a qualified digital asset custodian for purposes of this ,act if the person-- 7#a7 holds digital assets on behalf of a person registered under this ,act or a customer of a person registered under this ,act2 and 7#b7 is in compliance with subsections 7b7 and 7c74 7b7 ,supervision requirement ,a person is in compliance with this subsection if the person is subject to-- 7#a7 supervision and examination for custody and safekeeping of digital assets by an appropriate ,federal banking agency1 the ,national ,credit ,union ,administration1 the ,commission1 or the ,securities and ,exchange ,commission2 or 7#b7 adequate supervision and appropriate regulation for custody and safekeeping of digital assets by-- 7,a7 a ,state bank supervisor 7within the meaning of section #c of the ,federal ,deposit ,insurance ,act72 7,b7 a ,state credit union supervisor1 as defined under section #fjjc of the ,anti-,money ,laundering ,act of #bjbj2 or 7,c7 an appropriate foreign governmental authority in the home country of the digital commodity custodian4 7c7 ,other requirements ,a person shall be in compliance with this subsection if3 7#a7 ,not otherwise prohibited ,the person has not been prohibited by its supervisor from engaging in an activity with respect to the custody and safekeeping of digital assets4 7#b7 ,information sharing 7,a7 ,in general ,the person shares information with the ,commission on request and complies with such requirements for periodic sharing of information regarding customer accounts that the person holds on behalf of an entity registered with the ,commission as the ,commission determines by rule are reasonably necessary to effectuate any of the provisions1 or to accomplish any of the purposes1 of this ,act4 7,b7 ,provision of information ,if the person is subject to regulation and examination by an appropriate ,federal banking agency1 the person may satisfy any information request described in subparagraph 7,a7 by providing the ,commission with a detailed listing1 in writing1 of the digital assets of a customer in the custody of1 or use by1 the person4 7,c7 ,rulemaking for ,,cftc entities 7i7 ,in general ,the ,commission shall prescribe rules to permit a person registered with the ,commission to be a qualified digital asset custodian in compliance with this section4 7ii7 ,content ,in prescribing the rules under subparagraph 7,a71 the ,commission shall require a person registered with the ,commission to-- 7,i7 implement requirement consistent with the requirements in subsection 7d77#a72 7,,ii7 establish sufficient system safeguards2 7,,iii7 prevent or mitigate conflicts of interest1 as appropriate2 and 7,,iv7 establish separate governance arrangements for the custodial function of the entity4 7d7 ,adequate supervision and appropriate regulation 7#a7 ,in general ,for purposes of subsection 7b71 the terms adequate supervision and appropriate regulation mean such minimum standards for supervision and regulation as are reasonably necessary to protect the digital assets held by a person registered under this ,act1 including standards relating to the licensing1 examination1 and supervisory processes that require the person to1 at a minimum-- 7,a7 receive a review and evaluation of ownership1 character and fitness1 conflicts of interest1 business model1 financial statements1 funding resources1 and policies and procedures of the person2 7,b7 hold capital sufficient for the financial integrity of the person2 7,c7 protect customer assets2 7,d7 establish and maintain books and records regarding the business of the person2 7,e7 submit financial statements and audited financial statements to the applicable supervisor described in subsection 7b72 7,f7 provide disclosures to the applicable supervisor described in subsection 7b7 regarding actions1 proceedings1 and other items as determined by the supervisor2 7,g7 maintain and enforce policies and procedures for compliance with applicable ,state and ,federal laws1 including those related to anti-money laundering and cybersecurity2 7,h7 establish a business continuity plan to ensure functionality in cases of disruption2 and 7,i7 establish policies and procedures to resolve complaints4 7#b7 ,rulemaking with respect to definitions 7,a7 ,in general ,for purposes of this section1 the ,commission may1 by rule1 further define the terms adequate supervision and appropriate regulation as necessary and appropriate for the protection of customers1 and consistent with the purposes of this ,act4 7,b7 ,conditional treatment of certain custodians before rulemaking ,before the effective date of a rulemaking under subparagraph 7,a71 a trust company is deemed subject to adequate supervision and appropriate regulation if-- 7i7 the trust company is expressly permitted by a ,state bank supervisor to engage in the custody and safekeeping of digital assets2 7ii7 the ,state bank supervisor has established licensing1 examination1 and supervisory processes that require the trust company to1 at a minimum1 meet the conditions described in subparagraphs 7,a7 through 7,i7 of paragraph 7#a72 and 7iii7 the trust company is in good standing with its ,state bank supervisor4 7,c7 ,transition period for certain custodians ,in implementing the rulemaking under subparagraph 7,a71 the ,commission shall provide a transition period of not less than #b years for any trust company that is deemed subject to adequate supervision and appropriate regulation under subparagraph 7,b7 on the effective date of the rulemaking4 7e7 ,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 section1 or any requirement to utilize a qualified digital asset custodian1 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 seq47 is amended by inserting after section #dt the following3 #du4 ,registration and regulation of digital commodity brokers and dealers 7a7 ,registration 7#a7 ,requirement ,it shall be unlawful for any person to act as a digital commodity broker or digital commodity dealer unless the person is registered as such with the ,commission4 7#b7 ,additional registration 7,a7 ,rules ,in order to foster the development of fair and orderly markets1 protect customers1 and promote responsible innovation1 the ,commission-- 7i7 shall prescribe rules to exempt an entity registered with the ,commission under more than #a section of this ,act from duplicative1 conflicting1 or unduly burdensome provisions of this ,act and the rules under this ,act2 7ii7 shall prescribe rules to address conflicts of interests and the activities of the entity2 and 7iii7 may after an analysis of the risks and benefits1 prescribe rules to provide for portfolio margining4 7,b7 ,with membership in a registered futures association ,any person required to be registered as a digital commodity broker or digital commodity dealer under this section shall become and remain a member of a registered futures association4 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 ,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 7c7 ,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 ,financing agreements 7,a7 ,in general ,the ,commission shall prescribe rules and regulations applicable to digital commodity brokers or digital commodity dealers which shall set forth minimum requirements related to disclosure1 recordkeeping1 margin financing arrangements1 rehypothecation1 capital1 reporting1 business conduct1 documentation1 and supervision of employees and agents1 in connection with-- 7i7 an agreement described in section #b7;c77#b77;,d77iv72 or 7ii7 any other margined1 leveraged1 or financing arrangement for the purchase or sale of a digital commodity with an eligible contract participant4 7,b7 ,specific authority ,except as prohibited in section #b7;c77#b77;,g77iii71 the ,commission may also make1 promulgate1 and enforce such rules and regulations as1 in the judgment of the ,commission1 are reasonably necessary to effectuate any of the provisions of1 or to accomplish any of the purposes of1 this ,act in connection with an agreement referred to in subparagraph 7,a7 of this paragraph4 7d7 ,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 able1 at all times1 to-- 7,a7 meet1 and continue to meet the obligations of such a registrant2 and 7,b7 fulfill obligations to customers or counterparties for any margined1 leveraged1 or financed transactions4 7#b7 ,futures commission merchants and other dealers ,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 7e7 ,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 7f7 ,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 7g7 ,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 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 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 appropriate for the protection of customers4 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 7h7 ,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 establish1 maintain1 and enforce written policies and procedures reasonably designed1 taking into consideration the nature of the business of the person1 to mitigate any conflicts of interest in transactions or arrangements with affiliates4 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 7i7 ,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 this ,act 7including regulations72 and 7ii7 each policy and procedure of the registered digital commodity broker or registered digital commodity dealer followed by 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 7j7 ,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 asset custodian ,each digital commodity broker and digital commodity dealer shall hold in a qualified digital asset custodian each unit of a digital asset that is-- 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 digital commodity broker or 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 asset 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 broker or 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 broker and a digital commodity dealer 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#f7 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 respectively1 or any person other than a customer of 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#b7 for any unit of a digital commodity to be used under subparagraph 7,b7 of this paragraph1 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 shall1 by rule1 establish notice and disclosure requirements1 and may1 by rule1 establish 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 paragraph1 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 7k7 ,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 section with respect to activities subject to this ,act4 7l7 ,exemptions ,in order to promote responsible 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 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 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 7a7 ,in general ,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 7b7 ,exemptive authority ,section #dm of such ,act 7#g ,u4,s4,c4 #fm7 is amended by adding at the end the following3 7#d7 ,exemptive authority ,the ,commission shall promulgate rules to provide appropriate exemptions for commodity pool operators and commodity trading advisors1 to provide relief from duplicative1 conflicting1 or unduly burdensome requirements or to promote responsible innovation1 to the extent the exemptions foster the development of fair and orderly cash or spot digital commodity markets1 are necessary or appropriate in the public interest1 and are consistent with the protection of customers4 4 #dji4 ,exclusion for decentralized finance 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 ,decentralized finance activities not subject to this ,act 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 based on the person directly or indirectly engaging in any of the following activities1 whether singly or in combination1 in relation to the operation of a blockchain system or in relation to decentralized finance trading protocol3 7#a7 ,compiling network transactions or relaying1 searching1 sequencing1 validating1 or acting in a similar capacity4 7#b7 ,providing computational work1 operating a node or oracle service1 or procuring1 offering1 or utilizing network bandwidth1 or other similar incidental services4 7#c7 ,providing a user-interface that enables a user to read1 and access data about a blockchain system4 7#d7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing a blockchain system other than a decentralized finance trading protocol4 7#e7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing a decentralized finance messaging system or decentralized finance trading protocol1 or operating or participating in a liquidity pool with respect thereto1 for the purpose of executing a spot contract for the purchase or sale of a digital commodity4 7#f7 ,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 the user's digital assets or related private keys4 7b7 ,exceptions ,subsection 7a7 shall not be interpreted to apply to the anti-fraud1 anti-manipulation1 or false reporting enforcement authorities of the ,commission4 4 #daj4 ,resources for implementation and enforcement 7a7 ,collection of fees 7#a7 ,in general ,the ,commodity ,futures ,trading ,commission 7in this section referred to as the ,commission7 shall charge and collect a fee from each person in provisional status registered with the ,commission pursuant to section #ajf1 on-- 7,a7 the filing of the initial application for registration2 and 7,b7 an annual basis thereafter for maintaining provisional status4 7#b7 ,amount ,the fees authorized under paragraph 7#a7 may be collected and available for obligation only in the amounts provided in advance in an appropriation ,act4 7#c7 ,authority to adjust fees ,notwithstanding the preceding provisions of this subsection1 to promote fair competition or innovation1 the ,commission1 in its sole discretion1 may reduce or eliminate any fee otherwise required to be paid by a small or medium filer under this subsection4 7b7 ,fee schedule 7#a7 ,in general ,the ,commission shall publish in the ,federal ,register a schedule of the fees to be charged and collected under this section4 7#b7 ,content ,the fee schedule for a fiscal year shall include a written analysis of the estimate of the ,commission of the total costs of carrying out the functions of the ,commission under this ,act during the fiscal year4 7#c7 ,submission to congress ,before publishing the fee schedule for a fiscal year1 the ,commission shall submit a copy of the fee schedule to the ,committees on ,agriculture and on ,appropriations of the ,house of ,representatives and the ,committees on ,agriculture1 ,nutrition1 and ,forestry and on ,appropriations of the ,senate4 7#d7 ,timing 7,a7 #ast fiscal year ,the ,commission shall publish the fee schedule for the fiscal year in which this ,act is enacted1 within #cj days after the date of the enactment of this ,act4 7,b7 ,subsequent fiscal years ,the ,commission shall publish the fee schedule for each subsequent fiscal year1 not less than #ij days before the due date prescribed by the ,commission for payment of the annual fee for the fiscal year4 7c7 ,late payment penalty 7#a7 ,in general ,the ,commission may impose a penalty against a person that fails to pay an annual fee charged under this section1 within #cj days after the due date prescribed by the ,commission for payment of the fee4 7#b7 ,amount ,the amount of the penalty shall be-- 7,a7 #e percent of the amount of the fee due1 multiplied by 7,b7 the whole number of consecutive #cj-;day periods that have elapsed since the due date4 7d7 ,reimbursement of excess fees ,to the extent that the total amount of fees collected under this section during a fiscal year that begins after the date of the enactment of this ,act exceeds the amount provided under subsection 7a77#b7 with respect to the fiscal year1 the ,commission shall reimburse the excess amount to the persons who have timely paid their annual fees1 on a pro-rata basis that excludes penalties1 and shall do so within #fj days after the end of the fiscal year4 7e7 ,deposit of fees into the ,treasury ,all amounts collected under this section shall be credited to the currently applicable appropriation1 account1 or fund of the ,commission as discretionary offsetting collections1 and shall be available for the purposes authorized in subsection 7f7 only to the extent and in the amounts provided in advance in appropriations ,acts4 7f7 ,authorization of appropriations ,in addition to amounts otherwise authorized to be appropriated to the ,commission1 there is authorized to be appropriated to the ,commission amounts collected under this section to cover the costs of carrying out the functions of the ,commission under this ,act4 7g7 ,expedited hiring authority 7#a7 ,appointment authority ,the ,chairman1 pursuant to section #f7;a71 may appoint individuals to a position described in paragraph 7#b7 of this subsection-- 7,a7 in accordance with the statutes1 rules1 and regulations governing appointments to positions in the excepted service 7as defined in section #bajc of title #e1 ,united ,states ,code72 and 7,b7 without regard to any statute1 rule1 or regulation governing appointments to positions in the competitive service 7as defined in section #bajb of such title74 7#b7 ,position described ,a position referred to in subparagraph 7#a7 is a position at the ,commission that-- 7,a7 is in the competitive service 7as defined in section #bajb of such title72 and 7,b7 requires specialized knowledge of digital commodities markets1 financial and capital market formation or regulation1 financial market structures or surveillance1 data collection or analysis1 or information technology1 cybersecurity1 or system safeguards4 7#c7 ,rule of construction ,the appointment of a candidate to a position under this subsection shall not be considered to cause the position to be converted from the competitive service to the excepted service4 7h7 ,sunset ,the authorities provided by this section shall expire at the end of the #dth fiscal year that begins after the date of the enactment of this ,act4 #daa4 ,digital commodity activities by ,,sec-registered entities ,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;j the following3 #ek4 ,exemption for certain registered entities engaged in digital commodity activities 7a7 ,by alternative trading systems 7#a7 ,in general ,on receipt by the ,commission from an alternative trading system of a written or electronic notice that contains such information as the ,commission1 by rule1 may prescribe as necessary or appropriate in the public interest or for the protection of investors1 the alternative trading system shall be exempt from registration as a digital commodity exchange pursuant to section #e;i if-- 7,a7 the alternative trading system does not list any retail commodity transactions pursuant to section #b7;c77#b77;,d72 7,b7 the provider1 or an affiliated person of the provider1 of the alternative trading system is not otherwise registered under this ,act2 7,c7 the alternative trading system lists or trades no other contracts of sale of commodities1 except for digital commodities1 currencies1 and securities2 and 7,d7 the registration of the alternative trading system is not suspended pursuant to an order by the ,securities and ,exchange ,commission4 7#b7 ,further requirements ,an alternative trading system that provides notice to the ,commission pursuant to paragraph 7#a7 of this subsection shall be exempt from the requirements of section #e;i to the extent that the alternative trading system-- 7,a7 is in compliance with requirements consistent with the requirements of section #e;i and imposed on the alternative trading system by the ,securities and ,exchange ,commission2 7,b7 annually files with the ,commission1 in a form and manner acceptable to the ,commission1 a notice that demonstrates compliance with this paragraph and contains any other information the ,commission determines to be necessary or appropriate to perform the duties of the ,commission under this ,act2 and 7,c7 has total trading volume in digital commodities during any calendar quarter in either of its #b most recently completed fiscal years that does not exceed the lesser of-- 7i7 #be percent of the total trading volume for all transactions over the same period2 or 7ii7 #ej1jjj1jjj1jjj4 7#c7 ,enforcement ,this subsection shall not be construed to limit any jurisdiction that the ,commission may otherwise have under any other provision of this ,act with respect to a contract of sale of a digital commodity or persons effecting contracts of sale of digital commodities4 7b7 ,by registered intermediaries 7#a7 ,in general ,on receipt by the ,commission1 from a broker or dealer that is registered with the ,securities and ,exchange ,commission1 of a written or electronic notice that contains such information as the ,commission1 by rule1 may prescribe as necessary or appropriate in the public interest or for the protection of investors1 the broker or dealer shall be exempt from registration as a digital commodity broker or digital commodity dealer pursuant to section #du of this ,act if-- 7,a7 the broker or dealer does not offer or engage in any retail commodity transactions pursuant to section #b7;c77#b77;,d7 of this ,act2 7,b7 the broker or dealer1 or an affiliated person of the broker or dealer1 is not otherwise registered under this ,act2 7,c7 the broker or dealer does not offer or engage in any other contracts of sale of commodities1 except for digital commodities1 currencies1 and securities2 7,d7 the broker or dealer is not subject to a statutory disqualification1 as defined under section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a772 and 7,e7 the broker or dealer is a member of a national securities association registered pursuant to section #ae;,a of the ,securities ,exchange ,act of #aicd4 7#b7 ,further requirements ,a broker or dealer that provides notice to the ,commission pursuant to paragraph 7#a7 shall be exempt from the requirements of section #du to the extent that the broker or dealer-- 7,a7 is in compliance with requirements consistent with the requirements of section #du and imposed on the broker or dealer by the ,securities and ,exchange ,commission2 7,b7 annually files with the ,commission1 in a form and manner acceptable to the ,commission1 a notice that demonstrates compliance with this subsection and contains any other information the ,commission determines to be necessary or appropriate to perform the duties of the ,commission under this ,act2 and 7,c7 has consolidated annual gross financial revenues in either of its #b most recently completed fiscal years from sales1 commissions or other activities in digital commodities that do not exceed the lesser of-- 7i7 #aj percent of the total annual gross revenues during the same period2 or 7ii7 #ajj1jjj1jjj4 7#c7 ,enforcement ,this subsection shall not be construed to limit any jurisdiction that the ,commission may otherwise have under any other provision of this ,act with respect to a contract of sale of a digital commodity and persons effecting contracts of sale of digital commodities4 4 #dab4 ,requirements related to control persons ,the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq471 as amended the preceding provisions of this ,act1 is amended by inserting after section #dv the following3 #dw4 ,limitation on transactions by blockchain control persons 7a7 ,limitation ,it shall be unlawful for a blockchain control person with respect to a blockchain system certified as a mature blockchain system in accordance with section #db of the ,securities ,exchange ,act of #aicd to sell a unit of a digital commodity related to the blockchain system unless the person files notice with the ,commission1 in a form and manner determined by the ,commission1 that the person has or intends to obtain an authority described in subsection 7b77#a7 with respect to the blockchain system1 and complies with rules adopted by the ,commission that require-- 7#a7 disclosure of information to the ,commission and the public about the material activities1 as determined by the ,commission1 of the blockchain control person2 and 7#b7 7,a7 the use of a digital commodity broker to effect the sale2 or 7,b7 such other sales restrictions applicable to the blockchain control person1 or any affiliated blockchain control person1 to prevent manipulation and distortion of the value of the digital commodity and promote further maturity of the blockchain system to which the digital commodity relates4 7b7 ,definitions ,in this section3 7#a7 ,blockchain control person ,the term blockchain control person means1 with respect to a blockchain system1 any person or group of persons under common control1 other than a decentralized governance system1 who-- 7,a7 has the unilateral authority1 directly or indirectly1 through any contract1 arrangement1 understanding1 relationship1 or otherwise1 to control or materially alter the functionality1 operation1 or rules of consensus or agreement of the blockchain system or its related digital commodity2 or 7,b7 has the unilateral authority to direct the voting1 in the aggregate1 of #bj percent or more of the outstanding voting power of the blockchain system by means of a related digital commodity1 nodes or validators1 a decentralized governance system1 or otherwise1 in a blockchain system which can be altered by a voting system4 7#b7 ,affiliated blockchain control person ,the term affiliated blockchain control person means any person directly or indirectly controlling1 controlled by1 or under common control with a blockchain control person1 as the ,commission by rule or regulation1 may determine will effectuate the purposes of this section4 4 #dac4 ,other tradable assets ,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 #dw the following3 #dx4 ,trading requirements for other tradable assets 7a7 ,limitation ,a tradable asset shall not be offered1 solicited1 traded1 facilitated1 executed1 cleared1 reported1 or otherwise dealt in1 on or subject to the rules of a registered entity1 or by any other entity registered with the ,commission1 except in accordance with subsection 7b74 7b7 ,requirements 7#a7 ,treatment of tradable assets ,a tradable asset that is offered1 solicited1 traded1 facilitated1 executed1 cleared1 reported1 or otherwise dealt in on or subject to the rules of a registered entity1 or by any other entity registered with the ,commission1 shall be treated as a digital commodity for purposes of this ,act4 7#b7 ,additional rulemaking authority ,in addition to the other requirements of this ,act1 the ,commission may1 by rule or regulation1 impose additional obligations on any person registered under this ,act offering1 soliciting1 trading1 facilitating1 executing1 clearing1 reporting1 or otherwise dealing in a tradable asset1 or class thereof1 pursuant to paragraph 7#a7 as are necessary for the protection of customers1 the promotion of innovation1 and the maintenance of fair1 orderly1 and efficient markets1 including additional obligations related to-- 7,a7 disclosure2 7,b7 recordkeeping2 7,c7 capital2 7,d7 reporting2 7,e7 business conduct2 7,f7 documentation2 7,g7 supervision of employees2 and 7,h7 segregation4 7#c7 ,prohibition on trading ,a tradable asset1 the primary purpose of which is to be used to commit fraud or market manipulation1 or engage in any other conduct that would result in abusive practices or be disruptive to market integrity1 shall not be offered1 solicited1 traded1 facilitated1 executed1 cleared1 reported1 or otherwise dealt in on or subject to the rules of a registered entity1 or by any other entity registered with the ,commission4 7c7 ,tradable asset defined ,in this section1 the term tradable asset means a digital asset other than-- 7#a7 a digital commodity that is treated as such other than by reason of subsection 7b77#a7 of this section2 or 7#b7 a digital asset excluded from the definition of digital commodity pursuant to subclause 7,i7 through 7,,vii7 of section #a;a7#af77;,f77iii74 7d7 ,guidance on fraudulent1 manipulative1 or disruptive tradable assets ,the ,commission may1 after public notice and comment1 issue guidance establishing criteria for determining if the primary purpose of a tradable asset is to be used to commit fraud or market manipulation1 or engage in any other conduct that would result in abusive practices or be disruptive to market integrity4 4 #dad4 ,effective date ,unless otherwise provided in this title1 this title and the amendments made by this title shall take effect #bgj days after the date of the enactment of this ,act4 #dae4 ,sense of ,congress ,it is the sense of ,congress that nothing in this ,act or any amendment made by this ,act should be interpreted to authorize any entity to regulate any commodity1 other than a digital commodity1 on any spot market4 ,v ,innovation and ,technology ,improvements #eja4 ,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 commodity networks represent a new way for people to join together and cooperate with one another to undertake certain activities4 7#c7 ,digital commodities have the potential to be the foundational building blocks of these systems1 aligning the economic incentive for individuals to cooperate with one another to achieve a common purpose4 7#d7 ,the digital commodity ecosystem has the potential to grow our economy and improve everyday lives of ,americans by facilitating collaboration through the use of technology to manage activities1 allocate resources1 and facilitate decision making4 7#e7 ,blockchain systems and the digital commodities they empower provide 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 commodity 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 commodities and provide safeguards for consumers4 7#h7 ,digital commodities1 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 commodities 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 commodities and the underlying technology in the ,united ,states or risk the shifting of the development of such assets and technology outside of the ,united ,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 commodity-related activities1 distributed ledger technology1 distributed networks1 and mature blockchain systems2 7#e7 ,congress should enact a functional framework tailored to the specific risks of different digital commodity-related activities and unique benefits of distributed ledger technology1 distributed networks1 and mature blockchain systems2 and 7#f7 consumers and market participants will benefit from a framework for digital commodities consistent with longstanding investor protections in securities and commodities markets1 yet tailored to the unique benefits and risks of the digital commodity ecosystem4 #ejb4 ,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 #ejc4 ,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 7k7 ,strategic ,hub for ,innovation and ,financial ,technology 7#a7 ,establishment ,not later than #ahj days after the date of the enactment of this subsection1 the ,securities and ,exchange ,commission shall establish a committee to be known as the ,strategic ,hub for ,innovation and ,financial ,technology 7referred to in this subsection as the ,fin,hub7 to support engagement on emerging technologies in the financial sector4 7#b7 ,members ,the composition of ,fin,hub shall be determined by the ,commission1 drawing from relevant divisions as appropriate1 including the ,division of ,trading and ,markets1 ,division of ,corporate ,finance1 and ,division of ,investment ,management4 7#c7 ,responsibilities ,fin,hub shall-- 7,a7 serve as a resource for the ,commission on emerging financial technology advancements2 7,b7 engage with market participants working on emerging financial technologies2 and 7,c7 facilitate communication between the ,commission and businesses working in emerging financial technology fields with information on the ,commission1 its rules1 and regulations4 7#d7 ,report to the ,commission 7,a7 ,in general ,not later than ,october #ca of each year after #bjbe1 ,fin,hub shall provide an annual summary of its engagement activities to the ,commission1 which shall be included in the ,commission's annual report to ,congress4 7,b7 ,confidentiality ,each report submitted under this paragraph shall not contain confidential information4 4 #ejd4 ,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 ,report to ,congress 7,a7 ,in general ,not later than ,october #ca of each year after #bjbe1 ,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#f7 ,records and engagement ,the ,commission shall-- 7,a7 maintain systems of records to track engagements with the public through ,lab,c,f,t,c2 7,b7 store communications and materials received in connection with any such engagement in accordance with ,commission policies and procedures on data retention and confidentiality2 and 7,c7 take reasonable steps to protect any confidential or proprietary information received through ,lab,c,f,t,c engagement4 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 #eje4 ,study on decentralized finance 7a7 ,in general ,the ,commodity ,futures ,trading ,commission1 the ,securities and ,exchange ,commission1 and the ,secretary of the ,treasury shall jointly carry out a study on decentralized finance that analyzes-- 7#a7 the nature1 size1 role1 and use of decentralized finance blockchain applications2 7#b7 the operation of blockchain applications that comprise decentralized finance2 7#c7 the interoperability of blockchain applications and other blockchain systems2 7#d7 the interoperability of blockchain applications and software-based systems1 including websites and wallets2 7#e7 the decentralized governance systems through which blockchain applications 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 benefits and risks of the decentralized governance system2 and 7,b7 any procedures1 requirements1 or best practices that would mitigate the risks identified in subparagraph 7,a77ii72 7#f7 the benefits of decentralized finance1 including-- 7,a7 operational resilience and availability of blockchain systems2 7,b7 interoperability of blockchain systems2 7,c7 market competition and innovation2 7,d7 transaction efficiency2 7,e7 transparency and traceability of transactions2 and 7,f7 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 or improvements to the 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 methods for addressing illicit activity in decentralized finance and traditional markets that are tailored to the unique attributes of each2 7#aa7 how decentralized finance may increase the accessibility of cross-border transactions2 and 7#ab7 the feasibility of embedding self-executing compliance and risk controls into decentralized finance4 7b7 ,consultation ,in carrying out the study required under subsection 7a71 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall consult with the ,secretary of the ,treasury on the factors described under paragraphs 7#g7 through 7#aj7 of subsection 7a74 7c7 ,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 7d7 ,,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#ab7 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 7e7 ,definitions ,in this section3 7#a7 ,decentralized finance 7,a7 ,in general ,the term decentralized finance means blockchain applications 7including decentralized finance trading protocols and related decentralized finance messaging systems7 that allow users to engage in financial transactions in a self-directed manner so that a third-party intermediary does not effectuate the transactions or take custody of digital commodities of a user during any part of the transactions4 7,b7 ,relationship to excluded activities ,the term decentralized finance shall not be interpreted to limit or exclude any activity from the activities described in section #ae;,i7a7 of the ,securities ,exchange ,act of #aicd or section #dv7a7 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 tokens 7a7 ,in general ,the ,comptroller ,general of the ,united ,states shall carry out a study of non-fungible tokens that analyzes-- 7#a7 the nature1 size1 role1 purpose1 and use of non-fungible tokens2 7#b7 the similarities and differences between non-fungible tokens and other digital commodities1 including digital commodities and permitted payment stablecoins1 and how the markets for those digital commodities intersect with each other2 7#c7 how non-fungible tokens are minted by issuers and subsequently administered to purchasers2 7#d7 how non-fungible tokens are stored after being purchased by a consumer2 7#e7 the interoperability of non-fungible tokens between different blockchain systems2 7#f7 the scalability of different non-fungible tokens marketplaces2 7#g7 the benefits of non-fungible tokens1 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 tokens have integrated with traditional marketplaces1 including those for music1 real estate1 gaming1 events1 and travel2 7#aj7 whether and how 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 tokens markets4 7b7 ,report ,not later than #a year after the date of the enactment of this ,act1 the ,comptroller ,general1 shall make publicly available a report that includes the results of the study required by subsection 7a74 #ejg4 ,study on expanding financial literacy amongst digital commodity 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 commodity 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 commodities 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 information1 including clear disclosures1 that retail digital commodity holders need to make informed financial decisions before engaging with or purchasing a digital commodity or service that is typically sold to retail investors of digital commodities2 7#f7 the most effective public-private partnerships in providing financial literacy regarding digital commodities 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 commodities4 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 #ejh4 ,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 #eji4 ,study on illicit use of digital assets 7a7 ,in general ,one year after the date of the enactment of this ,act1 the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission1 in conjunction with the ,secretary of the ,treasury1 shall conduct a comprehensive review of how ,foreign ,terrorist ,organizations and ,transnational ,criminal ,syndicates utilize digital assets in connection with illicit activities4 7b7 ,scope ,this review shall include an analysis of whether the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission have the necessary tools and resources to effectively detect1 disrupt1 and deter illicit financial activity4 7c7 ,report ,the two ,commissions shall jointly issue a report to the ,committees on ,agriculture and on ,financial ,services of the ,house of ,representatives and the ,committees on ,agriculture1 ,nutrition1 and ,forestry and on ,banking1 ,housing1 and ,urban ,affairs of the ,senate on the findings of the ,commissions4 #eaj4 ,conflict of interest rulemaking ,no later than #cfj days after the date of the enactment of this ,act1 the ,commodity ,futures ,trading ,commission shall issue rules establishing requirements for the identification1 mitigation1 and resolution of conflicts of interest among and across registered entities 7within the meaning of the ,commodity ,exchange ,act7 and persons required to be registered with the ,commission1 including conflicts of interest related to vertically integrated market structures and their varying responsibilities4 #a4 ,short title2 table of contents 7a7 ,short title ,this ,act may be cited as the ,digital ,asset ,market ,clarity ,act of #bjbe or the ,,clarity ,act of #bjbe4 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 ,provisional registration ,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 ,rulemakings4 ,sec4 #ajf4 ,provisional registration for digital commodity exchanges1 brokers1 and dealers4 ,sec4 #ajg4 ,commodity ,exchange ,act and securities laws savings provisions4 ,sec4 #ajh4 ,administrative requirements4 ,sec4 #aji4 ,international cooperation4 ,sec4 #aaj4 ,treatment of certain non-controlling blockchain developers4 ,sec4 #aaa4 ,application of the ,bank ,secrecy ,act4 ,sec4 #aab4 ,implementation4 ,title ,,ii--,offers and ,sales of ,digital ,commodities ,sec4 #bja4 ,treatment of investment contract assets4 ,sec4 #bjb4 ,exempted primary transactions in digital commodities4 ,sec4 #bjc4 ,treatment of secondary transactions in digital commodities that originally involved investment contracts4 ,sec4 #bjd4 ,requirements for offers and sales of digital commodities by digital commodity related persons and digital commodity affiliated persons4 ,sec4 #bje4 ,mature blockchain system requirements4 ,sec4 #bjf4 ,effective date4 ,title ,,iii--,registration for ,intermediaries at the ,securities and ,exchange ,commission ,sec4 #cja4 ,treatment of digital commodities and permitted payment stablecoins4 ,sec4 #cjb4 ,anti-fraud authority over permitted payment stablecoins and certain digital commodity transactions4 ,sec4 #cjc4 ,eligibility of alternative trading systems4 ,sec4 #cjd4 ,operation of alternative trading systems4 ,sec4 #cje4 ,modernization of recordkeeping requirements4 ,sec4 #cjf4 ,exemptive authority4 ,sec4 #cjg4 ,additional registrations with the ,commodity ,futures ,trading ,commission4 ,sec4 #cjh4 ,exempting digital commodities from ,state securities laws4 ,sec4 #cji4 ,exclusion for decentralized finance activities4 ,sec4 #caj4 ,treatment of custody activities by banking institutions4 ,sec4 #caa4 ,broker and dealer disclosures regarding the treatment of assets4 ,sec4 #cab4 ,digital commodity activities that are financial in nature4 ,sec4 #cac4 ,effective date2 administration4 ,sec4 #cad4 ,studies on foreign adversary participation4 ,title ,,iv--,registration for ,digital ,commodity ,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 asset custodians4 ,sec4 #djc4 ,trading certification and approval for digital commodities4 ,sec4 #djd4 ,registration of digital commodity exchanges4 ,sec4 #dje4 ,qualified digital asset 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 decentralized finance activities4 ,sec4 #daj4 ,resources for implementation and enforcement4 ,sec4 #daa4 ,digital commodity activities by ,,sec-registered entities4 ,sec4 #dab4 ,requirements related to control persons4 ,sec4 #dac4 ,effective date4 ,sec4 #dad4 ,sense of ,congress4 ,title ,v--,innovation and ,technology ,improvements ,sec4 #eja4 ,findings2 sense of ,congress4 ,sec4 #ejb4 ,modernization of the ,securities and ,exchange ,commission mission4 ,sec4 #ejc4 ,strategic ,hub for ,innovation and ,financial ,technology4 ,sec4 #ejd4 ,codification of ,lab,c,f,t,c4 ,sec4 #eje4 ,study on decentralized finance4 ,sec4 #ejf4 ,study on non-fungible tokens4 ,sec4 #ejg4 ,study on expanding financial literacy amongst digital commodity holders4 ,sec4 #ejh4 ,study on financial market infrastructure improvements4 ,sec4 #eji4 ,study on blockchain in payments4 ,i ,definitions2 ,rulemaking2 ,provisional registration #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 ,blockchain ,the term blockchain means-- 7,a7 any technology-- 7i7 where data is-- 7,i7 shared across a network to create a distributed ledger of independently verifiable transactions or information among network participants2 7,,ii7 linked using cryptography to maintain the integrity of the distributed ledger and to execute other functions2 and 7,,iii7 propagated among network participants to reach consensus on the state of the distributed ledger and any other functions2 and 7ii7 composed of source code that is publicly available2 and 7,b7 any similar technology to the technology described in subparagraph 7,a74 7#ba7 ,blockchain application ,the term blockchain application means any executable software that is deployed to a blockchain and composed of source code that is publicly available1 including a smart contract or any network of smart contracts1 or other similar technology4 7#bb7 ,blockchain protocol ,the term blockchain protocol means publicly available source code of a blockchain that is executed by the network participants of a blockchain to facilitate its functioning1 or other similar technology4 7#bc7 ,blockchain system ,the term blockchain system means any blockchain1 together with its blockchain protocol or any blockchain application or network of blockchain applications4 7#bd7 ,decentralized governance system 7,a7 ,in general ,the term decentralized governance system means1 with respect to a blockchain system1 any transparent1 rules-based system permitting persons to form consensus or reach agreement in the development1 provision1 publication1 maintenance1 or administration of such blockchain system1 where participation is not limited to1 or under the effective control of1 any person or group of persons under common control4 7,b7 ,relationship of persons to decentralized governance systems ,with respect to a decentralized governance system1 the decentralized governance system and any persons participating in the decentralized governance system shall be treated as separate persons unless such persons are under common control or acting pursuant to an agreement to act in concert4 7,c7 ,legal entities for decentralized governance systems ,the term decentralized governance system shall include a legal entity used to implement the rules-based system described in subparagraph 7,a71 provided that the legal entity does not operate pursuant to centralized management4 ,for the purposes of this subparagraph1 the delegation of ministerial or administrative authority at the direction of the participants in a decentralized governance system shall not be construed to be centralized management4 7#be7 ,digital asset ,the term digital asset means any digital representation of value which is recorded on a cryptographically-secured distributed ledger or other similar technology4 7#bf7 ,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#bg7 ,digital commodity affiliated person ,the term digital commodity affiliated person means a person 7including a digital commodity related person7 that1 with respect to any digital commodity-- 7,a7 acquires or has any right to acquire #e percent or more of the total outstanding units of such digital commodity from a digital commodity issuer or an agent or underwriter thereof 7other than a decentralized governance system72 7,b7 is a founder of the digital commodity issuer2 or 7,c7 is an executive officer1 director1 trustee1 general partner1 or person serving in a similar capacity of the digital commodity issuer or held such role at any point in the previous #ab-month period4 7#bh7 ,digital commodity issuer 7,a7 ,in general ,with respect to a digital commodity1 the term digital commodity issuer means any person that-- 7i7 issues or causes to be issued1 or proposes to issue or cause to be issued1 a unit of such digital commodity to a person2 or 7ii7 offers or sells a right to a future issuance of a unit of such digital commodity to a person4 7,b7 ,prohibition on evasion ,it shall be unlawful for any person to knowingly evade classification as a digital commodity issuer and facilitate an arrangement for the primary purpose of effecting an offer1 sale1 distribution1 or other issuance of a digital commodity1 including via any arrangement involving the transfer of intellectual property associated with the blockchain system to which the digital commodity relates4 7#bi7 ,digital commodity related person 7,a7 ,in general ,with respect to a digital commodity issuer1 the term digital commodity related person means a person-- 7i7 that is or was in the previous #f-month period a promoter1 senior employee1 advisory board member1 consultant1 advisor1 or person serving in a similar capacity2 or 7ii7 that acquires or has any right to acquire #a percent or more of the total outstanding units of such digital commodity from a digital commodity issuer or an agent or underwriter thereof 7other than a decentralized governance system74 7,b7 ,senior employee defined ,in this paragraph and with respect to a digital commodity issuer1 the term senior employee means any employee materially involved in the management of the digital commodity issuer1 including management of the development of the blockchain system to which the digital commodity relates4 7#cj7 ,end user distribution ,the term end user distribution means a distribution of a unit of a digital commodity 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 broad and equitable 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 commodity or any blockchain system to which the digital commodity 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 commodity1 in proportion to the total units of such other digital commodity as are held by each person4 7#ca7 ,mature blockchain system ,the term #8mature blockchain system' means a blockchain system1 together with its related digital commodity1 that is not controlled by any person or group of persons under common control4 7#cb7 ,permitted payment stablecoin 7,a7 ,in general ,the term permitted payment stablecoin means a digital asset-- 7i7 that is or is designed to be used as a means of payment or settlement2 7ii7 that is denominated in a national currency2 7iii7 the issuer of which is subject to the regulatory and supervisory authority of a ,state or ,federal agency2 7iv7 the issuer of which-- 7,i7 is obligated to convert1 redeem1 or repurchase for a fixed amount of monetary value2 or 7,,ii7 represents that the digital asset will maintain or creates the reasonable expectation that the digital asset will maintain a stable value relative to the value of a fixed amount of monetary value2 and 7v7 that is not-- 7,i7 a national currency2 7,,ii7 a security issued by-- 7aa7 an investment company registered under section #h7;a7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#h7;a772 or 7bb7 a person that would be an investment company under the ,investment ,company ,act of #aidj but for paragraphs 7#a7 and 7#g7 of section #c7;c7 of that ,act 7#ae ,u4,s4,c4 #hj;a-#c7;c772 7,,iii7 a deposit 7as defined under section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac771 regardless of the technology used to record such deposit2 or 7,,iv7 an account 7as defined in section #aja of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageb771 regardless of the technology used to record such account4 7,b7 ,monetary value defined ,the term monetary value-- 7i7 means-- 7,i7 a national currency2 7,,ii7 a deposit 7as defined in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac77 that is denominated in a national currency2 or 7,,iii7 an account 7as defined in section #aja of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageb772 and 7ii7 does not include any agricultural or other physical commodity 7as defined in section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a774 7#cc7 ,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 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#a7 by redesignating the second paragraph 7#hj7 7relating to funding portals7 as paragraph 7#ha72 and 7#b7 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 ,additional digital commodity-related terms 7,a7 ,securities ,act of #aicc ,the terms blockchain system1 decentralized governance system1 digital asset1 digital commodity affiliated person1 digital commodity issuer1 digital commodity related person1 end user distribution1 mature blockchain system1 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 7,b7 ,commodity ,exchange ,act ,the terms digital commodity1 digital commodity broker1 digital commodity dealer1 digital commodity exchange1 decentralized finance messaging system1 and decentralized finance trading protocol 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 7a7 ,in general ,section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a7 is amended-- 7#a7 in paragraph 7#aj7-- 7,a7 in subparagraph 7,a7-- 7i7 by redesignating clauses 7iii7 and 7iv7 as clauses 7iv7 and 7v71 respectively2 and 7ii7 by inserting after clause 7ii7 the following3 7iii7 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 ,for purposes of this paragraph1 the term trading in commodity interests shall not include transacting in digital commodities for the purpose of-- 7i7 acting as a digital commodity custodian2 7ii7 establishing1 maintaining1 or managing inventory or payment instruments for commercial purposes2 or 7iii7 maintaining or supporting the operation of1 or validating transactions on1 a blockchain system4 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 ,for purposes of this paragraph1 the term trading in commodity interests shall not include transacting in digital commodities for the purpose of-- 7i7 acting as a digital commodity custodian2 7ii7 establishing1 maintaining1 or managing inventory or payment instruments for commercial purposes2 or 7iii7 maintaining or supporting the operation of1 or validating transactions on1 a blockchain system4 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 by redesignating paragraphs 7#af7 through 7#ea7 as paragraphs 7#ag7 through 7#eb71 respectively1 and inserting after paragraph 7#ae7 the following3 7#af7 ,terms related to digital commodities 7,a7 ,associated person of a digital commodity broker 7i7 ,in general ,except as provided in clause 7ii71 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-- 7,i7 the solicitation or acceptance of an order for the purchase or sale of a digital commodity2 or 7,,ii7 the supervision of any person engaged in the solicitation or acceptance of an order for the purchase or sale of a digital commodity4 7ii7 ,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,b7 ,associated person of a digital commodity dealer 7i7 ,in general ,except as provided in clause 7ii71 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-- 7,i7 the solicitation or acceptance of a contract for the purchase or sale of a digital commodity2 or 7,,ii7 the supervision of any person engaged in the solicitation or acceptance of a contract for the purchase or sale of a digital commodity4 7ii7 ,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,c7 ,bank ,secrecy ,act ,the term ,bank ,secrecy ,act means-- 7i7 section #ba of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahbi;b72 7ii7 chapter #b of title ,i of ,public ,law #ia-ejh 7#ab ,u4,s4,c4 #aiea et seq472 and 7iii7 subchapter ,,ii of chapter #ec of title #ca1 ,united ,states ,code4 7,d7 ,decentralized finance messaging system 7i7 ,in general ,the term decentralized finance messaging system means a software application that provides a user with the ability to create or submit an instruction1 communication1 or message to a decentralized finance trading protocol for the purpose of executing a transaction by the user4 7ii7 ,additional requirements ,the term decentralized finance messaging system does not include any system that provides any person other than the user with control over-- 7,i7 the funds of the user2 or 7,,ii7 the execution of the transaction of the user4 7,e7 ,decentralized finance trading protocol 7i7 ,in general ,the term decentralized finance trading protocol means a blockchain system through which multiple participants can execute a financial transaction-- 7,i7 in accordance with an automated rule or algorithm that is predetermined and non-discretionary2 and 7,,ii7 without reliance on any other person to maintain control of the digital assets of the user during any part of the financial transaction4 7ii7 ,exclusions 7,i7 ,in general ,the term decentralized finance trading protocol does not include a blockchain system if-- 7aa7 a person or group of persons under common control has the unilateral authority1 directly or indirectly1 through any contract1 arrangement1 understanding1 relationship1 or otherwise1 to control or materially alter the functionality1 operation1 or rules of consensus or agreement of the blockchain system2 or 7bb7 the blockchain system does not operate1 execute and enforce its operations and transactions based solely on pre-established1 transparent rules encoded directly within the source code of the blockchain system4 7,,ii7 ,special rule ,for purposes of subclause 7,i71 a decentralized governance system shall not be considered to be a person or a group of persons under common control4 7,f7 ,digital commodity 7i7 ,in general ,the term digital commodity means a digital asset that is intrinsically linked to a blockchain system1 and the value of which is derived from or is reasonably expected to be derived from the use of the blockchain system4 7ii7 ,relationship to a blockchain system ,for purposes of this subparagraph1 a digital asset is intrinsically linked to a blockchain system if the digital asset is directly related to the functionality or operation of the blockchain system or to the activities or services for which the blockchain system is created or utilized1 including where the digital asset is-- 7,i7 issued or generated by the programmatic functioning of the blockchain system2 7,,ii7 used to transfer value between participants in the blockchain system2 7,,iii7 used to access the activities or services of the blockchain system2 7,,iv7 used to participate in the decentralized governance system of the blockchain system2 7,v7 used or removed from circulation in whole or in part to pay fees or otherwise verify or validate transactions on the blockchain system2 7,,vi7 used as payment or incentive to participants in the blockchain system to engage in the activities of the blockchain system1 provide services to other participants in the blockchain system1 or otherwise participate in the functionality of the blockchain system2 or 7,,vii7 used as payment or incentive to participants in the blockchain system to validate transactions1 secure the blockchain system1 provide computational services1 maintain or distribute information1 or otherwise participate in the operations of the blockchain system4 7iii7 ,exclusion ,the term digital commodity does not include any of the following3 7,i7 ,security 7aa7 ,any security1 other than a note1 an investment contract1 or a certificate of interest or participation in any profit-sharing agreement4 7bb7 ,a note1 an investment contract1 or a certificate of interest or participation in any profit-sharing agreement that represents or gives the holder an ownership interest or other interest in the revenues1 profits1 obligations1 debts1 assets1 or assets or debts to be acquired of the issuer of the digital asset or another person 7other than a decentralized governance system74 7,,ii7 ,security derivative ,a digital asset that1 based on its terms and other characteristics1 is1 represents1 or is functionally equivalent to an agreement1 contract1 or transaction that is-- 7aa7 a security future1 as defined in section #b;a of the ,securities ,act of #aicc2 7bb7 a security-based swap1 as defined in section #b;a of the ,securities ,act of #aicc2 7cc7 a put1 call1 straddle1 option1 or privilege on any security1 certificate of deposit1 or group or index of securities 7including any interest therein or based on the value thereof71 as defined in section #b;a of the ,securities ,act of #aicc2 or 7dd7 a put1 call1 straddle1 option1 or privilege on any security1 as defined in section #b;a of the ,securities ,act of #aicc4 7,,iii7 ,permitted payment stablecoin ,a digital asset that is a permitted payment stablecoin4 7,,iv7 ,banking deposit 7aa7 ,a deposit 7as defined under section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac771 regardless of the technology used to record the deposit4 7bb7 ,an account 7as defined in section #aja of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageb771 regardless of the technology used to record the account4 7,v7 ,commodity ,a digital asset that references1 represents an interest in1 or is functionally equivalent to-- 7aa7 an agricultural commodity2 7bb7 an excluded commodity1 other than a security2 or 7cc7 an exempt commodity1 other than the digital commodity itself1 as shall be further defined by the ,commission4 7,,vi7 ,commodity derivative ,a digital asset that1 based on its terms and other characteristics1 is1 represents1 or is functionally equivalent to an agreement1 contract1 or transaction that is-- 7aa7 a contract of sale of a commodity for future delivery or an option thereon2 7bb7 a security futures product2 7cc7 a swap2 7dd7 an agreement1 contract1 or transaction described in section #b7;c77#b77;,c77i7 or #b7;c77#b77;,d77i72 7ee7 a commodity option authorized under section #d;c2 or 7ff7 a leverage transaction authorized under section #ai4 7,,vii7 ,pooled investment vehicle 7aa7 ,in general ,a digital asset that1 based on its terms and other characteristics1 is1 represents1 or is functionally equivalent to-- 7,,aa7 a commodity pool1 as defined in this ,act2 or 7,,bb7 a pooled investment vehicle4 7bb7 ,pooled investment vehicle defined ,in this subclause1 the term pooled investment vehicle means any investment company as defined in section #c7;a7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#c7;a77 or any company that would be an investment company under section #c7;a7 of such ,act but for the exclusion provided from that definition by paragraph 7#a71 7#g71 or 7#i7 of section #c7;c7 of such ,act 7#ae ,u4,s4,c4 #hj;a-#c7;c77#a71 7#g71 or 7#i774 7,,viii7 ,good1 collectible1 and other non-commodity asset ,a digital asset that has inherent value1 utility1 or significance beyond its mere existence as a digital asset1 including the digital equivalent of a tangible or intangible good1 such as-- 7aa7 a work of art1 a musical composition1 a literary work1 or other intellectual property2 7bb7 collectibles1 merchandise1 virtual land1 and video game assets2 7cc7 affinity1 rewards1 or loyalty points1 including airline miles or credit card points1 that are not primarily speculative in nature2 or 7dd7 rights1 licenses1 and tickets4 7iv7 ,rule of construction ,no presumption shall exist that a digital asset is a security1 nor shall a digital asset be excluded from being a digital commodity pursuant to clause 7iii77,i71 solely due to-- 7,i7 the digital asset providing voting or economic rights with respect to the blockchain system to which the digital asset relates or the decentralized governance system of the blockchain system2 7,,ii7 the value of the digital asset having the potential to appreciate or depreciate in response to the efforts1 operations1 or financial performance of the decentralized governance system of the blockchain system to which the digital asset relates2 or 7,,iii7 the value of the digital asset appreciating or depreciating due to the adoption and use of the blockchain system to which the digital asset relates or the decentralized governance system of the blockchain system4 7,g7 ,digital commodity broker 7i7 ,in general ,the term digital commodity broker means any person who1 as a regular business-- 7,i7 is engaged in-- 7aa7 soliciting or accepting an order from a customer for-- 7,,aa7 the purchase or sale of a digital commodity2 or 7,,bb7 an agreement1 contract1 or transaction described in section #b7;c77#b77;,d77iv72 and 7bb7 in conjunction with the activities in item 7aa71 accepts or maintains control over-- 7,,aa7 the funds of any customer2 or 7,,bb7 the execution of any transaction of a customer2 7,,ii7 is engaged in soliciting or accepting orders from a customer for the purchase or sale of a unit of a digital commodity on or subject to the rules of a registered entity2 or 7,,iii7 is registered with the ,commission as a digital commodity broker4 7ii7 ,exceptions ,the term #8digital commodity broker' does not include a person solely because the person-- 7,i7 solicits or accepts an order described in clause 7i77,i77aa77,,aa7 from a customer who is an eligible contract participant2 7,,ii7 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 7,,iii7 is a bank 7as defined under section #c7;a7 of the ,securities ,exchange ,act of #aicd7 engaging in certain banking activities with respect to a digital commodity in the same or a similar manner as a bank is excluded from the definition of a broker under such section1 as determined by the ,commission4 7iii7 ,further definition ,the ,commission1 by rule or regulation1 may exclude from the term digital commodity broker any person or class of persons if the ,commission determines that the rule or regulation will effectuate the purposes of this ,act4 7,h7 ,digital commodity dealer 7i7 ,in general ,the term digital commodity dealer means any person who1 as a regular business-- 7,i7 is1 or offers to be a counterparty to a person for the purchase or sale of a digital commodity as a regular business1 and in conjunction with the activities1 accepts or maintains control over the funds of any counterparty2 or 7,,ii7 is registered with the ,commission as a digital commodity dealer4 7ii7 ,exception ,the term digital commodity dealer does not include a person solely because the person-- 7,i7 is or offers to be a counterparty to a person who is an eligible contract participant2 7,,ii7 enters into a digital commodity transaction with an eligible contract participant2 7,,iii7 enters into a digital commodity transaction on or through a registered digital commodity exchange1 with a registered digital commodity broker1 or through a decentralized finance trading protocol2 7,,iv7 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 7,v7 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 7,,vi7 is a bank 7as defined under section #c7;a7 of the ,securities ,exchange ,act of #aicd7 engaging in certain banking activities with respect to a digital commodity in the same or a similar manner as a bank is excluded from the definition of a dealer under section #c7;a77#e7 of such ,act1 as determined by the ,commission4 7iii7 ,further definition ,the ,commission1 by rule or regulation1 may exclude from the term digital commodity dealer any person or class of persons if the ,commission determines that the rule or regulation will effectuate the purposes of this ,act4 7,i7 ,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,j7 ,mixed digital asset transaction ,the term mixed digital asset transaction means a transaction in which a digital commodity is traded for a security4 7,k7 ,terms defined under the ,securities ,act of #aicc ,the terms blockchain system1 decentralized governance system1 digital asset1 digital commodity issuer1 digital commodity affiliated person1 digital commodity related person1 end user distribution1 mature blockchain system1 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 2 and 7#e7 in paragraph 7#da7 7as so redesignated by paragraph 7#d7 of this subsection7-- 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 4 7b7 ,conforming amendments 7#a7 ,each of the following provisions of law is amended by striking #a;a7#ah7 and inserting #a;a7#ai73 7,a7 ,section #ds7h77#e77;,a77i7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #fs7h77#e77;,a77i774 7,b7 ,section #e7;e7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;e7e774 7,c7 ,section #f7;g77#e77;,b7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;f7g77#e77;,b774 7,d7 ,section #ae;,f7h77#e77;,a77i7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#aj7;h77#e77;,a77i774 7#b7 ,section #geb of the ,wall ,street ,transparency and ,accountability ,act of #bjaj 7#ae ,u4,s4,c4 #hcbe7 is amended by striking #a;a7#ci7 and inserting #a;a7#dj74 7#c7 ,section #ds7f77#a77;,d7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #fs7f77#a77;,d77 is amended by striking #a;a7#dg77;,a7 and inserting #a;a7#dh77;,a74 7#d7 ,each of the following provisions of the ,commodity ,exchange ,act is amended by striking #a;a7#dg77;,a77v7 and inserting #a;a7#dh77;,a77v73 7,a7 ,section #dt7b77#a77;,c7 7#g ,u4,s4,c4 #ft7b77#a77;,c774 7,b7 ,section #e7;d77#bc7 7#g ,u4,s4,c4 #g7;d77#bc774 7,c7 ,section #e;b7k77#c7 7#g ,u4,s4,c4 #g;a-#a7k77#c774 7,d7 ,section #e;h7f77#aj77;,a77iii7 7#g ,u4,s4,c4 #g;b-#c7;f77#aj77;,a77iii774 7#e7 ,section #ba7;f77#d77;,c7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #bd;a7f77#d77;,c77 is amended by striking #a;a7#dh7 and inserting #a;a7#di74 7#f7 ,section #djc of the ,legal ,certainty for ,bank ,products ,act of #bjjj 7#g ,u4,s4,c4 #bg;a7 is amended-- 7,a7 in subsection 7a77#b71 by striking #a;a7#dg77;,a77v7 and inserting #a;a7#dh77;,a77v72 and 7,b7 in each of subsections 7b77#a7 and 7c77#b71 by striking #a;a7#dg7 and inserting #a;a7#dh74 7#g7 ,section #gab of the ,wall ,street ,transparency and ,accountability ,act of #bjaj 7#ae ,u4,s4,c4 #hcjb7 is amended-- 7,a7 in subsection 7a77#h71 by striking #a;a7#dg77;,d7 each place it appears and inserting #a;a7#dh77;,d72 and 7,b7 in subsection 7d77#a71 by striking #a;a7#dg77;,a77v7 each place it appears and inserting #a;a7#dh77;,a77v74 #ajd4 ,definitions under this ,act ,in this ,act3 7#a7 ,definitions under the ,commodity ,exchange ,act ,the terms decentralized finance messaging system1 decentralized finance trading protocol1 digital commodity1 digital commodity broker1 digital commodity dealer1 digital commodity exchange1 and mixed digital asset transaction 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 blockchain1 blockchain system1 blockchain protocol1 decentralized governance system1 digital asset1 digital commodity issuer1 end user distribution1 mature blockchain system1 permitted payment stablecoin1 and securities laws 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 securities laws1 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 ,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-- 7,a7 blockchain1 blockchain application1 blockchain system1 blockchain protocol1 decentralized governance system1 digital commodity affiliated person1 digital commodity issuer1 digital commodity related person1 end user distribution1 and mature blockchain system1 as defined under section #b7;a7 of the ,securities ,act of #aicc2 7,b7 unilateral authority1 as such term is used in section #db of the ,securities ,exchange ,act of #aicd and section #a;a of the ,commodity ,exchange ,act2 and 7,c7 programmatic functioning1 as such term is used in sections #d;,c of the ,securities ,act of #aicc1 section #db of the ,securities ,exchange ,act of #aicd1 and section #a;a of the ,commodity ,exchange ,act4 7#b7 ,the terms digital commodity1 decentralized finance messaging system1 and decentralized finance trading protocol1 as defined under section #a;a of the ,commodity ,exchange ,act4 7b7 ,joint rulemaking for mixed digital asset transactions ,the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission shall jointly issue rules applicable to mixed digital asset transactions under this ,act and the amendments made by this ,act1 including by further defining such term4 7c7 ,protection of self-,custody 7#a7 ,in general ,a ,united ,states individual shall retain the right to-- 7,a7 maintain a hardware wallet or software wallet for the purpose of facilitating the individual's own lawful custody of digital assets2 and 7,b7 engage in direct1 peer-to-peer transactions in digital assets with another individual or entity for the individual's own lawful purposes using a hardware wallet or software wallet1 if-- 7i7 such other individual or entity is not a financial institution 7as defined in section #ecab of title #ca1 ,united ,states ,code72 and 7ii7 the transactions do not involve any property or interests in property that are blocked pursuant to1 or are otherwise prohibited by1 ,united ,states sanctions4 7#b7 ,application ,this subsection-- 7,a7 applies solely to personal use by individuals2 and 7,b7 does not apply to individuals acting in a custodial or fiduciary capacity for others4 7#c7 ,rule of construction ,nothing in this subsection shall be construed to limit the authority of the ,secretary of the ,treasury1 the ,securities and ,exchange ,commission1 the ,commodity ,futures ,trading ,commission1 the ,board of ,governors of the ,federal ,reserve ,system1 the ,comptroller of the ,currency1 the ,federal ,deposit ,insurance ,corporation1 or the ,national ,credit ,union ,administration to carry out any enforcement action or special measure authorized under applicable law1 including-- 7,a7 the ,bank ,secrecy ,act1 section #igad of the ,combating ,russian ,money ,laundering ,act 7#ca ,u4,s4,c4 #ecah;,a note71 and section #gbac;,a of the ,fentanyl ,sanctions ,act 7#ba ,u4,s4,c4 #bcac;a72 or 7,b7 any other law relating to illicit finance1 money laundering1 terrorism financing1 or ,united ,states sanctions4 7d7 ,joint rulemaking1 procedures1 or guidance for delisting ,not later than #ahj 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 section #ajf 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 7e7 ,joint rules for portfolio margining determinations 7#a7 ,in general ,not later than #cfj days after the date of the enactment of this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly issue rules describing the process for persons registered with either such ,commission to seek a joint order or determination with respect to margin1 customer protection1 segregation1 or other requirements as necessary to facilitate portfolio margining of securities 7including related extensions of credit71 security-based swaps1 contracts for future delivery1 options on a contract for future delivery1 swaps1 and digital commodities1 or any subset thereof1 in-- 7,a7 a securities account carried by a registered broker or dealer or a security-based swap account carried by a registered security-based swap dealer2 7,b7 a futures or cleared swap account carried by a registered futures commission merchant2 7,c7 a swap account carried by a swap dealer2 or 7,d7 a digital commodity account carried by a registered digital commodity broker or digital commodity dealer that is also registered in such other capacity as is necessary to also carry the other customer or counterparty positions being held in the account4 7#b7 ,process ,with respect to a joint order or determination described in paragraph 7#a71 the rules required to be issued pursuant to paragraph 7#a7 shall require-- 7,a7 the joint order or determination to be issued only if the order or determination is in the public interest and provides for the appropriate protection of customers2 7,b7 applicants to file a standard application1 in a form and manner determined by the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission1 which shall include the information necessary to make the joint order or determination2 7,c7 the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission to make a final determination not later than #bgj days after the filing of a completed application2 7,d7 the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission to consider the public interest of the joint order or determination through the solicitation of public comments2 and 7,e7 the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission to consult with other relevant foreign or domestic regulators1 including the ,board of ,governors of the ,federal ,reserve ,system1 the ,federal ,deposit ,insurance ,corporation1 and the ,office of the ,comptroller of the ,currency1 as appropriate4 7f7 ,capital requirements to address netting agreements ,no later than #cfj days following the date of enactment of this ,act1 the ,board of ,governors of the ,federal ,reserve ,system1 the ,comptroller of the ,currency1 and the ,federal ,deposit ,insurance ,corporation shall develop risk-based and leverage capital requirements for insured depository institutions1 depository institution holding companies1 and nonbank financial companies supervised by the ,board of ,governors that address netting agreements that provide for termination and close-out netting across multiple types of financial transactions1 consistent with subsection 7e71 in the event of a counterparty's default4 #ajf4 ,provisional registration for digital commodity exchanges1 brokers1 and dealers 7a7 ,in general 7#a7 ,provisional registration ,within #ahj days after the date of the enactment of this ,act1 a person acting as a digital commodity exchange1 digital commodity broker1 or digital commodity dealer shall file a statement of provisional registration with the ,commodity ,futures ,trading ,commission 7in this subsection referred to as the ,commission71 unless exempted from registration under section #ek of the ,commodity ,exchange ,act1 as a-- 7,a7 digital commodity exchange1 for a person acting as a digital commodity exchange2 7,b7 digital commodity broker1 for a person acting as a digital commodity broker2 or 7,c7 digital commodity dealer1 for a person acting as a digital commodity dealer4 7#b7 ,conditions 7,a7 ,non-registered entities ,a person1 other than a registered entity1 who files a statement of provisional registration under paragraph 7#a7 shall be considered to be in compliance with this section if the person-- 7i7 is a member of a futures association registered under section #ag of the ,commodity ,exchange ,act1 and complies with the rules of the association1 including the rules of the association pertaining to customer disclosures and protection of customer assets2 7ii7 submits to the ,commission1 in the form and manner determined by the ,commission1 and continues to materially update1 as necessary or required by the ,commission1 a statement of the nature of the digital commodity-related activities the person is pursuing or intends to pursue2 7iii7 submits to the ,commission and continues to materially update the information required by this subsection2 7iv7 complies with subsection 7c7 of this section2 and 7v7 pays all fees and penalties imposed on the person under section #daj of this ,act4 7,b7 ,registered entity 7i7 ,in general ,a registered entity who files a statement of provisional registration under paragraph 7#a7 shall be considered to be in compliance with this section if the person-- 7,i7 submits to the ,commission and continues to materially update1 a statement of the nature of the digital commodity-related activities the person is pursuing or intends to pursue2 7,,ii7 submits1 and continues to materially update1 the information required by this subsection and subsection 7b72 7,,iii7 complies with subsection 7c72 and 7,,iv7 pays all fees and penalties imposed on the person under section #daj4 7ii7 ,definition ,in this paragraph1 the term registered entity means a person who is designated by the ,commodity ,futures ,trading ,commission as a contract market or registered with the ,commodity ,futures ,trading ,commission as a swap execution facility4 7b7 ,disclosure of general information ,a person who files a statement of provisional registration under subsection 7a7 shall disclose to the ,commission1 unless already known to the ,commission1 the following3 7#a7 ,management ,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 7,e7 the address of the person1 including-- 7i7 the place of incorporation2 7ii7 principal place of business2 and 7iii7 an address for service of process2 and 7,f7 a list of the ,states in which the person has operations4 7#b7 ,digital commodity operations ,information concerning the digital commodity operations of the person1 including-- 7,a7 a general description of the person's business and the terms of service for ,united ,states customers2 7,b7 a description of the person's account approval process2 7,c7 any rulebook or other customer order fulfillment rules or procedures2 7,d7 risk management procedures2 7,e7 a description of the product listing process2 and 7,f7 policies and procedures for compliance with the ,bank ,secrecy ,act4 7c7 ,requirements ,a person who files a statement of provisional registration under subsection 7a7 shall comply with the following requirements3 7#a7 ,statutory disqualifications ,except to the extent otherwise specifically provided by the ,commission or any registered futures association rule1 regulation1 or order1 the person shall not permit an individual who is subject to a statutory disqualification under paragraph 7#b7 or 7#c7 of section #h;a of the ,commodity ,exchange ,act or subject to a statutory disqualification as defined in section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a77 to effect or be involved in effecting transactions on behalf of the person1 if the person knew1 or in the exercise of reasonable care should have known1 of the statutory disqualification4 7#b7 ,books and records ,the person shall keep their books and records open to inspection and examination by the ,commission and by any registered futures association or national securities association of which the person is a member4 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 legal entity that custodies customer assets and the general manner in which the digital assets of the customer will be and are custodied2 7,c7 information concerning the policies and procedures of the person that are related to the protection of customers of the person1 including information regarding any conflicts of interest or material affiliates2 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 7d7 ,authority 7#a7 ,in general 7,a7 ,deemed registration ,a person who remains in compliance with the requirements of this section is deemed to be-- 7i7 a registered digital commodity exchange1 pursuant to section #e;i1 if the person filed a statement of provisional registration as a digital commodity exchange2 or 7ii7 a registered digital commodity broker or dealer1 pursuant to section #du1 if the person filed a statement of provisional registration as a digital commodity broker or dealer1 as the case may be4 7,b7 ,sunset ,the applicability of subparagraph 7,a7 shall expire-- 7i7 in the case of a digital commodity exchange deemed registered pursuant to subparagraph 7,a77i71 #ahj days after the final effective date of the rulemakings required under #e;i2 or 7ii7 in the case of a digital commodity broker or dealer deemed registered pursuant to subparagraph 7,a77ii71 #ahj days after the final effective date of the rulemakings required under #du4 7#b7 ,superiority of ,commission-adopted requirements ,the requirements of the preceding provisions of this section shall not supersede any requirements applicable to registered persons adopted by the ,commission under the ,commodity ,exchange ,act4 7e7 ,delisting ,this section 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 determine1 in accordance with rules1 procedures or guidance jointly issued by the ,commission and the ,securities and ,exchange ,commission to delist an asset for trading1 that the listing is inconsistent with the ,commodity ,exchange ,act1 the securities laws 7including regulations under those laws71 or this ,act4 7f7 ,registration ,a person may not file a statement of provisional registration 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 7g7 ,rulemaking 7#a7 ,in general ,within #ahj days after the date of the enactment of this ,act1 a registered futures association shall adopt and enforce rules applicable to persons required by subsection 7a77#b7 to be members of the association4 7#b7 ,fees ,the rules adopted under subparagraph 7,a7 of this paragraph may provide for dues in accordance with section #ag7;b77#f7 of the ,commodity ,exchange ,act4 7#c7 ,effect ,a registered futures association shall submit to the ,commission any rule adopted under subparagraph 7,a7 of this paragraph1 which shall take effect pursuant to the requirements of section #ag7;j7 of the ,commodity ,exchange ,act4 7h7 ,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 7i7 ,whistleblower enforcement ,for purposes of section #bc of the ,commodity ,exchange ,act1 the term this ,act includes this section4 7j7 ,federal preemption 7#a7 ,this section shall supersede any ,state or local law 7other than antifraud provisions of general applicability7 that regulates the offer or sale of digital assets in the case of a transaction conducted in compliance with this section and conducted on or through a person who files a statement of provisional registration under subsection 7a7 and complies with the requirements of this section4 7#b7 ,notwithstanding any other provision of law1 the ,commission shall have exclusive jurisdiction over the digital asset activities of a person who-- 7,a7 files a statement of provisional registration under subsection 7a72 and 7,b7 complies with the requirements of this section4 #ajg4 ,commodity ,exchange ,act and securities laws 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 7#b7 any agreement1 contract1 or transaction that is subject to the securities laws as-- 7,a7 a security-based swap2 7,b7 a security futures product2 or 7,c7 an option on or based on the value of a security2 or 7#c7 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 a statement of provisional registration 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 ,administrative requirements ,section #d;c7a7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #f;c7a77 is amended-- 7#a7 in paragraph 7#c7-- 7,a7 in subparagraph 7,b71 by striking or at the end2 7,b7 in subparagraph 7,c71 by striking the period and inserting 2 or2 and 7,c7 by adding at the end the following3 7,d7 a contract of sale of a digital commodity4 2 7#b7 in paragraph 7#d7-- 7,a7 in subparagraph 7,a7-- 7i7 in clause 7ii71 by striking or at the end2 7ii7 in clause 7iii71 by striking the period and inserting 2 or2 and 7iii7 by adding at the end the following3 7iv7 a contract of sale of a digital commodity4 2 7,b7 in subparagraph 7,b7-- 7i7 in clause 7ii71 by striking or at the end2 7ii7 in clause 7iii71 by striking the period and inserting 2 or2 and 7iii7 by adding at the end the following3 7iv7 a contract of sale of a digital commodity4 2 and 7,c7 in subparagraph 7,c7-- 7i7 in clause 7ii71 by striking or at the end2 7ii7 by striking 7iii7 a swap1 provided however1 and inserting the following3 7iii7 a swap2 or 7iv7 a contract of sale of a digital commodity1 provided1 however1 2 and 7iii7 by striking clauses 7i71 7ii71 or 7iii7 and insert any of clauses 7i7 through 7iv74 #aji4 ,international cooperation ,in order to promote greater consistency in 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 application of consistent international standards with respect to the regulation of digital assets2 and 7#b7 may enter into 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 ,treatment of certain non-controlling blockchain developers 7a7 ,in general ,notwithstanding applicable law1 a non-controlling blockchain developer or provider of a blockchain service shall not be treated as a money transmitter or as engaged in money transmitting or1 following the date of enactment of this ,act1 be otherwise subject to any new registration requirement that is substantially similar to the requirement that currently applies to money transmitters1 solely on the basis of-- 7#a7 creating or publishing software to facilitate the creation of1 or provision of maintenance services to1 a blockchain or blockchain service2 7#b7 providing hardware or software to facilitate a customer's own custody or safekeeping of the customer's digital assets2 or 7#c7 providing infrastructure support to maintain a blockchain service4 7b7 ,rule of ,construction ,nothing in this section shall be construed to affect whether a blockchain developer or provider of a blockchain service is otherwise subject to classification or treatment as a money transmitter1 or as engaged in money transmitting1 under applicable ,state or ,federal law1 including laws relating to anti-money laundering or countering the financing of terrorism1 based on conduct outside the scope of subsection 7a74 ,nothing in this section shall be construed to affect whether a blockchain developer or provider of a blockchain service is otherwise subject to classification or treatment as a financial institution under the ,bank ,secrecy ,act1 this ,act1 or any ,act enacted after the date of enactment of this ,act4 7c7 ,effect on other laws 7#a7 ,intellectual property law ,nothing in this section shall be construed to limit or expand any law pertaining to intellectual property4 7#b7 ,state law ,nothing in this section shall be construed to prevent any ,state from enforcing any ,state law that is consistent with this section4 ,no cause of action may be brought and no liability may be imposed under any ,state or local law that is inconsistent with this section4 7d7 ,definitions ,in this section3 7#a7 ,blockchain developer ,the term blockchain developer means any person or business that creates or publishes software to facilitate the creation of1 or provide maintenance to1 a blockchain or a blockchain service4 7#b7 ,blockchain service ,the term blockchain service means any information1 transaction1 or computing service or system that provides or enables access to a blockchain network by multiple users1 including specifically a service or system that enables users to send1 receive1 exchange1 or store digital assets described by blockchain networks4 7#c7 ,non-controlling blockchain developer or provider of a blockchain service ,the term non-controlling blockchain developer or provider of a blockchain service means a blockchain developer or provider of a blockchain service that in the regular course of operations1 does not have the legal right or the unilateral and independent ability to control1 initiate upon demand1 or effectuate transactions involving digital assets that users are entitled to1 without the approval1 consent1 or direction of any other third party4 #aaa4 ,application of the ,bank ,secrecy ,act 7a7 ,in general ,section #ecab7;c77#a77;,a7 of title #ca1 ,united ,states ,code1 is amended-- 7#a7 by inserting digital commodity broker1 digital commodity dealer1 after futures commission merchant12 and 7#b7 by inserting before the period the following3 and any digital commodity exchange registered1 or required to register1 under the ,commodity ,exchange ,act which permits direct customer access4 7b7 ,,gao study 7#a7 ,in general ,the ,comptroller ,general of the ,united ,states1 in consultation with the ,secretary of the ,treasury1 shall conduct a study to-- 7,a7 assess the risks posed by centralized intermediaries that are primarily located in foreign jurisdictions that provide services to ,u4,s4 persons without regulatory requirements that are substantially similar to the requirements of the ,bank ,secrecy ,act2 and 7,b7 provide any regulatory or legislative recommendations to address these risks under subparagraph 7,a74 7#b7 ,report ,not later than #a year after the date of enactment of this ,act1 the ,comptroller ,general shall issue a report to ,congress containing all findings and determinations made in carrying out the study required under paragraph 7#a74 #aab4 ,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 ,commodities #bja4 ,treatment of investment contract assets 7a7 ,securities ,act of #aicc ,section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a771 as amended by section #aja1 is further amended-- 7#a7 in paragraph 7#a71 by adding at the end the following3 ,the term investment contract does not include an investment contract asset42 and 7#b7 by adding at the end the following3 7#cd7 ,the term investment contract asset means a digital commodity-- 7,a7 that can be exclusively possessed and transferred1 person to person1 without necessary reliance on an intermediary1 and is recorded on a blockchain2 and 7,b7 sold or otherwise transferred1 or intended to be sold or otherwise transferred1 pursuant to an investment contract4 4 7b7 ,investment ,advisers ,act of #aidj ,section #bjb7;a77#ah7 of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#b7;a77#ah77 is amended by adding at the end the following3 ,the term investment contract does not include an investment contract asset 7as such term is defined under section #b7;a7 of the ,securities ,act of #aicc744 7c7 ,investment ,company ,act of #aidj ,section #b7;a77#cf7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#b7;a77#cf77 is amended by adding at the end the following3 ,the term investment contract does not include an investment contract asset 7as such term is defined under section #b7;a7 of the ,securities ,act of #aicc744 7d7 ,securities ,exchange ,act of #aicd ,section #c7;a77#aj7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a77#aj77 is amended by adding at the end the following3 ,the term investment contract does not include an investment contract asset 7as such term is defined under section #b7;a7 of the ,securities ,act of #aicc744 7e7 ,securities ,investor ,protection ,act of #aigj ,section #af7ad7 of the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #ghlll7#ad77 is amended by adding at the end the following3 ,the term investment contract does not include an investment contract asset 7as such term is defined under section #b7;a7 of the ,securities ,act of #aicc744 #bjb4 ,exempted primary transactions in digital commodities 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 the offer or sale of an investment contract involving units of a digital commodity by its digital commodity issuer 7including all entities controlled by or under common control with the issuer71 if-- 7,a7 the blockchain system to which the digital commodity relates1 together with the digital commodity1 is certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd or the issuer intends for the blockchain system to which the digital commodity relates to be a mature blockchain system by the later of-- 7i7 the date that is four years after the first sale of the investment contract involving a unit of such digital commodity in reliance on the exemption provided under this paragraph1 subject to any extensions as may be granted by the ,commission2 or 7ii7 the date that is four years after the effective date of this paragraph2 7,b7 the sum of all cash and other consideration to be received by the digital commodity issuer in reliance on the exemption provided under this paragraph1 during the #ab-month period preceding the date of such offering1 including the amount received in such offering1 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,c7 after the completion of the transaction1 a purchaser does not own more than #aj percent of the total amount of the outstanding units of the digital commodity2 7,d7 the transaction does not involve the offer or sale of an investment contract involving units of a digital commodity by its digital commodity issuer that-- 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,e7 the issuer meets the requirements of section #d;,b7b74 2 and 7#b7 by inserting after section #d;,a the following3 #d;,b4 ,requirements with respect to certain digital commodity transactions 7a7 ,commission jurisdiction ,for the purposes of this section3 7#a7 ,the ,commission shall have jurisdiction and enforcement authority with respect to disclosures described in this section4 7#b7 ,section #ag shall apply to a statement made in an offering statement1 disclosure1 or report filed under this section to the same extent as such section #ag applies to a statement made in any other offering statement1 disclosure1 or report filed under this ,act4 7b7 ,requirements for digital commodity issuers 7#a7 ,terms and conditions ,a digital commodity issuer offering or selling an investment contract involving units of a digital commodity in reliance on section #d7;a77#h7 shall file with the ,commission an offering statement and any related documents1 in such form and with such content as prescribed by the ,commission1 including financial information1 a description of the issuer and the operations of the issuer1 the financial condition of the issuer1 a description of the plan of distribution of any unit of a digital commodity that is to be offered as well as the intended use of the offering proceeds1 and a description of the development plan for the blockchain system1 and the related digital commodity1 to become a mature blockchain system1 if such blockchain system is not already certified as a mature blockchain system pursuant to section #db of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq474 7#b7 ,information required for purchasers ,a digital commodity issuer that has filed a statement under paragraph 7#a7 to offer and sell an investment contract involving a unit of a digital commodity in reliance on section #d7;a77#h7 shall include in such statement the following information3 7,a7 ,maturity status ,whether the blockchain system to which the digital commodity relates has been certified as a mature blockchain system pursuant to section #db of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 and1 where such blockchain system is not so certified1 a statement of the digital commodity issuer's intent for the blockchain system to which the digital commodity relates to be a mature blockchain system within the time period described in section #d7;a77#h77;,a74 7,b7 ,source code ,the source code1 or a publicly accessible webpage displaying such source code1 for any blockchain system to which the digital commodity relates1 and whether the source code was sourced from an external third party1 whether there are any existing external dependencies1 and whether the code underwent a third-party security audit1 along with material results of any such audit4 7,c7 ,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 commodity relates1 to the extent any such independent access1 search1 and verification activities are technically feasible with respect to such blockchain system4 7,d7 ,digital commodity economics ,a description of the purpose of any blockchain system to which the digital commodity relates and the operation of any such blockchain system1 including-- 7i7 information explaining the launch and supply process1 including the number of units of the digital commodity to be issued in an initial allocation1 the total number of units of the digital commodity to be created1 the release schedule for the units of the digital commodity1 and the total number of units of the digital commodity outstanding2 7ii7 information explaining the technical requirements for holding1 accessing1 and transferring the digital commodity2 7iii7 information on any applicable consensus mechanism or process for validating transactions1 method of generating or mining digital commodities1 and any process for burning or destroying units of the digital commodity on the blockchain system2 7iv7 an explanation of any mechanism for driving value to the digital commodity of such blockchain system2 and 7v7 an explanation of governance mechanisms for implementing changes to the blockchain system or forming consensus among holders of units of such digital commodity4 7,e7 ,plan of development ,the current state and timeline for the development of any blockchain system to which the digital commodity relates1 detailing how and when the blockchain system is intended to be a mature blockchain system1 if the blockchain system is not yet certified as a mature blockchain system1 and the various roles that exist or are intended to exist in connection with the blockchain system1 such as users1 service providers1 developers1 transaction validators1 and governance participants1 including a discussion of any mechanisms by which control or authority are exerted with respect to the blockchain system or its related digital commodity1 and any critical operational dependencies of the blockchain system or its related digital commodity4 7,f7 ,ownership disclosures 7i7 ,in general ,a list of all persons who are digital commodity related persons or digital commodity affiliated persons who have been issued a unit of the digital commodity by the digital commodity issuer or have a right to a unit of the digital commodity from the digital commodity issuer4 7ii7 ,confidentiality ,the ,commission shall keep each list described under clause 7i7 confidential1 consistent with what is necessary or appropriate in the public interest or for the protection of investors4 7,g7 ,risk factor disclosures ,a description of the material risks surrounding ownership of a unit of a digital commodity4 7#c7 ,ongoing disclosure requirements for maturing blockchain systems ,subject to paragraph 7#e71 the issuer of a digital commodity related to a blockchain system that is not yet certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd that has filed a statement under paragraph 7#a7 to offer and sell an investment contract involving a unit of a digital commodity in reliance on section #d7;a77#h7 shall file the following with the ,commission3 7,a7 ,semiannual reports ,every #f months1 a report containing-- 7i7 an updated description of the current state and timeline for the development of the blockchain system to which the digital commodity relates1 showing how and when the blockchain is intended to be a mature blockchain system2 7ii7 a description of the efforts of the issuer and digital commodity related persons in developing the blockchain system to which the digital commodity relates2 7iii7 the amount of money raised by the digital commodity issuer in reliance on section #d7;a77#h71 how much of that money has been spent1 and the general categories of activities for which that money has been spent and amounts spent per category2 and 7iv7 financial statements1 where applicable4 7,b7 ,current reports ,a current report reflecting any material changes relevant to the information previously reported to the ,commission by the digital commodity issuer1 which shall be filed as soon as practicable after the material change occurred1 in accordance with such rules as the ,commission may prescribe as necessary or appropriate in the public interest or for the protection of investors4 7#d7 ,rulemaking ,not later than #cfj days after the date of the enactment of this section1 the ,commission shall prescribe rules on requirements applicable to issuers of digital commodities in reliance on section #d7;a77#h74 7#e7 ,termination of certain reporting requirements2 post-maturity reporting requirements 7,a7 ,in general ,the ongoing reporting requirements under paragraph 7#c7 shall not apply to a digital commodity issuer #ahj days after the end of the covered fiscal year1 if the information with respect to the digital commodity and the blockchain system to which it relates described in subparagraphs 7,a7 through 7,c7 of paragraph 7#b7 is made publicly available and the disclosure requirements under subparagraph 7,c7 of this paragraph are satisfied4 7,b7 ,covered fiscal year defined ,in this paragraph1 the term covered fiscal year means1 with respect to a digital commodity1 the first fiscal year of a digital commodity issuer in which the blockchain system to which such digital commodity relates is certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd4 7,c7 ,post-maturity reporting requirements ,after the blockchain system to which a digital commodity relates is certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd1 any digital commodity issuer that has filed a statement under paragraph 7#a7 to offer and sell an investment contract involving a unit of a digital commodity in reliance on section #d7;a77#h7 and is engaged in material ongoing efforts related to the mature blockchain system shall disclose1 in a manner reasonably calculated to inform the public1 and at such frequency as the ,commission may prescribe1 by rule1 a description of such efforts1 including-- 7i7 any participation in a decentralized governance system of such blockchain system2 7ii7 any participation in alterations or proposed alterations to the functionality or operation of such blockchain system2 7iii7 the use or planned use of any funds raised in reliance on section #d7;a77#h7 or any rulemaking pursuant to section #bjb7;c7 of the ,,clarity ,act of #bjbe in such efforts2 7iv7 the amount of units of the digital commodity1 or rights thereto1 owned and controlled by such issuer and any use1 sale1 trading1 or other disposition thereof2 and 7v7 any affiliations of such issuer material to the efforts of such issuer4 7,d7 ,termination of and exemption from post-maturity reporting requirements ,not later than #bgj days after the date of the enactment of this section1 the ,commission shall issue rules-- 7i7 for terminating the disclosure requirements described in subparagraph 7,c7 during the first fiscal year in which the digital commodity issuer does not engage in material ongoing efforts related to the mature blockchain system2 and 7ii7 to1 as is necessary or appropriate in the public interest or for the protection of investors1 exempt a digital commodity issuer from the requirements described in subparagraph 7,c7 where only a de minimis amount of market activity involving the digital commodity of such digital commodity issuer is taking place4 7,e7 ,rule of construction ,nothing in subparagraph 7,c7 may be construed to make any digital commodity described in such subparagraph a security4 7c7 ,requirements for intermediaries ,a person acting as an intermediary in connection with the offer or sale of an investment contract involving units of a digital commodity in reliance on section #d7;a77#h7 shall-- 7#a7 register with the ,commission as a broker or dealer2 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 7d7 ,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 7e7 ,failure ,to mature 7#a7 ,in general ,not later than #bgj days after the date of the enactment of this section1 the ,commission shall issue rules applying such additional obligations and disclosures for the digital commodity issuers1 digital commodity related persons1 and digital commodity affiliated persons of a blockchain system described under subsection 7b77#a7 that does not become a mature blockchain system within the time period described in section #d7;a77#h77;,a7 as are necessary or appropriate in the public interest or for the protection of investors4 ,such obligations and disclosures shall include the following3 7,a7 ,disclosures ,disclosures regarding the following3 7i7 ,failure to mature ,a detailed explanation of the reason that the blockchain system has not become a mature blockchain system within the time period described in section #d7;a77#h77;,a74 7ii7 ,development plans ,the future plans of development of the blockchain system1 including information required under subsection 7b77#c74 7iii7 ,risk factor disclosures ,the material risks surrounding ownership of a unit of a digital commodity that relates to a blockchain system described under subsection 7b77#a7 that has not become a mature blockchain system within the time period described in section #d7;a77#h77;,a74 7,b7 ,obligations ,transaction reporting and beneficial ownership disclosure obligations applicable to digital commodity related persons and digital commodity affiliated persons of such blockchain system4 7#b7 ,qualification required ,the ,commission may not permit any additional reliance on an exempt offering for the offer or sale of an investment contract involving a unit of a digital commodity by the issuer of the digital commodity related to a blockchain system described under subsection 7a77#a7 that has not become a mature blockchain system within the time period described in section #d7;a77#h77;,a7 unless the ,commission has qualified any offering statement related to such exempt offering4 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 subparagraph 7,b71 by striking section #d7d7 and inserting section #d7;a77#d72 7,b7 in subparagraph 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 and 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 7c7 ,use of other exemptions 7#a7 ,rule of construction ,except as provided in this subsection1 nothing in this section or the amendments made by this section may be construed as prohibiting the offer or sale of an investment contract involving units of a digital commodity in reliance on an exemption provided under section #c1 #d7;a71 or #ai of the ,securities ,act of #aicc other than that provided under section #d7;a77#h7 of the ,securities ,act of #aicc4 7#b7 ,rulemakings 7,a7 ,the ,securities and ,exchange ,commission may issue rules-- 7i7 to permit the issuer of a digital commodity related to a blockchain system described under section #d;,b7b77#a7 of the ,securities ,act of #aicc that has not become a mature blockchain system within the time period described in section #d7;a77#h77;,a7 of such ,act1 or the issuer of a digital commodity described in subparagraph 7,b77iii71 to utilize an exempt offering to offer or sell an investment contract involving the digital commodity1 if the ,commission qualifies any offering statement related to such exempt offering2 and 7ii7 for the offer and sale of investment contracts involving units of a digital commodity by issuers that are not organized under the laws of a ,state1 a territory of the ,united ,states1 or the ,district of ,columbia4 7,b7 ,not later than #bgj days after the date of the enactment of this section1 the ,securities and ,exchange ,commission shall issue the following rules3 7i7 ,a rule requiring a digital commodity issuer that last offered or sold an investment contract involving units of a digital commodity in reliance on an exemption provided under section #c1 #d7;a71 or #ai of the ,securities ,act of #aicc prior to the date of enactment of this ,act1 to file a comparable set of disclosures to those described under section #d;,b of the ,securities ,act of #aicc as the ,commission determines appropriate based on the exemption1 the maturity of the blockchain system to which such digital commodity relates1 and any material ongoing efforts of such digital commodity issuer 7provided that for blockchains certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd1 such disclosures shall be comparable to those under section #d;,b7b77#e77;,c771 not later than the later of-- 7,i7 one year after the effective date of this section2 or 7,,ii7 the date of any secondary market sale of such digital commodity made in reliance on section #bjc4 7ii7 ,a rule requiring a digital commodity issuer that offers or sells an investment contract involving units of a digital commodity in reliance on an exemption provided under section #c1 #d7;a71 or #ai of the ,securities ,act of #aicc1 other than that provided under section #d7;a77#h7 of the ,securities ,act of #aicc1 on or after the date of enactment of this ,act1 to file a comparable set of disclosures to those described under section #d;,b of the ,securities ,act of #aicc as the ,commission determines appropriate based on the exemption1 the maturity of the blockchain system to which such digital commodity relates1 and any material ongoing efforts of such digital commodity issuer1 prior to the date of any secondary market sale of such digital commodity made in reliance on section #bjc4 7iii7 ,with respect to a digital commodity where the digital commodity issuer is required to file disclosures under clause 7i7 or 7ii7 and where the blockchain system to which the digital commodity relates is not certified as a mature blockchain system pursuant to section #db of the ,securities ,exchange ,act of #aicd after the #d-year period beginning on the date that the first such disclosure is filed-- 7,i7 a rule prohibiting the offer or sale of an investment contract involving units of the digital commodity unless the ,commission has qualified any offering statement related to such offer or sale1 where such offer or sale is permitted pursuant to subparagraph 7,a77i72 and 7,,ii7 a rule requiring the digital commodity issuer to make disclosures comparable to those described in #d;,b7e77#a77;,a7 of the ,securities ,act of #aicc4 #bjc4 ,treatment of secondary transactions in digital commodities that originally involved investment contracts 7a7 ,secondary market treatment ,notwithstanding any other provision of law1 the offer or sale of a digital commodity that originally involved an investment contract by a person other than the issuer of such digital commodity1 or an agent or underwriter thereof1 shall be deemed not to be an offer or sale of such investment contract between the issuer of the investment contract involving the digital commodity1 or an agent or underwriter thereof1 and the purchaser of such digital commodity under-- 7#a7 the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;a et seq472 7#b7 the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#a et seq472 7#c7 the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#a et seq472 7#d7 the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq472 7#e7 the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #gh;aaa et seq472 and 7#f7 any applicable provisions of ,state law4 7b7 ,end user distributions not an offer or sale of a security ,an end user distribution does not involve the offer or sale of a security4 7c7 ,agent defined ,in this section and with respect to a digital commodity issuer1 the term agent means any person directly or indirectly controlled by the issuer or under direct or indirect common control with the issuer4 #bjd4 ,requirements for offers and sales of digital commodities by digital commodity related persons and digital commodity affiliated persons ,the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;a et seq471 as amended by section #bjb1 is further amended by inserting after section #d;,b the following3 #d;,c4 ,requirements for offers and sales of digital commodities by digital commodity related persons and digital commodity affiliated persons 7a7 ,in general ,it shall be a violation of this ,act for a digital commodity affiliated person or a digital commodity related person to offer or sell a digital commodity acquired directly from its issuer1 or an agent or underwriter thereof1 pursuant to an investment contract in reliance on section #d7;a77#h7 or another exemption under this ,act1 other than as provided in this section4 7b7 ,commission jurisdiction 7#a7 ,where a digital commodity affiliated person or a digital commodity related person offers or sells a digital commodity acquired directly from its issuer1 or an agent or underwriter thereof1 pursuant to an investment contract in reliance on section #d7;a77#h71 or another exemption under this ,act1 other than as provided in this section1 such digital commodity affiliated person or digital commodity related person shall be considered an issuer of such investment contract4 7#b7 ,for the purposes of this section1 the ,commission shall have jurisdiction and enforcement authority with respect to an offer or sale of a digital commodity described in subsection 7a74 7c7 ,restrictions on digital commodity related persons and digital commodity affiliated persons 7#a7 ,prior to being a mature blockchain system ,prior to the blockchain system to which a digital commodity relates being certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd1 units of the digital commodity acquired by a digital commodity related person or digital commodity affiliated person directly from its issuer 7or an agent or underwriter thereof7 pursuant to an investment contract in reliance on section #d7;a77#h71 or another exemption under this ,act1 may be offered or sold by such digital commodity related person or digital commodity affiliated person if-- 7,a7 reports with respect to such digital commodity1 where required under section #d;,b7b77#c7 7or1 with respect to a digital commodity not issued in reliance on section #d7;a77#h71 a comparable set of reports where required by the ,commission7 have been filed with the ,commission2 7,b7 the digital commodity related person or digital commodity affiliated person has held the units for not less than #ab months2 and 7,c7 the aggregate amount of the units of the digital commodity offered or sold by the digital commodity related person or digital commodity affiliated person is-- 7i7 in any #ab-month period1 or shorter period as the ,commission may prescribe1 not less than #e percent or greater than #bj percent of the total units of the digital commodity acquired directly from its issuer 7or an agent or underwriter thereof7 by the digital commodity related person or digital commodity affiliated person1 as determined by the ,commission pursuant to paragraph 7#c72 and 7ii7 an amount1 as determined by the ,commission pursuant to paragraph 7#c71 not less than #cj percent or greater than #ej percent of the total units of the digital commodity acquired directly from its issuer 7or an agent or underwriter thereof7 by the digital commodity related person or digital commodity affiliated person4 7#b7 ,after becoming a mature blockchain system ,after the blockchain system to which a digital commodity relates is certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd1 units of the digital commodity acquired by a digital commodity related person or digital commodity affiliated person directly from its issuer 7or an agent or underwriter thereof7 pursuant to an investment contract in reliance on section #d7;a77#h7 or another exemption under this ,act1 may be-- 7,a7 offered or sold by a digital commodity related person2 or 7,b7 offered or sold by a digital commodity affiliated person if-- 7i7 information described in section #d;,b7b77#e77;,c71 where required 7or1 with respect to a digital commodity not issued in reliance on section #d7;a77#h71 a comparable set of information1 where required7 is publicly available2 7ii7 the digital commodity affiliated person has held the units for not less than the earlier of-- 7,i7 #ab months2 or 7,,ii7 #c months following the date on which the blockchain system is certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd2 and 7iii7 the aggregate amount of the units of the digital commodity offered or sold by the digital commodity affiliated person in any #ab-month period is an amount1 as determined by the ,commission pursuant to paragraph 7#c71 not less than #e percent or greater than #aj percent of the total outstanding amount of the digital commodity4 7#c7 ,rulemakings required ,not later than #bgj days after the date of the enactment of this section1 consistent with protecting investors1 fostering the development of mature blockchain systems1 facilitating capital formation1 and maintaining fair and orderly markets the ,commission1 by rule1 after notice and comment-- 7,a7 shall set the percentage amounts described in paragraphs 7#a77;,c77i71 7#a77;,c77ii71 and 7#b77;,b77iii72 and 7,b7 may provide an exemption from the limitation described in paragraph 7#a77;,c77ii71 if the ,commission requires any offer or sale pursuant to such exemption of a digital commodity related to a blockchain system that has failed to become a mature blockchain system under this ,act or any rule promulgated hereunder to be accompanied by the disclosures required under1 as applicable1 section #d;,b7e77#a77;,a7 or section #bjb7;c77#b77;,b77iii77,,ii7 of the ,,clarity ,act of #bjbe4 7d7 ,use of a digital commodity in the programmatic functioning of the blockchain system ,for purposes of this section1 the use of a digital commodity in the programmatic functioning of the blockchain system to which it relates is not an offer or sale of a digital commodity4 7e7 ,manipulative and deceptive devices2 reporting 7#a7 ,in general ,it shall be unlawful for any digital commodity issuer1 digital commodity related person1 or digital commodity affiliated person1 directly or indirectly1 by the use of any means or instrumentality of interstate commerce or of the mails1 to use or employ1 in connection with the purchase or sale of any digital commodity1 any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the ,commission may prescribe as necessary or appropriate in the public interest or for the protection of investors4 7#b7 ,affirmative defense ,not later than #bgj days after the date of the enactment of this section1 the ,commission shall issue rules to implement paragraph 7#a71 including by providing any affirmative defenses to an enforcement action thereunder as the ,commission may prescribe as necessary or appropriate in the public interest or for the protection of investors4 7#c7 ,reporting ,not later than #bgj days after the date of the enactment of this section1 the ,commission shall issue rules to prescribe such transaction reporting and beneficial ownership disclosure obligations applicable to digital commodity related persons and digital commodity affiliated persons1 as necessary or appropriate in the public interest or for the protection of investors4 7#d7 ,differentiation between persons ,in issuing rules required under paragraphs 7#b7 and 7#c71 the ,commission shall differentiate between digital commodity related persons and digital commodity affiliated persons1 as necessary or appropriate in the public interest or for the protection of investors4 7f7 ,certain units received prior to enactment ,a unit of a digital commodity received from the digital commodity issuer prior to the date of the enactment of this section through an offer or sale of an investment contract involving units of a digital commodity in reliance on an exemption provided under section #c1 #d7;a71 or #ai1 may be offered or sold by a digital commodity related person or digital commodity affiliated person1 if-- 7#a7 the digital commodity issuer is no longer engaged in material ongoing efforts related to the blockchain system to which the digital commodity relates and the blockchain system to which the digital commodity relates is certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd2 7#b7 the digital commodity issuer is engaged in material ongoing efforts related to the blockchain system to which the digital commodity relates and the blockchain system to which the digital commodity relates is certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd1 and the appropriate disclosures required under section #bjb7;c77#b77;,b7 of the ,,clarity ,act of #bjbe have been made with the ,commission2 or 7#c7 the digital commodity issuer is engaged in material ongoing efforts related to the blockchain system to which the digital commodity relates and the blockchain system to which the digital commodity relates is not certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd1 and the appropriate disclosures required under section #bjb7;c77#b77;,b7 of the ,,clarity ,act of #bjbe have been made with the ,commission4 7g7 ,rulemaking on further usage of digital commodities ,the ,commission1 consistent with protecting investors1 fostering the development of mature blockchain systems1 facilitating capital formation1 and maintaining fair and orderly markets1 may1 by rule1 exempt unconditionally or on stated terms or conditions1 a digital commodity related person or a digital commodity affiliated person1 or any class thereof1 from the requirements of this section for the offer or sale of a digital commodity4 4 #bje4 ,mature blockchain system requirements ,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 ,mature blockchain systems 7a7 ,certification of blockchain systems 7#a7 ,certification ,for purposes of sections #d7;a77#h71 #d;,b1 and #d;,c of the ,securities ,act of #aicc1 any digital commodity issuer1 digital commodity related person1 digital commodity affiliated person1 or decentralized governance system of the blockchain system may certify to the ,securities and ,exchange ,commission that the blockchain system to which a digital commodity relates is a mature blockchain system4 7#b7 ,filing requirements ,a certification described under paragraph 7#a7 shall be filed with the ,commission1 and include such information that is reasonably necessary to establish that the blockchain system is not controlled by any person or group of persons under common control1 which may include information regarding-- 7,a7 the operation of the blockchain system2 7,b7 the functionality of the related digital commodity2 7,c7 how the market value of the digital commodity is substantially derived from the programmatic functioning of such blockchain system2 7,d7 any decentralized governance system which relates to the blockchain system2 and 7,e7 the current roles1 if any1 of the digital commodity issuer1 digital commodity affiliated persons1 and digital commodity related persons where such roles are material to the development or operation of such blockchain system or the decentralized governance system of such blockchain system4 7#c7 ,rebuttable presumption ,the ,commission may rebut a certification described under paragraph 7#a7 with respect to a blockchain system if the ,commission1 within #fj days of receiving such certification1 determines that the blockchain system is not a mature blockchain system4 7#d7 ,certification review 7,a7 ,in general ,any blockchain system that relates to a digital commodity for which a certification has been made under paragraph 7#a7 shall be considered a mature blockchain system #fj days after the date on which the ,commission receives a certification under paragraph 7#a71 unless the ,commission notifies the person who made the certification within such time that the ,commission is staying the certification due to-- 7i7 an inadequate explanation by the person making the certification2 or 7ii7 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 7i7 ,each certification received under paragraph 7#a74 7ii7 ,each stay of the ,commission under this subsection1 and the reasons therefor4 7iii7 ,any response from a person making a certification under paragraph 7#a7 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 paragraph 7#a7 for the same blockchain system which relates to a digital commodity which are received during the review period provided under this paragraph4 7#e7 ,stay of certification 7,a7 ,in general ,a notification by the ,commission pursuant to paragraph 7#d77;,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 paragraph 7#d77;,a71 the ,commission may begin a public comment period of at least #cj days in conjunction with a stay under this subsection4 7#f7 ,disposition of certification ,a certification made under paragraph 7#a7 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#g7 ,recertification ,with respect to a blockchain system for which a certification has been rebutted under this subsection1 no person may make a certification under paragraph 7#a7 with respect to such blockchain system during the #ij-;day period beginning on the date of such rebuttal4 7#h7 ,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 subparagraph 7,a71 the court shall have de novo review of the determination to rebut the certification4 7b7 ,maturity criteria 7#a7 ,sense of ,congress ,it is the sense of the ,congress that protecting investors1 maintaining fair1 orderly1 and efficient markets1 and facilitating capital formation necessitates establishing clear criteria for blockchain systems to be deemed mature1 as well as enabling the ,commission to develop1 without prejudice to any such criteria codified in statute1 alternative criteria by which blockchain systems may be considered not to be controlled by any person or group of persons under common control in order to accommodate changes in markets and technology4 7#b7 ,in general ,the ,commission may issue rules identifying conditions by which a blockchain system1 together with its related digital commodity1 shall be considered a mature blockchain system1 consistent with the protection of investors1 maintenance of fair1 orderly1 and efficient markets1 and the facilitation of capital formation4 7#c7 ,rules of construction 7,a7 ,nothing in this subsection may be construed to permit the ,commission to impose additional criteria to the criteria in subsection 7c7 for certifying that a blockchain system is a mature blockchain system pursuant to subsection 7c74 7,b7 ,nothing in this subsection or subsection 7c7 may be construed to limit the ,commission's ability to identify alternative conditions and criteria by which a blockchain system may be considered a mature blockchain system4 7c7 ,deemed mature 7#a7 ,in general ,notwithstanding subsection 7b71 for the purposes of subsection 7a71 a digital commodity issuer1 digital commodity related person1 digital commodity affiliated person1 or decentralized governance system of the blockchain system may establish that a blockchain system1 together with its related digital commodity1 is not controlled by any person or group of persons under common control1 if the blockchain system1 together with its related digital asset1 meets the requirements described in paragraph 7#b7 or 7#c74 7#b7 ,criteria for any blockchain system ,the requirements described in this paragraph are the following3 7,a7 ,system value 7i7 ,market value ,the digital commodity has a value that is substantially derived from the use and functioning of the blockchain system4 7ii7 ,development of value mechanism substantially completed ,where the digital commodity issuer has made public a development plan describing how the digital commodity's value is reasonably expected to be derived from the programmatic functioning of the blockchain system1 the development of such mechanisms has been substantially completed4 7,b7 ,functional system ,the blockchain system allows network participants to engage in the activities the blockchain system is intended to provide1 including-- 7i7 using1 transmitting1 or storing value1 or otherwise executing transactions1 on the blockchain system2 7ii7 deploying1 executing1 or accessing software or services1 or otherwise offering or participating in services1 deployed on or integrated with the blockchain system2 7iii7 participating in the consensus mechanism1 transaction validation process1 or decentralized governance system of the blockchain system2 or 7iv7 operating any client1 node1 validator1 or other form of computational infrastructure with respect to the blockchain system4 7,c7 ,open and interoperable system ,the blockchain system-- 7i7 is composed of source code that is open source2 and 7ii7 does not restrict or prohibit based on the exercise of unilateral authority any person1 other than a digital commodity issuer1 digital commodity related person1 or digital commodity affiliated person from engaging in the activities the blockchain system is intended to provide1 including the activities described in subparagraph 7,b74 7,d7 ,programmatic system ,the blockchain system operates1 executes1 and enforces its operations and transactions based solely on pre-established1 transparent rules encoded directly within the source code of the blockchain system4 7,e7 ,system governance ,no person or group of persons under common control-- 7i7 has the unilateral authority1 directly or indirectly1 through any contract1 arrangement1 understanding1 relationship1 or otherwise1 to control or materially alter the functionality1 operation1 or rules of consensus or agreement of the blockchain system or its related digital commodity2 or 7ii7 has the unilateral authority to direct the voting1 in the aggregate1 of #bj percent or more of the outstanding voting power of such blockchain system by means of a related digital commodity1 nodes or validators1 a decentralized governance system1 or otherwise1 in a blockchain system which can be altered by a voting system4 7,f7 ,impartial system ,no person or group of persons under common control possesses a unique permission or privilege to alter the functionality1 operation1 or rules of consensus or agreement of the blockchain system or its related digital commodity1 unless such alteration-- 7i7 addresses errors1 regular maintenance1 or cybersecurity risks of the blockchain system that affect the programmatic functioning of the blockchain system2 and 7ii7 is adopted through the consensus or agreement of a decentralized governance system4 7,g7 ,distributed ownership ,no digital commodity issuer1 digital commodity related person1 or digital commodity affiliated person beneficially owns1 in the aggregate1 #bj percent or more of the total amount of units of the digital commodity4 7#c7 ,optional criteria for preexisting blockchain systems ,the requirements described in this paragraph are that the blockchain system-- 7,a7 was created prior to the date of enactment of this section2 7,b7 met the requirements of subparagraphs 7,a7 through 7,f7 of paragraph 7#b7 prior to ,january #a1 #bjbj2 and 7,c7 at least #ej percent of the units of the digital commodity related to the blockchain system are held by persons other than the digital commodity issuer1 a digital commodity related person1 or a digital commodity affiliated person4 7d7 ,decentralized governance system 7#a7 ,for the purposes of this section1 a decentralized governance system is not a person or a group of persons under common control4 7#b7 ,a blockchain system1 together with its digital commodity1 shall not be precluded from being considered a mature blockchain system solely based on a functional1 administrative1 clerical1 or ministerial action of a decentralized governance system1 including any such action taken by a person acting on behalf of and at the direction of the decentralized governance system1 as determined by the ,commission and consistent with the protection of investors1 maintenance of fair1 orderly1 and efficient markets1 and the facilitation of capital formation4 7e7 ,rulemaking ,not more than #bgj days after the date of enactment of this section1 the ,commission shall issue rules to carry out this section4 4 #bjf4 ,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 ,intermediaries at the ,securities and ,exchange ,commission #cja4 ,treatment of digital commodities and permitted payment stablecoins 7a7 ,securities ,act of #aicc ,section #b7;a77#a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a77#a771 as amended by section #bja7;a77#a71 is further 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;a77#aj7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a771 as amended by section #bja7;d7 is further is amended by adding at the end the following3 ,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;a77 is amended-- 7#a7 in paragraph 7#ah771 as amended by section #bja7;b71 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 and 7#c7 by adding at the end1 the following3 7#cb7 ,digital commodity-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 as amended by section #bja7;c71 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 commodity-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 7e7 ,securities ,investor ,protection ,act of #aigj ,section #af of the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #ghlll7 is amended-- 7#a7 in paragraph 7#ad71 as amended by section #bja7;e71 by adding at the end the following3 ,the term does not include a digital commodity or permitted payment stablecoin1 as such terms are defined1 respectively1 under section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a772 and 7#b7 by adding at the end the following3 7#ae7 ,treatment of permitted payment stablecoins ,a permitted payment stablecoin1 as defined in section #b7;a7 of the ,securities ,act of #aicc1 shall not qualify as cash and a claim for a permitted payment stablecoin shall not qualify as a claim for cash4 4 #cjb4 ,anti-fraud authority over permitted payment stablecoins and certain digital commodity transactions 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 inserting after subsection 7c7 the following3 7d7 ,to use or employ1 in connection with the purchase or sale of any permitted payment stablecoin or digital commodity1 including1 as applicable1 by or through a broker or dealer or an alternative trading system1 any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the ,commission may prescribe as necessary or appropriate in the public interest or for the protection of investors4 2 and 7#c7 by adding at the end the following3 ,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 with respect to permitted payment stablecoin and digital commodity transactions engaged in by a broker or dealer or through an alternative trading system or1 as applicable1 a national securities exchange to the same extent as they apply to securities transactions4 ,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 and digital commodities with respect to those circumstances in which the permitted payment stablecoins and digital commodities are brokered1 traded1 or custodied by a broker or dealer or through an alternative trading system or1 as applicable1 a national securities exchange to the same extent as they apply to securities44 4 7b7 ,treatment of permitted payment stablecoins ,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 ,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 broker or dealer or through an alternative trading system or national securities exchange4 7b7 ,commission jurisdiction ,the ,commission shall only have jurisdiction over a transaction in a permitted payment stablecoin with respect to those circumstances in which a permitted payment stablecoin is brokered1 traded1 or custodied-- 7#a7 by a broker or dealer2 7#b7 through a national securities exchange2 or 7#c7 through an alternative 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 broker or dealer2 7#b7 through a national securities exchange2 or 7#c7 through an alternative trading system4 4 #cjc4 ,eligibility of alternative trading systems 7a7 ,in general ,section #e of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;e7 is amended-- 7#a7 by striking ,it and inserting the following3 7a7 ,in general ,it 2 and 7#b7 by adding at the end the following3 7b7 ,digital commodity protections 7#a7 ,in general ,the ,commission may not preclude a trading platform from operating pursuant to a covered exemption on the basis that the assets traded or to be traded on such platform include-- 7,a7 digital commodities or permitted payment stablecoins2 and 7,b7 securities4 7#b7 ,covered exemption ,in this subsection1 the term covered exemption means an exemption-- 7,a7 described in subsection 7a77#b72 or 7,b7 with respect to any other rule of the ,commission relating to the definition of exchange4 4 7b7 ,securities ,exchange ,act of #aicd ,section #c7;a77#b7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a77#b77 is amended by adding at the end the following3 ,an alternative trading system primarily facilitating the trading of digital commodities1 permitted payment stablecoins1 or both1 is not a facility of an exchange44 7c7 ,rule of construction ,nothing in this section1 the amendments made by this section1 or section #cjd may be construed to-- 7#a7 prohibit a national securities exchange from owning or operating any other type of alternative trading system2 or 7#b7 create a presumption that any other type of alternative trading system owned or operated by a national securities exchange is a facility of that exchange4 #cjd4 ,operation of alternative trading systems 7a7 ,commission authority ,the ,securities and ,exchange ,commission shall have jurisdiction over digital commodity activities and transactions engaged in by-- 7#a7 a registered broker or registered dealer exempt from registration with the ,commodity ,futures ,trading ,commission pursuant to section #ek of the ,commodity ,exchange ,act2 and 7#b7 an alternative trading system exempt from registration with the ,commodity ,futures ,trading ,commission pursuant to section #ek of the ,commodity ,exchange ,act1 including where such alternative trading system is operated by a national securities exchange or affiliate thereof4 7b7 ,rulemaking authority ,the ,securities and ,exchange ,commission shall have authority to issue rules governing any digital commodity activities and transactions engaged in by a registered broker or registered dealer1 or an alternative trading system1 including where such alternative trading system is operated by a national securities exchange or affiliate thereof1 that is exempt from registration with the ,commodity ,futures ,trading ,commission pursuant to section #ek of the ,commodity ,exchange ,act1 consistent with this section and what is necessary or appropriate in the public interest or for the protection of investors4 7c7 ,national securities exchanges ,not later than #bgj days after the date of the enactment of this ,act1 the ,securities and ,exchange ,commission shall revise the covered regulations to permit a national securities exchange or affiliate thereof to operate an alternative trading system that permits the trading of digital commodities1 permitted payment stablecoins1 or both by registered brokers or registered dealers that are exempt from registration with the ,commodity ,futures ,trading ,commission pursuant section #ek of the ,commodity ,exchange ,act1 consistent with this section and what is necessary or appropriate in the public interest or for the protection of investors4 7d7 ,registered brokers and registered dealers ,not later than #bgj days after the date of the enactment of this ,act1 the ,securities and ,exchange ,commission shall revise the covered regulations to permit a registered broker or registered dealer that is exempt from registration with the ,commodity ,futures ,trading ,commission pursuant to section #ek of the ,commodity ,exchange ,act to operate an alternative trading system that permits the trading of digital commodities1 permitted payment stablecoins1 or both1 consistent with this section and what is necessary or appropriate in the public interest or for the protection of investors4 7e7 ,permitted trading 7#a7 ,in general ,an alternative trading system operated pursuant to this section and the regulations promulgated hereunder shall be permitted to trade upon notice to the ,securities and ,exchange ,commission in a manner prescribed by the ,securities and ,exchange ,commission any digital commodity that has been listed by a digital commodity exchange in compliance with section #e;i7c77#c7 of the ,commodity ,exchange ,act4 7#b7 ,commission authority ,digital commodity transactions offered on an alternative trading system operating pursuant to this section shall be subject to the jurisdiction of the ,securities and ,exchange ,commission4 ,the ,securities and ,exchange ,commission shall have authority to promulgate rules governing such digital commodity transactions of alternative trading systems1 consistent with this section and what is necessary or appropriate in the public interest or for the protection of investors4 7#c7 ,suspension of trading ,the ,securities and ,exchange ,commission may suspend the trading of a digital commodity by an alternative trading system operating pursuant to this section as is necessary or appropriate in the public interest and is consistent with the protection of investors4 7f7 ,order display and execution ,not later than #bgj days after the date of the enactment of this ,act1 the ,securities and ,exchange ,commission shall issue and revise rules1 as necessary or appropriate in the public interest or for the protection of investors1 regarding whether alternative trading systems operating pursuant to subsections 7c7 and 7d7 have an obligation to provide the prices and sizes of orders displayed to more than one person in such alternative trading system of digital commodities to self-regulatory organizations with members who trade in digital commodities or permitted payment stablecoins4 7g7 ,principles of trade ,not later than #bgj days after the date of the enactment of this ,act1 the ,securities and ,exchange ,commission shall issue and revise rules1 as necessary or appropriate in the public interest or for the protection of investors1 to-- 7#a7 apply the rules and standards promulgated pursuant to paragraph 7#b7 to the appropriate market participants1 including-- 7,a7 national securities exchanges operating an alternative trading system described in subsection 7c72 and 7,b7 registered brokers and registered dealers operating or subscribing to an alternative trading system described in subsection 7d72 and 7#b7 apply1 as appropriate to the market participants described in paragraph 7#a7 and customers thereof1 rules and standards to-- 7,a7 prevent fraudulent and manipulative acts and practices2 7,b7 foster cooperation and coordination with persons engaged in regulating1 settling1 processing information with respect to1 and facilitating transactions in digital commodities or permitted payment stablecoins traded1 as applicable1 on or by any alternative trading system operating pursuant to subsection 7c7 or 7d71 or any registered broker or registered dealer2 7,c7 remove impediments to and perfect the mechanism of a free and open market in digital commodities or permitted payment stablecoins traded1 as applicable1 on or by any alternative trading system operating pursuant to subsection 7c7 or 7d71 or any registered broker or registered dealer2 7,d7 in general1 protect investors and the public interest2 and 7,e7 prohibit any unfair discrimination between-- 7i7 customers2 7ii7 any market participants described in subparagraphs 7,a7 and 7,b7 of paragraph 7#a72 or 7iii7 issuers of digital commodities4 7h7 ,implementing organizations ,the ,securities and ,exchange ,commission shall require any registered national securities association that has as a member a registered broker or registered dealer that operates an alternative trading system pursuant to subsection 7d7 or otherwise transacts in digital commodities or permitted payment stablecoins to adopt such rules as may be necessary to further compliance with this section1 including subsection 7g77#b71 protect investors1 maintain fair1 orderly1 and efficient markets1 and facilitate capital formation4 7i7 ,rule of construction ,the enumeration of any category of rules or regulations in this section shall not be construed to limit the authority of the ,securities and ,exchange ,commission to promulgate such rules as may be necessary or appropriate to implement this section and the purposes of this ,act1 including over-- 7#a7 system capacity1 integrity1 and security2 7#b7 examinations1 inspections1 and investigations2 7#c7 trade reporting2 or 7#d7 written procedures for the confidential treatment of trading information4 7j7 ,memorandum of understanding ,consistent with section #ek of the ,commodity ,exchange ,act and to carry out this ,act1 the ,securities and ,exchange ,commission shall enter into a memorandum of understanding with the ,commodity ,futures ,trading ,commission to ensure-- 7#a7 requirements imposed on registered brokers or registered dealers operating an alternative trading system pursuant to subsection 7c7 or otherwise transacting in digital commodities or permitted payment stablecoins are consistent with the substantive requirements under section #du of the ,commodity ,exchange ,act2 7#b7 requirements imposed on alternative trading systems operating pursuant to subsection 7c7 or 7d7 are not inconsistent with core principles of and are consistent with the other substantive requirements under section #e;i of the ,commodity ,exchange ,act2 and 7#c7 non-duplicative supervision and enforcement with respect to registrants of the ,securities and ,exchange ,commission notice registered with the ,commodity ,futures ,trading ,commission4 7k7 ,covered regulations defined ,in this section1 the term covered regulations means sections #bdb4cjj1 #bdb4cja1 #bdb4cjb1 #bdb4cjc1 #bdb4cjd1 and #bdb4ajjj through #bdb4ajjg of title #ag1 ,code of ,federal ,regulations4 7l7 ,rule of construction ,nothing in this section shall be construed to limit the anti-fraud1 anti-manipulation1 or false reporting enforcement authorities of the ,commodity ,futures ,trading ,commission with respect to a contract of sale of a commodity and persons effecting such contracts4 #cje4 ,modernization of recordkeeping requirements 7a7 ,in general ,for purposes of books and records requirements for brokers1 dealers1 transfer agents1 national securities exchanges under the ,securities and ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq471 investment advisers under the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#a et seq471 and investment companies under the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#a et seq471 a person may consider records from a blockchain system4 7b7 ,revision of rules ,not later than #ahj days after the date of enactment of this ,act1 the ,securities and ,exchange ,commission shall issue and revise such rules as may be necessary to implement this section4 #cjf4 ,exemptive authority ,section #bh of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggz-#c7 is amended by striking by rule or regulation and inserting by rule1 regulation1 or order4 #cjg4 ,additional registrations with the ,commodity ,futures ,trading ,commission ,section #ae of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho7 is amended by adding at the end the following3 7p7 ,additional registrations with the ,commodity ,futures ,trading ,commission ,a registered broker or registered dealer shall be permitted to maintain a registration with the ,commodity ,futures ,trading ,commission as a digital commodity broker or digital commodity dealer1 to list or trade contracts of sale for digital commodities4 4 #cjh4 ,exempting digital commodities from ,state securities laws ,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 in connection with digital commodities ,a digital commodity shall be treated as a covered security4 4 #cji4 ,exclusion for decentralized finance 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 ,decentralized finance activities not subject to this ,act 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 based on the person directly or indirectly engaging in any of the following activities1 whether singly or in combination1 in relation to the operation of a blockchain system or in relation to a decentralized finance trading protocol3 7#a7 ,compiling network transactions or relaying1 searching1 sequencing1 validating1 or acting in a similar capacity4 7#b7 ,providing computational work1 operating a node or oracle service1 or procuring1 offering1 or utilizing network bandwidth1 or providing other similar incidental services4 7#c7 ,providing a user-interface that enables a user to read and access data about a blockchain system4 7#d7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing a blockchain system or a decentralized finance trading protocol4 7#e7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing a decentralized finance messaging system1 or operating or participating in a liquidity pool1 for the purpose of executing a spot contract for the purchase or sale of a digital commodity in relation to a decentralized finance trading protocol4 7#f7 ,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 the user's digital assets or related private keys4 7b7 ,exceptions ,subsection 7a7 shall not apply to the anti-fraud and anti-manipulation authorities of the ,commission4 4 #caj4 ,treatment of custody activities by banking institutions 7a7 ,treatment of custody activities ,the appropriate ,federal banking agency1 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 trust company1 broker1 or dealer1 or any affiliate thereof 7the entity7-- 7#a7 to include assets held in custody that are not owned by the entity as a liability on the financial statement or balance sheet of the entity1 including digital commodity or permitted payment stablecoin custody or safekeeping services2 7#b7 to hold regulatory capital against assets1 including reserves backing such assets1 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 supervisor2 7,d7 a ,state credit union supervisor 7as defined in section #fjjc of the ,anti-,money ,laundering ,act of #bjbj 7#ca ,u4,s4,c4 #ecaa note772 or 7,e7 the ,securities and ,exchange ,commission 7in the case of a broker or dealer72 and 7#c7 to recognize a liability for any obligations related to activities or services performed with respect to digital commodities 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 ,banking terms ,the terms appropriate ,federal banking agency1 depository institution1 national bank1 and ,state bank supervisor have the meaning given those terms1 respectively1 under section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac74 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 ,act 7#ab ,u4,s4,c4 #ageb74 #caa4 ,broker and dealer disclosures regarding the treatment of assets 7a7 ,in general ,not later than #bgj days after the date of the enactment of this ,act1 the ,securities and ,exchange ,commission shall issue rules requiring written disclosures regarding the treatment of customer assets in the event of an insolvency1 resolution1 or liquidation proceeding to be provided by a registered broker or dealer to an investor before a digital commodity1 a permitted payment stablecoin1 or an investment contract involving a unit of a digital commodity is received1 acquired1 or held by the broker or dealer for the account of the investor1 which shall include1 as necessary or appropriate for the protection of investors-- 7#a7 a description of the manner in which any digital commodity1 permitted payment stablecoin1 or investment contact involving a unit of a digital commodity received1 acquired1 or held by the broker or dealer for the account of such investor would be treated in an insolvency1 resolution1 or liquidation proceeding with respect to the broker or dealer under-- 7,a7 title ,,ii of the ,dodd-,frank ,wall ,street ,reform and ,consumer ,protection ,act 7#ab ,u4,s4,c4 #echa et seq472 7,b7 the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #gh;aaa et seq472 or 7,c7 as applicable1 chapter #g or chapter #aa of title #aa1 ,united ,states ,code2 and 7#b7 how the treatment described in paragraph 7#a7 differs from the treatment of securities and cash received1 acquired1 or held by the broker or dealer for the account of such investor in the event of an insolvency1 resolution1 or liquidation proceeding with respect to the broker or dealer under each law described under subparagraph 7,a7 through 7,c7 of paragraph 7#a74 #cab4 ,digital commodity activities that are financial in nature 7a7 ,digital commodity activities that are financial in nature ,section #d7k77#d7 of the ,bank ,holding ,company ,act of #aief 7#ab ,u4,s4,c4 #ahdc7k77#d77 is amended-- 7#a7 in subparagraph 7,a71 by striking or securities and inserting 1 securities1 or digital commodities2 and 7#b7 in subparagraph 7,e71 by inserting or digital commodities before the period at the end4 7b7 ,national bank activity 7#a7 ,in general ,a national bank may use a digital asset or blockchain system to perform1 provide1 or deliver any activity1 function1 product1 or service that the national bank is otherwise authorized by law to perform1 provide1 or deliver4 7#b7 ,rule of construction ,nothing in this subsection may be construed to exempt a national bank's performance1 provision1 or delivery of an activity1 function1 product1 or service from a requirement that would apply if the activity were not performed1 provided1 or delivered using a digital asset or blockchain system4 7c7 ,insured ,state banks and subsidiaries of insured ,state banks ,for purposes of sections #bd7;a7 and #bd7;d7 of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahca;a7a7 and 7d771 all of the activities authorized for a national bank under subsection 7b7 that are principal activities shall be permissible for an insured ,state bank and subsidiary of an insured ,state bank4 #cac4 ,effective date2 administration ,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 #cad4 ,studies on foreign adversary participation 7a7 ,in general ,the ,secretary of the ,treasury1 in consultation with the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission1 shall1 not later than #a year after date of the enactment of this section1 conduct a study and submit a report to the relevant congressional committees that-- 7#a7 identifies any digital commodity registrants which are owned by governments of foreign adversaries2 7#b7 determines whether any governments of foreign adversaries are collecting personal data or trading data about ,united ,states persons in the digital commodity markets2 and 7#c7 evaluates whether any proprietary intellectual property of digital commodity registrants is being misused or stolen by any governments of foreign adversaries4 7b7 ,,gao study and report 7#a7 ,in general ,the ,comptroller ,general shall1 not later than #a year after date of the enactment of this section1 conduct a study and submit a report to the relevant congressional committees that-- 7,a7 identifies any digital commodity registrants which are owned by governments of foreign adversaries2 7,b7 determines whether any governments of foreign adversaries are collecting personal data or trading data about ,united ,states persons in the digital commodity markets2 and 7,c7 evaluates whether any proprietary intellectual property of digital commodity registrants is being misused or stolen by any governments of foreign adversaries4 7c7 ,definitions ,in this section3 7#a7 ,digital commodity registrant ,the term digital commodity registrant means any person required to register as a digital commodity exchange1 digital commodity broker1 or digital commodity dealer under the ,commodity ,exchange ,act4 7#b7 ,foreign adversaries ,the term foreign adversaries means the foreign governments and foreign non-government persons determined by the ,secretary of ,commerce to be foreign adversaries under section #g4d7;a7 of title #ae1 ,code of ,federal ,regulations4 7#c7 ,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 ,,iv ,registration for ,digital ,commodity ,intermediaries at the ,commodity ,futures ,trading ,commission #dja4 ,commission jurisdiction over digital commodity transactions 7a7 ,savings clause ,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 ,,clarity ,act of #bjbe 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 #ai2 or 7ii7 the activities of any person with respect to any such an agreement1 contract1 or transaction4 4 7b7 ,limitation on authority over permitted payment stablecoins ,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 ,commission jurisdiction over financing agreements ,section #b7;c77#b7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;c77#b77 is amended-- 7#a7 in subparagraph 7,d71 by redesignating clause 7iv7 as clause 7v7 and inserting after clause 7iii7 the following3 7iv7 ,notwithstanding clause 7iii71 a digital commodity broker may1 subject to the requirements of section #du7c77#c71 offer to or enter into an agreement for margin financing with a customer for the purchase or sale of a digital commodity4 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-- 7,i7 custodial or depository activities for a digital commodity 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 ,act72 or 7,,ii7 an offer or sale of an investment contract involving a digital commodity or of a securities offer or sale involving a digital commodity4 7iii7 ,mixed digital asset transactions 7,i7 ,in general ,clause 7i7 shall not apply to a mixed digital asset transaction4 7,,ii7 ,reports on mixed digital asset transactions ,a digital commodity issuer1 digital commodity related person1 digital commodity affiliated person1 or other person registered with the ,securities and ,exchange ,commission that engages in a mixed digital asset transaction1 shall1 on request of the ,commission1 open to inspection and examination by the ,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 clauses 7i7 and 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 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 asset 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 asset custodian1 as applicable12 and 7,b7 by inserting 3 ,provided further1 ,that any such property that is a digital asset shall be held in a qualified digital asset 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 asset 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 submit a written certification to the ,commission that the digital commodity meets the requirements of this ,act 7including the regulations prescribed under this ,act74 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 an analysis of how the digital commodity meets the requirements of section #e;i7c77#c74 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 held by a digital commodity related person or a digital commodity 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 listing of the digital commodity is inconsistent with the requirements of this ,act or the rules and regulations prescribed under this ,act4 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 #a business day 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 ,commission2 and 7ii7 once1 for an additional #cj business days1 through written notice to the eligible entity 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 ,prior approval before registration 7,a7 ,in general ,a person applying for registration with the ,commission for the purposes of listing or offering a digital commodity for trading in a digital commodity cash or spot market may request that the ,commission grant prior approval for the person to list or offer the digital commodity on being registered with the ,commission4 7,b7 ,request for prior approval ,a person seeking prior approval under subparagraph 7,a7 shall furnish the ,commission with a written certification that the digital commodity meets the requirements of this ,act 7including the regulations prescribed under this ,act7 and the information described in paragraph 7#b74 7,c7 ,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,d7 ,disapproval 7i7 ,in general ,the ,commission shall approve the listing of the digital commodity unless the ,commission finds that the listing is inconsistent with this ,act 7including any regulation prescribed under this ,act74 7ii7 ,analysis required ,the ,commission shall include1 with any findings made under clause 7i71 a detailed analysis of the factors on which the decision is based4 7iii7 ,public findings ,the ,commission shall make public any disapproval decision1 and any related findings and analysis1 made under this paragraph4 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 activity1 as the ,commission may determine by rule or regulation1 in a digital commodity2 or 7ii7 serves only customers in a single ,state1 territory1 or possession of the ,united ,states4 7#b7 ,additional registrations 7,a7 ,with the ,commission ,in order to foster the development of fair and orderly markets1 protect customers1 and promote responsible innovation1 the ,commission-- 7i7 shall prescribe rules to exempt an entity registered with the ,commission under more than #a section of this ,act from duplicative1 conflicting1 or unduly burdensome provisions of this ,act and the rules under this ,act2 7ii7 shall prescribe rules to address conflicts of interests and activities of the entity2 and 7iii7 may1 after an analysis of the risks and benefits1 prescribe rules to provide for portfolio margining4 7,b7 ,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,c7 ,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,c7 ,section #d;b-#a 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 ,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 the 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 credit1 market1 and liquidity risks associated with the digital commodity business of the exchange4 7iii7 ,operational needs ,a transaction related to the operational needs of the business of the digital commodity exchange or its affiliate4 7iv7 ,functional use ,a transaction related to the functional operation of a blockchain system4 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 purposes of this ,act4 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 not permit trading in a digital commodity unless-- 7i7 reports with respect to the digital commodity required under section #d;,b7b77#c7 of the ,securities ,act of #aicc 7or1 with respect to a digital commodity not issued in reliance on section #d7;a77#h7 of the ,securities ,act of #aicc1 a comparable set of reports1 where required by the ,securities and ,exchange ,commission7 have been filed with the ,securities and ,exchange ,commission2 or 7ii7 the blockchain system to which the digital commodity relates1 together with the digital commodity1 is certified as a mature blockchain system under section #db of the ,securities ,exchange ,act of #aicd4 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 description of the steps necessary to independently access1 search1 and verify the transaction history of any blockchain system to which the digital commodity relates1 to the extent any such independent access1 search1 and verification activities are technically feasible with respect to the blockchain system4 7,,iii7 ,digital commodity economics ,a narrative description of the purpose of any blockchain system to which the digital commodity relates and the operation of any such blockchain 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 commodities to be created1 the release schedule for the digital commodities1 and the total number of digital commodities then outstanding2 7bb7 information detailing any applicable consensus mechanism or process for validating transactions1 method of generating or mining digital commodities1 and any process for burning or destroying digital commodities 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 commodities2 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 commodity on the exchange4 7,v7 ,additional information ,such additional information as the ,commission may determine by rule to be necessary for a customer to understand the financial and operational risks of a digital commodity1 and to be practically feasible to provide4 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 7iv7 ,reliance on previous disclosures ,in complying with this subparagraph1 a digital commodity exchange may rely on and make available to the public relevant information publicly disclosed to the ,commission1 the ,securities and ,exchange ,commission1 or an appropriate ,federal banking agency4 7,c7 ,digital commodities held by related and digital commodity affiliated persons ,a digital commodity exchange shall permit the trading of a unit of a digital commodity held by a digital commodity affiliated person or a digital commodity related person1 only pursuant to section #d;,c of the ,securities ,act of #aicc4 7#d7 ,treatment of customer assets ,a digital commodity exchange shall establish policies 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 disruptions1 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 relating to the operation of the exchange1 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 ,the digital commodity exchange shall establish and enforce rules-- 7,a7 to minimize conflicts of interest in the decision making processes of the contract market2 and 7,b7 to establish a process for resolving conflicts of interest referred to in subparagraph 7,a74 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-- 7i7 the total amount that would enable the digital commodity exchange to cover the operating costs of the digital commodity exchange for a #a-year period1 as calculated on a rolling basis2 and 7ii7 the total amount necessary to meet the financial obligations of the digital commodity exchange to all customers of the digital commodity exchange4 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 and designed to permit consideration of the views of market participants4 7,b7 ,fitness standards ,a digital commodity exchange shall establish and enforce appropriate fitness standards for-- 7i7 officers and 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 systems in accordance with industry standards1 that-- 7i7 are reliable and secure2 and 7ii7 have adequate scalable capacity2 7,b7 establish and maintain emergency procedures1 backup resources1 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 customer 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 asset custodian4 7,,ii7 ,withdrawal ,notwithstanding subparagraph 7,a71 such share of the money1 assets1 and property described in subclause 7,i7 of this clause 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 the sale of a unit of a digital commodity occurring on or subject to the rules of a digital commodity exchange shall be considered a contract for the purchase or sale of a commodity for future delivery1 on or subject to the rules of1 a contract market or board of trade for purposes of the definition of 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 ,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#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 exchange or any person other than a customer of the digital commodity exchange2 or 7ii7 for any other person1 including any depository1 other digital commodity exchange1 or digital asset 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 shall1 by rule1 establish notice and disclosure requirements1 and may1 by rule1 establish 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 ,the ,commission may1 by rule1 impose any additional requirements related to the operations and activities of the digital commodity exchange and an affiliated digital commodity broker necessary to protect market participants1 promote fair and equitable trading on the digital commodity exchange1 and promote responsible 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 conflicts 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 asset custodian ,a digital commodity exchange shall hold in a qualified digital asset custodian each unit of a digital asset 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 customers4 7i7 ,exemptions 7#a7 ,in order to promote responsible 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 section with respect to activities and transactions subject to this ,act4 4 #dje4 ,qualified digital asset 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 asset custodians 7a7 ,in general ,a person is a qualified digital asset custodian for purposes of this ,act if the person-- 7#a7 holds digital assets on behalf of a person registered under this ,act or a customer of a person registered under this ,act2 and 7#b7 is in compliance with subsections 7b7 and 7c74 7b7 ,supervision requirement ,a person is in compliance with this subsection if the person is subject to-- 7#a7 supervision and examination for custody and safekeeping of digital assets by an appropriate ,federal banking agency1 the ,national ,credit ,union ,administration1 the ,commission1 or the ,securities and ,exchange ,commission2 or 7#b7 adequate supervision and appropriate regulation for custody and safekeeping of digital assets by-- 7,a7 a ,state bank supervisor 7within the meaning of section #c of the ,federal ,deposit ,insurance ,act72 7,b7 a ,state credit union supervisor1 as defined under section #fjjc of the ,anti-,money ,laundering ,act of #bjbj2 or 7,c7 an appropriate foreign governmental authority in the home country of the digital commodity custodian4 7c7 ,other requirements ,a person shall be in compliance with this subsection if3 7#a7 ,not otherwise prohibited ,the person has not been prohibited by its supervisor from engaging in an activity with respect to the custody and safekeeping of digital assets4 7#b7 ,information sharing 7,a7 ,in general ,the person shares information with the ,commission on request and complies with such requirements for periodic sharing of information regarding customer accounts that the person holds on behalf of an entity registered with the ,commission as the ,commission determines by rule are reasonably necessary to effectuate any of the provisions1 or to accomplish any of the purposes1 of this ,act4 7,b7 ,provision of information ,if the person is subject to regulation and examination by an appropriate ,federal banking agency1 the person may satisfy any information request described in subparagraph 7,a7 by providing the ,commission with a detailed listing1 in writing1 of the digital assets of a customer in the custody of1 or use by1 the person4 7,c7 ,rulemaking for ,,cftc entities 7i7 ,in general ,the ,commission shall prescribe rules to permit a person registered with the ,commission to be a qualified digital asset custodian in compliance with this section4 7ii7 ,content ,in prescribing the rules under subparagraph 7,a71 the ,commission shall require a person registered with the ,commission to-- 7,i7 implement requirement consistent with the requirements in subsection 7d77#a72 7,,ii7 establish sufficient system safeguards2 7,,iii7 prevent or mitigate conflicts of interest1 as appropriate2 and 7,,iv7 establish separate governance arrangements for the custodial function of the entity4 7d7 ,adequate supervision and appropriate regulation 7#a7 ,in general ,for purposes of subsection 7b71 the terms adequate supervision and appropriate regulation mean such minimum standards for supervision and regulation as are reasonably necessary to protect the digital assets held by a person registered under this ,act1 including standards relating to the licensing1 examination1 and supervisory processes that require the person to1 at a minimum-- 7,a7 receive a review and evaluation of ownership1 character and fitness1 conflicts of interest1 business model1 financial statements1 funding resources1 and policies and procedures of the person2 7,b7 hold capital sufficient for the financial integrity of the person2 7,c7 protect customer assets2 7,d7 establish and maintain books and records regarding the business of the person2 7,e7 submit financial statements and audited financial statements to the applicable supervisor described in subsection 7b72 7,f7 provide disclosures to the applicable supervisor described in subsection 7b7 regarding actions1 proceedings1 and other items as determined by the supervisor2 7,g7 maintain and enforce policies and procedures for compliance with applicable ,state and ,federal laws1 including those related to anti-money laundering and cybersecurity2 7,h7 establish a business continuity plan to ensure functionality in cases of disruption2 and 7,i7 establish policies and procedures to resolve complaints4 7#b7 ,rulemaking with respect to definitions 7,a7 ,in general ,for purposes of this section1 the ,commission may1 by rule1 further define the terms adequate supervision and appropriate regulation as necessary and appropriate for the protection of customers1 and consistent with the purposes of this ,act4 7,b7 ,conditional treatment of certain custodians before rulemaking ,before the effective date of a rulemaking under subparagraph 7,a71 a trust company is deemed subject to adequate supervision and appropriate regulation if-- 7i7 the trust company is expressly permitted by a ,state bank supervisor to engage in the custody and safekeeping of digital assets2 7ii7 the ,state bank supervisor has established licensing1 examination1 and supervisory processes that require the trust company to1 at a minimum1 meet the conditions described in subparagraphs 7,a7 through 7,i7 of paragraph 7#a72 and 7iii7 the trust company is in good standing with its ,state bank supervisor4 7,c7 ,transition period for certain custodians ,in implementing the rulemaking under subparagraph 7,a71 the ,commission shall provide a transition period of not less than #b years for any trust company that is deemed subject to adequate supervision and appropriate regulation under subparagraph 7,b7 on the effective date of the rulemaking4 7e7 ,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 seq47 is amended by inserting after section #dt the following3 #du4 ,registration and regulation of digital commodity brokers and dealers 7a7 ,registration 7#a7 ,requirement ,it shall be unlawful for any person to act as a digital commodity broker or digital commodity dealer unless the person is registered as such with the ,commission4 7#b7 ,additional registration 7,a7 ,rules ,in order to foster the development of fair and orderly markets1 protect customers1 and promote responsible innovation1 the ,commission-- 7i7 shall prescribe rules to exempt an entity registered with the ,commission under more than #a section of this ,act from duplicative1 conflicting1 or unduly burdensome provisions of this ,act and the rules under this ,act2 7ii7 shall prescribe rules to address conflicts of interests and the activities of the entity2 and 7iii7 may after an analysis of the risks and benefits1 prescribe rules to provide for portfolio margining4 7,b7 ,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 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 ,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 7c7 ,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 ,financing agreements 7,a7 ,in general ,the ,commission shall prescribe rules and regulations applicable to digital commodity brokers or digital commodity dealers which shall set forth minimum requirements related to disclosure1 recordkeeping1 margin and financing arrangements1 rehypothecation1 capital1 reporting1 business conduct1 documentation1 and supervision of employees and agents1 in connection with-- 7i7 an agreement described in section #b7;c77#b77;,d77iv72 or 7ii7 any other margined1 leveraged1 or financing arrangement for the purchase or sale of a digital commodity with an eligible contract participant4 7,b7 ,specific authority ,except as prohibited in section #b7;c77#b77;,g77iii71 the ,commission may also make1 promulgate1 and enforce such rules and regulations as1 in the judgment of the ,commission1 are reasonably necessary to effectuate any of the provisions of1 or to accomplish any of the purposes of1 this ,act in connection with an agreement referred to in subparagraph 7,a7 of this paragraph1 which may include1 without limitation1 requirements regarding registration with the ,commission and membership in a registered futures association4 7d7 ,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 able1 at all times1 to-- 7,a7 meet1 and continue to meet the obligations of such a registrant2 and 7,b7 fulfill obligations to customers or counterparties for any margined1 leveraged1 or financed transactions4 7#b7 ,futures commission merchants and other dealers ,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 7e7 ,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 7f7 ,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 7g7 ,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 appropriate for the protection of customers4 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 7h7 ,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 establish1 maintain1 and enforce written policies and procedures reasonably designed1 taking into consideration the nature of the business of the person1 to mitigate any conflicts of interest in transactions or arrangements with affiliates4 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 7i7 ,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 this ,act 7including regulations72 and 7ii7 each policy and procedure of the registered digital commodity broker or registered digital commodity dealer followed by 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 7j7 ,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 asset custodian ,each digital commodity broker and digital commodity dealer shall hold in a qualified digital asset custodian each unit of a digital asset that is-- 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 digital commodity broker or 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 asset 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 broker or 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 broker and a digital commodity dealer 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#f7 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 respectively1 or any person other than a customer of 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#b7 for any unit of a digital commodity to be used under subparagraph 7,b7 of this paragraph1 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 shall1 by rule1 establish notice and disclosure requirements1 and may1 by rule1 establish 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 7k7 ,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 section with respect to activities subject to this ,act1 except as provided in section #ek4 7l7 ,exemptions ,in order to promote responsible 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 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 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 7a7 ,in general ,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 7b7 ,exemptive authority ,section #dm of such ,act 7#g ,u4,s4,c4 #fm7 is amended by adding at the end the following3 7#d7 ,exemptive authority ,the ,commission shall promulgate rules to provide appropriate exemptions for commodity pool operators and commodity trading advisors1 to provide relief from duplicative1 conflicting1 or unduly burdensome requirements or to promote responsible innovation1 to the extent the exemptions foster the development of fair and orderly cash or spot digital commodity markets1 are necessary or appropriate in the public interest1 and are consistent with the protection of customers4 4 #dji4 ,exclusion for decentralized finance 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 ,decentralized finance activities not subject to this ,act 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 based on the person directly or indirectly engaging in any of the following activities1 whether singly or in combination1 in relation to the operation of a blockchain system or in relation to decentralized finance trading protocol3 7#a7 ,compiling network transactions or relaying1 searching1 sequencing1 validating1 or acting in a similar capacity4 7#b7 ,providing computational work1 operating a node or oracle service1 or procuring1 offering1 or utilizing network bandwidth1 or other similar incidental services4 7#c7 ,providing a user-interface that enables a user to read1 and access data about a blockchain system4 7#d7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing a blockchain system or a decentralized finance trading protocol4 7#e7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing a decentralized finance messaging system or operating or participating in a liquidity pool for the purpose of executing a contract of sale of a digital commodity4 7#f7 ,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 the user's digital assets or related private keys4 7b7 ,exceptions ,subsection 7a7 shall not be interpreted to apply to the anti-fraud1 anti-manipulation1 or false reporting enforcement authorities of the ,commission4 4 #daj4 ,resources for implementation and enforcement 7a7 ,collection of fees 7#a7 ,in general ,the ,commodity ,futures ,trading ,commission 7in this section referred to as the ,commission7 shall charge and collect a filing fee from each person who files with the ,commission a statement of provisional registration as a digital commodity exchange1 digital commodity broker1 or digital commodity dealer pursuant to section #ajf4 7#b7 ,amount ,the fees authorized under paragraph 7#a7 may be collected and available for obligation only in the amounts provided in advance in an appropriation ,act4 7#c7 ,authority to adjust fees ,notwithstanding the preceding provisions of this subsection1 to promote fair competition or innovation1 the ,commission1 in its sole discretion1 may reduce or eliminate any fee otherwise required to be paid by a small or medium filer under this subsection4 7b7 ,fee schedule 7#a7 ,in general ,the ,commission shall publish in the ,federal ,register a schedule of the fees to be charged and collected under this section4 7#b7 ,content ,the fee schedule for a fiscal year shall include a written analysis of the estimate of the ,commission of the total costs of carrying out the functions of the ,commission under this ,act during the fiscal year4 7#c7 ,submission to congress ,before publishing the fee schedule for a fiscal year1 the ,commission shall submit a copy of the fee schedule to the ,committees on ,agriculture and on ,appropriations of the ,house of ,representatives and the ,committees on ,agriculture1 ,nutrition1 and ,forestry and on ,appropriations of the ,senate4 7#d7 ,timing 7,a7 #ast fiscal year ,the ,commission shall publish the fee schedule for the fiscal year in which this ,act is enacted1 within #cj days after the date of the enactment of this ,act4 7,b7 ,subsequent fiscal years ,the ,commission shall publish the fee schedule for each subsequent fiscal year1 not less than #ij days before the due date prescribed by the ,commission for payment of the annual fee for the fiscal year4 7c7 ,late payment penalty 7#a7 ,in general ,the ,commission may impose a penalty against a person that fails to pay an annual fee charged under this section1 within #cj days after the due date prescribed by the ,commission for payment of the fee4 7#b7 ,amount ,the amount of the penalty shall be-- 7,a7 #e percent of the amount of the fee due1 multiplied by 7,b7 the whole number of consecutive #cj-;day periods that have elapsed since the due date4 7d7 ,reimbursement of excess fees ,to the extent that the total amount of fees collected under this section during a fiscal year that begins after the date of the enactment of this ,act exceeds the amount provided under subsection 7a77#b7 with respect to the fiscal year1 the ,commission shall reimburse the excess amount to the persons who have timely paid their annual fees1 on a pro-rata basis that excludes penalties1 and shall do so within #fj days after the end of the fiscal year4 7e7 ,deposit of fees into the ,treasury ,all amounts collected under this section shall be credited to the currently applicable appropriation1 account1 or fund of the ,commission as discretionary offsetting collections1 and shall be available for the purposes authorized in subsection 7f7 only to the extent and in the amounts provided in advance in appropriations ,acts4 7f7 ,authorization of appropriations ,in addition to amounts otherwise authorized to be appropriated to the ,commission1 there is authorized to be appropriated to the ,commission amounts collected under this section to cover the costs the costs of carrying out the functions of the ,commission under this ,act4 7g7 ,expedited hiring authority 7#a7 ,appointment authority ,the ,chairman1 pursuant to section #f7;a71 may appoint individuals to a position described in paragraph 7#b7 of this subsection-- 7,a7 in accordance with the statutes1 rules1 and regulations governing appointments to positions in the excepted service 7as defined in section #bajc of title #e1 ,united ,states ,code72 and 7,b7 without regard to any statute1 rule1 or regulation governing appointments to positions in the competitive service 7as defined in section #bajb of such title74 7#b7 ,position described ,a position referred to in subparagraph 7#a7 is a position at the ,commission that-- 7,a7 is in the competitive service 7as defined in section #bajb of such title72 and 7,b7 requires specialized knowledge of digital commodities markets1 financial and capital market formation or regulation1 financial market structures or surveillance1 data collection or analysis1 or information technology1 cybersecurity1 or system safeguards4 7#c7 ,rule of construction ,the appointment of a candidate to a position under this subsection shall not be considered to cause the position to be converted from the competitive service to the excepted service4 7h7 ,sunset ,the authorities provided by this section shall expire at the end of the #dth fiscal year that begins after the date of the enactment of this ,act4 #daa4 ,digital commodity activities by ,,sec-registered entities ,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;j the following3 #ek4 ,exemption for certain registered entities engaged in digital commodity activities 7a7 ,by alternative trading systems 7#a7 ,in general ,on receipt by the ,commission from an alternative trading system of a written or electronic notice that contains such information as the ,commission1 by rule1 may prescribe as necessary or appropriate in the public interest or for the protection of investors1 the alternative trading system shall be exempt from registration as a digital commodity exchange pursuant to section #e;i if-- 7,a7 the alternative trading system does not list any retail commodity transactions pursuant to section #b7;c77#b77;,d72 7,b7 the provider1 or an affiliate person of the provider1 of the alternative trading system is not otherwise registered under this ,act2 7,c7 the alternative trading system lists or trades no other contracts of sale of commodities1 except for digital commodities1 currencies1 and securities2 and 7,d7 the registration of the alternative trading system is not suspended pursuant to an order by the ,securities and ,exchange ,commission4 7#b7 ,further requirements ,an alternative trading system that provides notice to the ,commission pursuant to paragraph 7#a7 of this subsection shall be exempt from the requirements of section #e;i to the extent that the alternative trading system-- 7,a7 is in compliance with requirements consistent with the requirements of section #e;i and imposed on the alternative trading system by the ,securities and ,exchange ,commission2 7,b7 annually files with the ,commission1 in a form and manner acceptable to the ,commission1 a notice that demonstrates compliance with this paragraph and contains any other information the ,commission determines to be necessary or appropriate to perform the duties of the ,commission under this ,act2 and 7,c7 has total trading volume in digital commodities during any calendar quarter in either of its #b most recently completed fiscal years that does not exceed the lesser of-- 7i7 #be percent of the total trading volume for all transactions over the same period2 or 7ii7 #ej1jjj1jjj1jjj4 7#c7 ,enforcement ,this subsection shall not be construed to limit any jurisdiction that the ,commission may otherwise have under any other provision of this ,act with respect to a contract of sale of a digital commodity or persons effecting contracts of sale of digital commodities4 7b7 ,by registered intermediaries 7#a7 ,in general ,on receipt by the ,commission1 from a broker or dealer that is registered with the ,securities and ,exchange ,commission1 of a written or electronic notice that contains such information as the ,commission1 by rule1 may prescribe as necessary or appropriate in the public interest or for the protection of investors1 the broker or dealer shall be exempt from registration as a digital commodity broker or digital commodity dealer pursuant to section #du of this ,act if-- 7,a7 the broker or dealer does not offer or engage in any retail commodity transactions pursuant to section #b7;c77#b77;,d7 of this ,act or other contracts of sale of commodities1 except for digital commodities1 currencies1 and securities2 7,b7 the broker or dealer is not otherwise registered under this ,act2 7,c7 the broker or dealer is not subject to a statutory disqualification1 as defined under section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a772 and 7,d7 the broker or dealer is a member of a national securities association registered pursuant to section #ae;,a of the ,securities ,exchange ,act of #aicd4 7#b7 ,further requirements ,a broker or dealer that provides notice to the ,commission pursuant to paragraph 7#a7 shall be exempt from the requirements of section #du to the extent that the broker or dealer-- 7,a7 is in compliance with requirements consistent with the requirements of section #du and imposed on the broker or dealer by the ,securities and ,exchange ,commission2 7,b7 annually files with the ,commission1 in a form and manner acceptable to the ,commission1 a notice that demonstrates compliance with this subsection and contains any other information the ,commission determines to be necessary or appropriate to perform the duties of the ,commission under this ,act2 and 7,c7 has consolidated annual gross financial revenues in either of its #b most recently completed fiscal years from sales1 commissions or other activities in digital commodities that do not exceed the lesser of-- 7i7 #aj percent of the total annual gross revenues during the same period2 or 7ii7 #ajj1jjj1jjj4 7#c7 ,enforcement ,this subsection shall not be construed to limit any jurisdiction that the ,commission may otherwise have under any other provision of this ,act with respect to a contract of sale of a digital commodity and persons effecting contracts of sale of digital commodities4 4 #dab4 ,requirements related to control persons ,the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq471 as amended the preceding provisions of this ,act1 is amended by inserting after section #dv the following3 #dw4 ,limitation on transactions by blockchain control persons 7a7 ,limitation ,it shall be unlawful for a blockchain control person with respect to a blockchain system certified as a mature blockchain system in accordance with section #db of the ,securities ,exchange ,act of #aicd to sell a unit of a digital commodity related to the blockchain system unless the person files notice with the ,commission1 in a form and manner determined by the ,commission1 that the person has or intends to obtain an authority described in subsection 7b77#a7 with respect to the blockchain system1 and complies with rules adopted by the ,commission that require-- 7#a7 disclosure of information to the ,commission and the public about the material activities1 as determined by the ,commission1 of the blockchain control person2 and 7#b7 7,a7 the use of a digital commodity broker to effect the sale2 or 7,b7 such other sales restrictions applicable to blockchain control person1 or any of its digital commodity affiliated persons1 to prevent manipulation and distortion of the value of the digital commodity and promote further maturity of the blockchain system to which the digital commodity relates4 7b7 ,definitions ,in this section3 7#a7 ,blockchain control person ,the term blockchain control person means1 with respect to a blockchain system1 any person or group of persons under common control who-- 7,a7 has the unilateral authority1 directly or indirectly1 through any contract1 arrangement1 understanding1 relationship1 or otherwise1 to control or materially alter the functionality1 operation1 or rules of consensus or agreement of the blockchain system or its related digital commodity2 or 7,b7 has the unilateral authority to direct the voting1 in the aggregate1 of #bj percent or more of the outstanding voting power of the blockchain system by means of a related digital commodity1 nodes or validators1 a decentralized governance system1 or otherwise1 in a blockchain system which can be altered by a voting system4 7#b7 ,digital commodity affiliated person ,the term digital commodity affiliated person means any person directly or indirectly controlling1 controlled by1 or under common control with a blockchain control person1 as the ,commission by rule or regulation1 may determine will effectuate the purposes of this section4 4 #dac4 ,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 the 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 the enactment of this ,act2 or 7#b7 #fj days after the publication in the ,federal ,register of the final rule implementing the provision4 #dad4 ,sense of ,congress ,it is the sense of ,congress that nothing in this ,act or any amendment made by this ,act should be interpreted to authorize any entity to regulate any commodity1 other than a digital commodity1 on any spot market4 ,v ,innovation and ,technology ,improvements #eja4 ,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 commodity networks represent a new way for people to join together and cooperate with one another to undertake certain activities4 7#c7 ,digital commodities have the potential to be the foundational building blocks of these systems1 aligning the economic incentive for individuals to cooperate with one another to achieve a common purpose4 7#d7 ,the digital commodity ecosystem has the potential to grow our economy and improve everyday lives of ,americans by facilitating collaboration through the use of technology to manage activities1 allocate resources1 and facilitate decision making4 7#e7 ,blockchain systems and the digital commodities they empower provide 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 commodity 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 commodities and provide safeguards for consumers4 7#h7 ,digital commodities1 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 commodities 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 commodities and the underlying technology in the ,united ,states or risk the shifting of the development of such assets and technology outside of the ,united ,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 commodity-related activities1 distributed ledger technology1 distributed networks1 and mature blockchain systems2 7#e7 ,congress should enact a functional framework tailored to the specific risks of different digital commodity-related activities and unique benefits of distributed ledger technology1 distributed networks1 and mature blockchain systems2 and 7#f7 consumers and market participants will benefit from a framework for digital commodities consistent with longstanding investor protections in securities and commodities markets1 yet tailored to the unique benefits and risks of the digital commodity ecosystem4 #ejb4 ,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 #ejc4 ,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 ,establishment ,not later than #ahj days after the date of the enactment of this subsection1 the ,securities and ,exchange ,commission shall establish a committee to be known as the ,strategic ,hub for ,innovation and ,financial ,technology 7referred to in this subsection as the ,fin,hub7 to support engagement on emerging technologies in the financial sector4 7#b7 ,members ,the composition of ,fin,hub shall be determined by the ,commission1 drawing from relevant divisions as appropriate1 including the ,division of ,trading and ,markets1 ,division of ,corporate ,finance1 and ,division of ,investment ,management4 7#c7 ,responsibilities ,fin,hub shall-- 7,a7 serve as a resource for the ,commission on emerging financial technology advancements2 7,b7 engage with market participants working on emerging financial technologies2 and 7,c7 facilitate communication between the ,commission and businesses working in emerging financial technology fields with information on the ,commission1 its rules1 and regulations4 7#d7 ,report to the ,commission 7,a7 ,in general ,not later than ,october #ca of each year after #bjbe1 ,fin,hub shall provide an annual summary of its engagement activities to the ,commission1 which shall be included in the ,commission's annual report to ,congress4 7,b7 ,confidentiality ,each report submitted under this paragraph shall not contain confidential information4 4 #ejd4 ,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 ,report to ,congress 7,a7 ,in general ,not later than ,october #ca of each year after #bjbe1 ,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#f7 ,records and engagement ,the ,commission shall-- 7,a7 maintain systems of records to track engagements with the public through ,lab,c,f,t,c2 7,b7 store communications and materials received in connection with any such engagement in accordance with ,commission policies and procedures on data retention and confidentiality2 and 7,c7 take reasonable steps to protect any confidential or proprietary information received through ,lab,c,f,t,c engagement4 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 #eje4 ,study on decentralized finance 7a7 ,in general ,the ,commodity ,futures ,trading ,commission1 the ,securities and ,exchange ,commission1 and the ,secretary of the ,treasury shall jointly carry out a study on decentralized finance that analyzes-- 7#a7 the nature1 size1 role1 and use of decentralized finance blockchain applications2 7#b7 the operation of blockchain applications that comprise decentralized finance2 7#c7 the interoperability of blockchain applications and other blockchain systems2 7#d7 the interoperability of blockchain applications and software-based systems1 including websites and wallets2 7#e7 the decentralized governance systems through which blockchain applications 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 benefits and risks of the decentralized governance system2 and 7,b7 any procedures1 requirements1 or best practices that would mitigate the risks identified in subparagraph 7,a77ii72 7#f7 the benefits of decentralized finance1 including-- 7,a7 operational resilience and availability of blockchain systems2 7,b7 interoperability of blockchain systems2 7,c7 market competition and innovation2 7,d7 transaction efficiency2 7,e7 transparency and traceability of transactions2 and 7,f7 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 or improvements to the 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 methods for addressing illicit activity in decentralized finance and traditional markets that are tailored to the unique attributes of each2 7#aa7 how decentralized finance may increase the accessibility of cross-border transactions2 and 7#ab7 the feasibility of embedding self-executing compliance and risk controls into decentralized finance4 7b7 ,consultation ,in carrying out the study required under subsection 7a71 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall consult with the ,secretary of the ,treasury on the factors described under paragraphs 7#g7 through 7#aj7 of subsection 7a74 7c7 ,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 7d7 ,,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#ab7 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 7e7 ,definitions ,in this section3 7#a7 ,decentralized finance 7,a7 ,in general ,the term decentralized finance means blockchain applications 7including decentralized finance trading protocols and related decentralized finance messaging systems7 that allow users to engage in financial transactions in a self-directed manner so that a third-party intermediary does not effectuate the transactions or take custody of digital commodities of a user during any part of the transactions4 7,b7 ,relationship to excluded activities ,the term decentralized finance shall not be interpreted to limit or exclude any activity from the activities described in section #ae;,i7a7 of the ,securities ,exchange ,act of #aicd or section #dv7a7 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 tokens 7a7 ,in general ,the ,comptroller ,general of the ,united ,states shall carry out a study of non-fungible tokens that analyzes-- 7#a7 the nature1 size1 role1 purpose1 and use of non-fungible tokens2 7#b7 the similarities and differences between non-fungible tokens and other digital commodities1 including digital commodities and permitted payment stablecoins1 and how the markets for those digital commodities intersect with each other2 7#c7 how non-fungible tokens are minted by issuers and subsequently administered to purchasers2 7#d7 how non-fungible tokens are stored after being purchased by a consumer2 7#e7 the interoperability of non-fungible tokens between different blockchain systems2 7#f7 the scalability of different non-fungible tokens marketplaces2 7#g7 the benefits of non-fungible tokens1 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 tokens have integrated with traditional marketplaces1 including those for music1 real estate1 gaming1 events1 and travel2 7#aj7 whether and how 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 tokens markets4 7b7 ,report ,not later than #a year after the date of the enactment of this ,act1 the ,comptroller ,general1 shall make publicly available a report that includes the results of the study required by subsection 7a74 #ejg4 ,study on expanding financial literacy amongst digital commodity 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 commodity 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 commodities 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 information1 including clear disclosures1 that retail digital commodity holders need to make informed financial decisions before engaging with or purchasing a digital commodity or service that is typically sold to retail investors of digital commodities2 7#f7 the most effective public-private partnerships in providing financial literacy regarding digital commodities 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 commodities4 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 #ejh4 ,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 #eji4 ,study on blockchain in payments 7a7 ,study required ,the ,secretary of the ,treasury shall conduct a study on the potential use of blockchain technology by the domestic private sector to address-- 7#a7 fraud in payments2 7#b7 transaction costs and transaction times2 7#c7 automated payments2 and 7#d7 efficiency in commercial transactions4 7b7 ,report to ,congress ,not later than one year after the date of enactment of this ,act1 the ,secretary shall submit a report to the ,committee on ,financial ,services of the ,house of ,representatives and the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate that summarizes the findings of the study required under subsection 7a74 7c7 ,rule of construction ,nothing in this section shall be construed to mandate the use of blockchain technology by any public or private entity4 ,june #bc1 #bjbe ,reported from the ,committee on ,agriculture with an amendment ,june #bc1 #bjbe ,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