,,ii ,calendar ,no4 #dbc #aaith ,,congress #b;d ,session ,h4 ,r4 #cfcc ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,september #ah 7legislative day1 ,september #af71 #bjbe ,received2 read twice and referred to the ,committee on ,banking1 ,housing1 and ,urban ,affairs ,june #a1 #bjbf,reported by ,mr4 ,scott of ,south ,carolina1 with an amendment,strike out all after the enacting clause and insert the part printed in italic ,,an ,,act ,to provide for a system of regulation of the offer and sale of digital commodities by the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission1 to amend the ,federal ,reserve ,act to prohibit the ,federal reserve banks from offering certain products or services directly to an individual1 to prohibit the use of central bank digital currency for monetary policy1 and for other purposes4 #a4 ,short titles2 table of contents 7a7 ,short titles ,this ,act may be cited as the ,digital ,asset ,market ,clarity ,act of #bjbe or the ,,clarity ,act of #bjbe and the ,anti-,,cbdc ,surveillance ,state ,act4 7b7 ,table of contents ,the table of contents for this ,act is as follows3 ,sec4 #a4 ,short titles2 table of contents4,title ,i--,definitions2 ,rulemaking2 ,expedited ,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 ,expedited 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 ,treatment of certain non-controlling blockchain developers4,sec4 #aaj4 ,application of the ,bank ,secrecy ,act4,sec4 #aaa4 ,rule of construction4,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 ,rulemaking for dual-registered entities4,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 ,educational material requirements4,sec4 #cae4 ,discretionary ,surplus ,fund4,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 ,requirements related to control persons4,sec4 #dab4 ,other tradable assets4,sec4 #dac4 ,conflict of interest rulemaking4,sec4 #dad4 ,effective date4,sec4 #dae4 ,sense of ,congress4,title ,v--,innovation and ,technology ,improvements,sec4 #eja4 ,findings2 sense of ,congress4,sec4 #ejb4 ,strategic ,hub for ,innovation and ,financial ,technology4,sec4 #ejc4 ,codification of ,lab,c,f,t,c4,sec4 #ejd4 ,study on decentralized finance4,sec4 #eje4 ,study on non-fungible tokens4,sec4 #ejf4 ,study on expanding financial literacy amongst digital commodity holders4,sec4 #ejg4 ,study on financial market infrastructure improvements4,sec4 #ejh4 ,study on blockchain in payments4,sec4 #eji4 ,study on illicit use of digital assets4,sec4 #eaj4 ,,gao study on certain centralized intermediaries that are primarily located in foreign jurisdictions4,sec4 #eaa4 ,studies on foreign adversary participation4,sec4 #eab4 ,conforming amendments4,title ,,vi--,anti-,,cbdc ,surveillance ,state ,act,sec4 #fja4 ,short title4,sec4 #fjb4 ,prohibition on ,federal reserve banks relating to certain products or services for individuals and prohibition on directly issuing a central bank digital currency4,sec4 #fjc4 ,prohibition on ,federal reserve banks indirectly issuing a central bank digital currency4,sec4 #fjd4 ,prohibition with respect to central bank digital currency4,sec4 #fje4 ,sense of ,congress4 ,i ,definitions2 ,rulemaking2 ,expedited ,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-- 7,a7 means a person 7including a digital commodity related person7 that1 with respect to any digital commodity-- 7i7 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 thereof2 7ii7 is a founder of the digital commodity issuer2 or 7iii7 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 period2 and 7,b7 does not include a decentralized governance system4 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-- 7i7 means a person-- 7,i7 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 7,,ii7 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 thereof2 and 7ii7 does not include a decentralized governance system4 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 7,a7 ,in general ,the term end user distribution means a distribution of a unit of a digital commodity that-- 7i7 does not involve an exchange of more than a nominal value of cash1 property1 or other assets2 and 7ii7 is distributed in a broad and equitable manner based on conditions capable of being satisfied by any participant in the blockchain system1 including1 as incentive-based rewards-- 7,i7 to users of the digital commodity or any blockchain system to which the digital commodity relates2 7,,ii7 for activities directly related to the operation of the blockchain system1 such as mining1 validating1 staking1 or other activity directly tied to the operation of the blockchain system2 or 7,,iii7 to the existing holders of another digital commodity1 in proportion to the total units of such other digital commodity as are held by each person4 7,b7 ,protocol consensus participation ,the term end user distribution includes the following3 7i7 ,self staking ,the distribution of a unit of a digital commodity as a programmatic result of validating or staking activity for a blockchain system's consensus mechanism1 including the staking of a digital commodity and the operation of a node or validator for such activity where the owner of the staked digital commodity and operator of the node or validator are the same person or entity4 7ii7 ,self-custodial staking with a third party ,the distribution of a unit of a digital commodity as a programmatic result of validating or staking activity for a blockchain system's consensus mechanism1 including the staking of a digital commodity and the operation of a node or validator for such activity where-- 7,i7 the owner of the staked digital commodity and operator of the node or validator for such activity are different persons or entities2 and 7,,ii7 the operator of the node or validator does not maintain custody or control of the staked digital commodity4 7iii7 ,custodial and ancillary staking services ,subject to the rules issued pursuant to subparagraph 7,c71 the provision of custodial or ancillary staking services enabling the owner of a digital commodity to participate in validating or staking activity for a blockchain system's consensus mechanism that results in the programmatic distribution of a unit of a digital commodity1 provided that such custodial or ancillary services are exclusively administrative or ministerial in nature4 7,c7 ,rulemaking to define the custodial and ancillary staking services ,not later than #bgj days after the date of the enactment of this paragraph1 the ,commission shall issue rules defining the custodial and ancillary staking services described in subparagraph 7,b77iii7 that are exclusively administrative or ministerial in nature1 consistent with what is necessary or appropriate for the public interest or for the protection of investors4 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 ,the term permitted payment stablecoin means a payment stablecoin 7as defined in section #b of the ,,genius ,act7 issued by a permitted payment stablecoin issuer4 7#cc7 ,permitted payment stablecoin issuer ,the term permitted payment stablecoin issuer has the meaning given that term in section #b of the ,,genius ,act4 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 permitted payment stablecoin1 and permitted payment stablecoin issuer 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 section #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 not described by subclause 7,i7 that1 based on its terms and other characteristics1 is1 represents1 or is functionally equivalent to an interest in-- 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 7as defined in section #b of such ,act 7#ae ,u4,s4,c4 #hj;a-#b77 that would be an investment company under section #c7;a7 of such ,act but for the exclusions provided from that definition by section #c7;c7 of such ,act1 if for purposes of this subclause the company were assumed to be an issuer 7as defined in section #b of such ,act72 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 permitted payment stablecoin1 and permitted payment stablecoin issuer 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 permitted payment stablecoin issuer 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 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 ,expedited registration for digital commodity exchanges1 brokers1 and dealers2 provisional status 7a7 ,registration 7#a7 ,in general ,unless exempted from registration1 a person shall not act as a digital commodity broker1 digital commodity dealer1 or digital commodity exchange after the end of the #ij-;day period beginning on the date the process described in paragraph 7#b7 is adopted by the ,commodity ,futures ,trading ,commission1 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 ,within #ahj 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 required to be registered pursuant to paragraph 7#a74 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 be subject to the requirements of this section and the ,commodity ,exchange ,act and any rules or regulations promulgated under this section or the ,commodity ,exchange ,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 a 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 section or the ,commodity ,exchange ,act or any rules or regulations promulgated under this section or the ,commodity ,exchange ,act1 as applicable4 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 ,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 #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 ,bank ,secrecy ,act requirements 7#a7 ,regulations ,the ,secretary of the ,treasury1 acting through the ,director of the ,financial ,crimes ,enforcement ,network1 and in consultation with ,commodity ,futures ,trading ,commission1 shall issue requirements consistent with the requirements of futures commission merchants to apply the ,bank ,secrecy ,act to digital commodity brokers1 digital commodity dealers1 and digital commodity exchanges that are tailored to the size and complexity of such entities1 including by requiring each such entity to-- 7,a7 establish and maintain an anti-money laundering and countering the financing of terrorism program1 which shall include-- 7i7 an appropriate risk assessment2 7ii7 the development of internal policies1 procedures1 and controls2 7iii7 the designation of a compliance officer2 7iv7 an ongoing employee training program2 and 7v7 an independent audit function to test such program2 7,b7 retain appropriate records of transactions2 7,c7 monitor and report suspicious activity1 which may include use of appropriate distributed ledger analytics2 and 7,d7 maintain an effective customer identification program to identify and verify account holders and carry out appropriate customer due diligence4 7#b7 ,compliance with sanctions ,a digital commodity broker1 digital commodity dealer1 or digital commodity exchange shall comply with all laws and regulations related to ,united ,states sanctions administered by the ,office of ,foreign ,assets ,control4 #aaa4 ,rule of construction ,nothing in this ,act1 or the amendments made by this ,act1 shall be construed to limit or prevent the continued application of applicable ethics statutes and regulations administered by the ,office of ,government ,ethics1 or the ethics rules of the ,senate and the ,house of ,representatives1 including section #bjh of title #ah1 ,united ,states ,code1 and sections #bfce4gjb and #bfce4hjb of title #e1 ,code of ,federal ,regulations4 ,for the avoidance of doubt1 existing ,office of ,government ,ethics laws and the ethics rules of the ,senate and the ,house of ,representatives prohibit any member of ,congress or senior executive branch official from issuing a digital commodity during their time in public service4 ,for the purposes of this section1 an employee described in section #bjb of title #ah1 ,united ,states ,code1 shall be deemed an executive branch employee for purposes of complying with section #bjh of that title4 #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#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 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 #ej1jjj1jjj 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;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 from registration under the ,securities ,act of #aicc1 including as 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 #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 from registration under the ,securities ,act of #aicc1 including as provided under section #c1 #d7;a71 or #ai of the ,securities ,act of #aicc1 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 from registration under the ,securities ,act of #aicc1 including as 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 7iv7 ,a rule permitting a successor to a digital commodity issuer1 or such other appropriate person as designated by the ,commission1 to make the disclosures required under clause 7i71 where such issuer does not make the required disclosures4 #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 maintaining fair1 orderly1 and efficient markets1 and facilitating capital formation1 and to foster the development of mature blockchain systems1 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 ,rules of construction ,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 from registration under this ,act1 including as 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 or 7#b7 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 maintaining fair1 orderly1 and efficient markets1 and facilitating capital formation1 as well as fostering the development of mature blockchain systems1 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 commodity1 including for the purposes of promoting market liquidity4 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 ,a digital commodity issuer1 digital commodity related person1 digital commodity affiliated person1 decentralized governance system of the blockchain system1 or a registered digital commodity exchange1 or any other appropriate person as designated by the ,commission1 may certify to the ,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 with respect to 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 the date of enactment of this section2 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 the ,,genius ,act1 is amended by striking the final sentence and inserting 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 the ,,genius ,act1 is amended by striking the final sentence and inserting 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#ah71 as amended by the ,,genius ,act1 by striking the final sentence and inserting 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 the ,,genius ,act1 by striking the final sentence and inserting 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 the ,,genius ,act1 by striking the final sentence and inserting 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 by or through1 as applicable1 a broker1 dealer1 national securities exchange1 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 or through 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 are1 as applicable1 brokered1 traded1 or custodied by or through a broker or dealer or through an alternative trading system or a national securities exchange to the same extent as they apply to securities44 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 to exchange registration under section #f of this title 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 ,neither an alternative trading system predominantly facilitating the trading of digital commodities1 permitted payment stablecoins1 or both1 relative to its securities traded1 nor a digital commodity exchange1 is 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 ,rulemaking for dual-registered entities 7a7 ,conflict of interest policies and procedures ,each person or entity dual-registered with the ,commodity ,futures ,trading ,commission as permitted under section #ae7p7 of the ,securities ,exchange ,act of #aicd shall establish1 maintain1 and1 as applicable1 enforce and comply with written policies and procedures reasonably designed to mitigate any conflicts of interest1 including with respect to transactions or arrangements with affiliates registered with the ,securities and ,exchange ,commission1 taking into consideration the nature of the business of such person or entity4 7b7 ,exemption from duplicative1 conflicting1 or unduly burdensome provisions ,the ,securities and ,exchange ,commission shall prescribe rules for a person or entity with multiple registrations1 where at least one such registration includes any dual registration permitted under section #ae7p7 of the ,securities ,exchange ,act of #aicd1 to exempt the person or entity from duplicative1 conflicting1 or unduly burdensome provisions of the ,securities ,exchange ,act of #aicd and rules thereunder1 to the extent such an exemption would protect investors1 maintain fair1 orderly1 and efficient markets1 and facilitate capital formation4 7c7 ,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 is registered with the ,commodity ,futures ,trading ,commission as a digital commodity broker or digital commodity dealer as permitted under section #ae7p77#a7 of the ,securities ,exchange ,act of #aicd or otherwise transacts in permitted payment stablecoins to revise such rules as may be necessary to further the purposes of and compliance with this section4 7d7 ,memorandum of understanding ,the ,securities and ,exchange ,commission shall enter into a memorandum of understanding with the ,commodity ,futures ,trading ,commission to ensure-- 7#a7 non-duplicative supervision and enforcement with respect to registrants of the ,securities and ,exchange ,commission dual-registered with the ,commodity ,futures ,trading ,commission as permitted under section #ae7p7 of the ,securities ,exchange ,act of #aicd2 and 7#b7 appropriate information sharing between the ,commissions to further the purposes of and compliance with this section1 the ,securities ,exchange ,act of #aicd1 and the ,commodity ,exchange ,act4 7e7 ,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 may1 consistent with any rules promulgated under subsection 7b71 utilize 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 7#a7 ,registered brokers and dealers ,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 dealer4 7#b7 ,national securities exchanges ,a national securities exchange or affiliate thereof shall be permitted to maintain a registration with the ,commodity ,futures ,trading ,commission as a digital commodity exchange4 7#c7 ,alternative trading systems ,an alternative trading system1 and the operator thereof1 shall be permitted to maintain a registration with the ,commodity ,futures ,trading ,commission as a digital commodity exchange4 7#d7 ,notice of application ,any person or entity described in paragraph 7#a7 through 7#c7 shall provide to the ,securities and ,exchange ,commission1 at such time and in such form and manner as the ,securities and ,exchange ,commission shall prescribe1 notice of any application to register with the ,commodity ,futures ,trading ,commission as a digital commodity broker1 digital commodity dealer1 or digital commodity exchange4 4 #cjh4 ,exempting digital commodities from ,state securities laws 7a7 ,covered security ,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 7b7 ,rule of construction ,nothing in this section1 section #bjb1 or the amendments made by such sections may be construed to limit the existing authority described in section #ah7;c77#a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggr7c77#a77 of a securities commission 7or any agency or office performing like functions7 of any ,state with respect to a covered security or any security4 #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 accounted for as assets of 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 and 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 dealer74 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 ,educational material requirements ,the ,securities and ,exchange ,commission1 in consultation with the ,commodity ,futures ,trading ,commission1 shall require any registered entity that facilitates the trading of digital commodities or investment contracts involving units of a digital commodity to provide clear and accessible educational materials to the public1 including-- 7#a7 an overview of how blockchain technology functions2 7#b7 a description of common risks associated with digital commodities2 7#c7 a description of the differences between digital commodity markets and traditional financial markets2 7#d7 information on reporting requirements related to digital commodity transactions or investment contracts involving units of a digital commodity2 and 7#e7 guidance on recognizing fraudulent schemes and instructions for reporting suspected fraud4 #cae4 ,discretionary ,surplus ,fund 7a7 ,in general ,the dollar amount specified under section #g7;a77#c77;,a7 of the ,federal ,reserve ,act 7#ab ,u4,s4,c4 #bhi7;a77#c77;,a77 is reduced by #ae1jjj1jjj4 7b7 ,effective date ,the amendment made by subsection 7a7 shall take effect on ,september #cj1 #bjce4 ,,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#b77;,d7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;c77#b77;,d77 is amended-- 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 customer by the digital commodity broker1 as determined by the ,commission by rule or regulation1 based on commercial spot market practices4 4 7d7 ,commission authority over certain digital commodity and stablecoin spot transactions ,section #b7;c77#b7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;c77#b77 is amended 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 or tradable asset 7as defined in section #dx7 in interstate commerce1 including in a digital commodity or tradable asset 7as so defined7 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 solicited1 or accepted1 or for which the execution of is confirmed-- 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 7e7 ,conforming amendments ,the ,commodity ,exchange ,act is amended-- 7#a7 in section #a;a7#i7 7#g ,u4,s4,c4 #a;a7#i771 as amended by the ,,genius ,act1 by striking the second sentence2 and 7#b7 in section #b7;a77#a77;,a7 7#g ,u4,s4,c4 #b7;a77#a77;,a771 in the #ast sentence1 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 or 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 public4 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 ,use of funds ,a digital commodity exchange 7or a designee of a digital commodity exchange7 may use a unit of a digital commodity belonging to a customer to provide a blockchain service for a blockchain system to which the unit of the digital commodity relates if-- 7i7 the customer expressly permits the use1 in writing to the digital commodity exchange2 and 7ii7 the digital commodity exchange complies with subparagraph 7,b74 7,b7 ,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 a permission provided under subparagraph 7,a7 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 customer to provide the permission referred to in subparagraph 7,a7 as a condition of doing business on the exchange4 7,c7 ,requirements ,the ,commission may1 by rule1 waive or modify the requirements of paragraph 7#b7 or subsection 7h71 to facilitate the use of a unit of a digital commodity belonging to a customer to provide a blockchain service4 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 activity1 including protocol consensus participation activities described in section #b7;a77#cj77;,b7 of the ,securities ,act of #aicc1 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 digital commodity exchange7 exempt1 either unconditionally or on stated terms or conditions or for stated periods and either retroactively or prospectively1 or both1 a digital commodity exchange from the requirements of this ,act1 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 officer1 agency1 or other entity which has primary regulatory authority over nondepository ,state trust companies2 7,c7 a ,state credit union supervisor1 as defined under section #fjjc of the ,anti-,money ,laundering ,act of #bjbj2 or 7,d7 an appropriate foreign governmental authority in the home country of such person4 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 7,a7 ,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 7,b7 ,content ,in prescribing the rules under subparagraph 7,a71 the ,commission shall require a person registered with the ,commission to-- 7i7 implement requirement consistent with the requirements in subsection 7d77#a72 7ii7 establish sufficient system safeguards2 7iii7 prevent or mitigate conflicts of interest1 as appropriate2 and 7iv7 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 ,existing digital asset custodians ,a trust company operating as a digital asset custodian before the effective date of a rulemaking under subparagraph 7,a7 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 ,use of funds ,a digital commodity broker or digital commodity dealer 7or a designee of a digital commodity broker or a digital commodity dealer7 may use a unit of a digital commodity belonging to a customer to provide a blockchain service for a blockchain system to which the unit of the digital commodity relates if-- 7i7 the customer expressly permits the use1 in writing to the digital commodity broker or digital commodity dealer1 as the case may be2 and 7ii7 the digital commodity broker or the digital commodity dealer1 as the case may be1 complies with subparagraph 7,b74 7,b7 ,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 a permission provided under subparagraph 7,a7 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 customer to provide the permission referred to in subparagraph 7,a7 as a condition of doing business with the broker or dealer4 7,c7 ,requirements ,the ,commission may1 by rule1 waive or modify the requirements of paragraph 7#b7 or subsection 7h71 to facilitate the use of a unit of a digital commodity belonging to a customer to provide a blockchain service4 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 activity1 including protocol consensus participation activities described in section #b7;a77#cj77;,b7 of the ,securities ,act of #aicc1 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 digital commodity broker or digital commodity dealer7 exempt1 unconditionally or on stated terms or conditions1 or for stated periods1 and retroactively or prospectively1 or both1 a digital commodity broker or digital commodity dealer from the requirements of this ,act1 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 digital commodity broker or digital commodity dealer is subject to comparable1 comprehensive supervision and regulation by the appropriate government authorities in the home country of the digital commodity broker or 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 or otherwise distributing a blockchain system or a decentralized finance messaging system4 7#e7 ,constituting1 administering1 or maintaining 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 transaction 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 ,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 #dab4 ,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-- 7#a7 by inserting after section #dw the following3 #dx4 ,trading requirements for other tradable assets 7a7 ,limitation ,a contract of sale of 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 contract of sale of 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 contract of sale of 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 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 2 and 7#b7 by inserting after section #f;d the following3 #f;e4 ,prohibition on trading certain digital assets 7a7 ,in general ,a contract of sale of a digital commodity or tradable asset 7as defined in section #dx7 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 ,commission1 if the primary purpose of the digital commodity or tradable asset is to be used to-- 7#a7 commit fraud or market manipulation2 7#b7 further a scheme found in a final action by a court of competent jurisdiction to be in violation of campaign finance or government ethics laws2 or 7#c7 engage in any other conduct that would result in abusive practices or be disruptive to market integrity4 7b7 ,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 digital commodity or tradable asset 7as so defined7 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 #dac4 ,conflict of interest rulemaking ,not 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 #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 ,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 #ejc4 ,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 #ejd4 ,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 #eje4 ,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 #ejf4 ,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 #ejg4 ,study on financial market infrastructure improvements 7a7 ,in general ,the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly conduct a study to assess whether additional guidance or rules are necessary to facilitate the development of tokenized securities and derivatives products1 and to the extent such guidance or rules would foster the development of fair and orderly financial markets1 be necessary or appropriate in the public interest1 and be consistent with the protection of investors and customers4 7b7 ,report 7#a7 ,time limit ,not later than #a year after the date of enactment of this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly submit to the relevant congressional committees a report that includes the results of the study required by subsection 7a74 7#b7 ,relevant congressional committees defined ,in this section1 the term relevant congressional committees means-- 7,a7 the ,committees on ,financial ,services and on ,agriculture of the ,house of ,representatives2 and 7,b7 the ,committees on ,banking1 ,housing1 and ,urban ,affairs and on ,agriculture1 ,nutrition1 and ,forestry of the ,senate4 #ejh4 ,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 #eji4 ,study on illicit use of digital assets 7a7 ,in general ,one year after the date of the enactment of this ,act1 the ,secretary of the ,treasury1 in consultation with the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission1 shall conduct a comprehensive review of how ,foreign ,terrorist ,organizations and ,transnational ,criminal ,syndicates utilize digital assets in connection with illicit activities4 7b7 ,report ,not later than #ahj days after completing the review under subsection 7a71 the ,secretary of the ,treasury shall issue a report to the ,committees on ,agriculture and on ,financial ,services of the ,house of ,representatives and the ,committees on ,agriculture1 ,nutrition1 and ,forestry and on ,banking1 ,housing1 and ,urban ,affairs of the ,senate on the findings of the ,secretary1 including-- 7#a7 an assessment of how ,foreign ,terrorist ,organizations and ,transnational ,criminal ,syndicates utilize digital assets in connection with illicit activities2 and 7#b7 recommendations to assist the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission in strengthening compliance and enforcement of digital assets-related entities registered with their respective agencies4 #eaj4 ,,gao study on certain centralized intermediaries that are primarily located in foreign jurisdictions 7a7 ,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 paragraph 7#a74 7b7 ,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 subsection 7a74 #eaa4 ,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 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 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 #eab4 ,conforming amendments ,the ,,genius ,act is amended-- 7#a7 in section #b1 by amending paragraph 7#g7 to read as follows3 7#g7 ,digital asset service provider ,the term digital asset service provider means any entity registered or required to be registered with the ,securities and ,exchange ,commission or the ,commodity ,futures ,trading ,commission4 2 7#b7 in section #d7;a7-- 7,a7 by amending paragraph 7#c7 to read as follows3 7#c7 ,monthly certification2 examination of reports by registered public accounting firm 7,a7 ,in general ,a permitted payment stablecoin issuer shall1 each month1 have the information disclosed in the previous month-end report required under paragraph 7#a77;,c7 examined by a registered public accounting firm and such examination shall be performed in accordance with standards for attestation engagements issued or adopted by the primary ,federal payment stablecoin regulator or1 in the case of a ,state qualified payment stablecoin issuer1 the ,state payment stablecoin regulator4 7,b7 ,certification ,each month1 the ,chief ,executive ,officer and ,chief ,financial ,officer of a permitted payment stablecoin issuer shall submit to1 as applicable1 the primary ,federal payment stablecoin regulator or1 in the case of a ,state qualified payment stablecoin issuer1 the ,state payment stablecoin regulator1 a certification that1 based on such officers' knowledge1 the previous monthly report required under paragraph 7#a77;,c7-- 7i7 does not contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements made1 in light of the circumstances under which such statements were made1 not misleading2 and 7ii7 fairly presented in all material respects the information required under paragraph 7#a77;,c7 for the period presented in such report4 7,c7 ,criminal penalty ,any person who submits a certification required under subparagraph 7,b7 knowing that such certification is false shall be subject to the same criminal penalties as those set forth under section #acej7;c7 of title #ah1 ,united ,states ,code4 7,d7 ,internal controls over permitted payment stablecoin issuer's requirements 7i7 ,in general ,management of a permitted payment stablecoin issuer shall establish and maintain an adequate internal control structure and procedures for the requirements under this paragraph and paragraphs 7#a7 and 7#b7 in accordance with a framework determined acceptable by the primary ,federal payment stablecoin regulator or1 in the case of a ,state qualified payment stablecoin issuer1 the ,state payment stablecoin regulator4 7ii7 ,attestation report ,a permitted payment stablecoin issuer shall obtain an annual attestation report by an independent registered public accounting firm attesting to management's assertions concerning the effectiveness of the internal control structure and procedures for compliance with the requirements described in this paragraph and paragraphs 7#a7 and 7#b74 ,such attestation shall be made in accordance with standards for attestation engagements issued or adopted by the primary ,federal payment stablecoin regulator or1 in the case of a ,state qualified payment stablecoin issuer1 the ,state payment stablecoin regulator4 2 and 7,b7 by amending paragraph 7#ab7 to read as follows3 7#ab7 ,non-financial companies 7,a7 ,prohibition on non-financial company ownership ,it shall be unlawful for a company that derives a majority of its revenues from activities that are not financial activities to retain or acquire control of a nonbank entity that is-- 7i7 a ,federal qualified payment stablecoin issuer2 or 7ii7 a ,state qualified payment stablecoin issuer4 7,b7 ,financial activities defined 7i7 ,in general ,in this paragraph1 the term financial activities means-- 7,i7 a financial activity1 within the meaning of section #d7k7 of the ,bank ,holding ,company ,act of #aief 7#ab ,u4,s4,c4 #ahdc7k772 7,,ii7 issuing1 redeeming1 providing custodial or safekeeping services for1 buying1 selling1 making a market in1 or managing a reserve for payment stablecoins2 7,,iii7 providing electronic wallet services for payment stablecoins2 or 7,,iv7 an activity determined by the ,board to be a financial activity pursuant to clause 7ii74 7ii7 ,establishing additional financial activities ,not later than #ahj days after the date of enactment of the ,,clarity ,act of #bjbe1 the ,board1 in consultation with the ,secretary of the ,treasury and the ,comptroller1 shall issue rules1 consistent with the purposes of this ,act1 to establish-- 7,i7 a list of additional activities that are financial activities for purposes of clause 7i71 including applicable digital asset activities that are financial activities2 and 7,,ii7 a streamlined procedure for a nonbank entity to submit an activity to the ,board for purposes of the ,board determining whether such activity should be added to the list of additional activities that are financial activities for purposes of clause 7i74 2 and 7#c7 by adding at the end the following3 #ba4 ,commodity-backed payment stablecoins 7a7 ,rule of construction ,nothing in this ,act shall be construed to prohibit or limit a commodity-backed payment stablecoin issuer from issuing a commodity-backed payment stablecoin in accordance with regulations established by a ,state commodity-backed payment stablecoin regulator4 7b7 ,preservation of ,federal authority ,nothing in this section shall be construed to alter or limit the jurisdiction of the ,commodity ,futures ,trading ,commission over any matter within the ,commission's authority under applicable law4 7c7 ,definitions ,for purposes of this section3 7#a7 ,commodity-backed payment stablecoin ,the term commodity-backed payment stablecoin means a digital asset-- 7,a7 that is1 or is designed to be1 used as a means of payment or settlement2 7,b7 that is denominated in a highly liquid1 publicly traded physical commodity1 such as gold2 7,c7 the issuer of which is obligated to-- 7i7 convert1 redeem1 or repurchase for a fixed amount of the denominated highly liquid1 publicly traded physical commodity2 and 7ii7 custody or cause to be custodied1 for the benefit of the holders of the payment stablecoin1 an amount of the physical commodity equal to or greater than the total amount of outstanding payment stablecoins1 for the purpose of converting1 redeeming1 or repurchasing the digital asset2 and 7,d7 that is not-- 7i7 a security issued by-- 7,i7 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 7,,ii7 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 7ii7 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 7iii7 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 account2 or 7iv7 an interest or participation in a commodity pool 7as defined in section #a;a7#aj7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a774 7#b7 ,commodity-backed payment stablecoin issuer ,the term commodity-backed payment stablecoin issuer means-- 7,a7 an entity that issues a commodity-backed payment stablecoin2 and 7,b7 an entity that is approved to issue such commodity-backed payment stablecoins by a ,state commodity-backed payment stablecoin regulator4 7#c7 ,physical commodity ,the term physical commodity means any exempt commodity 7as defined in section #a;a7#ba7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a77 which can be physically delivered4 7#d7 ,state commodity-backed payment stablecoin regulator ,the term ,state commodity-backed payment stablecoin regulator means a ,state agency that has primary regulatory and supervisory authority over entities that issue commodity-backed payment stablecoins in such ,state4 #bb4 ,protection of self-custody 7a7 ,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-- 7,a7 such other individual or entity is not a financial institution 7as defined in section #ecab of title #ca1 ,united ,states ,code72 and 7,b7 the transactions do not involve any property or interests in property that are blocked pursuant to1 or are otherwise prohibited by1 ,united ,states sanctions4 7b7 ,application ,this section-- 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 7c7 ,rule of construction ,nothing in this section shall be construed to limit the authority of the ,secretary of the ,treasury1 the ,securities and ,exchange ,commission1 the ,commodity ,futures ,trading ,commission1 or the primary ,federal payment stablecoin regulators 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 4 ,,vi ,anti-,,cbdc ,surveillance ,state ,act #fja4 ,short title ,this title may be cited as the ,anti-,,cbdc ,surveillance ,state ,act4 #fjb4 ,prohibition on ,federal reserve banks relating to certain products or services for individuals and prohibition on directly issuing a central bank digital currency ,section #af of the ,federal ,reserve ,act 7#ab ,u4,s4,c4 #daa et seq47 is amended by adding at the end the following new paragraph3 7#ah7 7,a7 ,a ,federal reserve bank may not-- 7i7 offer financial products or services directly to an individual2 7ii7 maintain an account on behalf of an individual2 or 7iii7 issue a central bank digital currency1 or any digital asset that is substantially similar under any other name or label4 7,b7 ,in this paragraph1 the term central bank digital currency has the meaning given that term under section #aj7aa77;,d74 4 #fjc4 ,prohibition on ,federal reserve banks indirectly issuing a central bank digital currency ,section #af of the ,federal ,reserve ,act 7#ab ,u4,s4,c4 #daa et seq471 as amended by section #b1 is further amended by adding at the end the following paragraph3 7#ai7 7,a7 ,a ,federal reserve bank may not offer a central bank digital currency1 or any digital asset that is substantially similar under any other name or label1 indirectly to an individual through a financial institution or other intermediary4 7,b7 ,in this paragraph1 the term central bank digital currency has the meaning given that term under section #aj7aa77;,d74 4 #fjd4 ,prohibition with respect to central bank digital currency ,section #aj of the ,federal ,reserve ,act 7#ab ,u4,s4,c4 #bda et seq47 is amended by inserting before paragraph 7#ab7 the following3 7#aa7 ,prohibition with respect to central bank digital currency 7,a7 ,in general ,the ,board of ,governors of the ,federal ,reserve ,system may not test1 study1 develop1 create1 or implement a central bank digital currency1 or any digital asset that is substantially similar under any other name or label4 7,b7 ,monetary policy ,the ,board of ,governors of the ,federal ,reserve ,system and the ,federal ,open ,market ,committee may not use a central bank digital currency to implement monetary policy1 or any digital asset that is substantially similar under any other name or label4 7,c7 ,exception ,subparagraph 7,a7 and sections #af7ah77;,a77iii7 and #af7ai77;,a7 may not be construed to prohibit any dollar-denominated currency that is open1 permissionless1 and private1 and fully preserves the privacy protections of ,united ,states coins and physical currency4 7,d7 ,central bank digital currency defined ,in this paragraph1 the term central bank digital currency means a form of digital money or monetary value that is-- 7i7 denominated in the national unit of account2 7ii7 a direct liability of the ,federal ,reserve ,system2 and 7iii7 widely available to the general public4 4 #fje4 ,sense of ,congress ,it is the sense of ,congress that the ,board of ,governors of the ,federal ,reserve ,system currently does not have the authority to issue a central bank digital currency1 or any digital asset that is substantially similar under any other name or label1 and will not have such authority unless ,congress grants it under ,congress's ,article #a ,section #h powers4 #a4 ,short title2 table of contents 7a7 ,short title ,this ,act may be cited as the ,digital ,asset ,market ,clarity ,act4 7b7 ,table of contents ,the table of contents for this ,act is as follows3 ,sec4 #a4 ,short title2 table of contents4,sec4 #b4 ,definitions4,,title ,i--,responsible securities innovation,sec4 #aja4 ,short title4,sec4 #ajb4 ,disclosure requirements for certain transactions involving ancillary assets4,sec4 #ajc4 ,exemption and rulemaking for certain transactions involving ancillary assets4,sec4 #ajd4 ,special disposition restrictions by related persons4,sec4 #aje4 ,characteristics of network tokens4,sec4 #ajf4 ,exemptive authority4,sec4 #ajg4 ,modernization of recordkeeping requirements4,sec4 #ajh4 ,modernization of securities regulations for digital asset activities4,sec4 #aji4 ,insider trading with respect to ancillary asset transactions4,sec4 #aaj4 ,securities ,investor ,protection ,corporation applicability4,sec4 #aaa4 ,investor and consumer protection enforcement4,,title ,,ii--,protecting against illicit finance,sec4 #bja4 ,treatment under the ,bank ,secrecy ,act and sanctions laws4,sec4 #bjb4 ,digital asset examination standards4,sec4 #bjc4 ,preventing ,illicit ,finance ,through ,partnership ,act4,sec4 #bjd4 ,financial ,technology ,protection ,act4,sec4 #bje4 ,digital asset kiosks4,sec4 #bjf4 ,study on illicit use of digital assets4,,title ,,iii--,responsible innovation in decentralized finance,sec4 #cja4 ,rulemaking on application of existing securities intermediary requirements and existing ,bank ,secrecy ,act requirements to non-decentralized finance trading protocols4,sec4 #cjb4 ,illicit finance obligations for distributed ledger messaging systems4,sec4 #cjc4 ,special measure relating to certain transmittals of funds4,sec4 #cjd4 ,offshore stablecoin report4,sec4 #cje4 ,temporary hold for certain digital asset transactions4,sec4 #cjf4 ,voluntary cybersecurity program for decentralized finance trading protocols4,sec4 #cjg4 ,amendments to monetary instrument definition4,sec4 #cjh4 ,risk management standards for digital asset intermediaries4,sec4 #cji4 ,study on digital asset mixers and tumblers4,sec4 #caj4 ,,gao study on intermediaries in foreign jurisdictions4,sec4 #caa4 ,studies on foreign adversary activities4,sec4 #cab4 ,treasury study on cybersecurity standards4,sec4 #cac4 ,studies on financial stability risks of decentralized finance trading and credit in digital commodity markets4,,title ,,iv--,responsible banking innovation,sec4 #dja4 ,permissibility of digital asset activities4,sec4 #djb4 ,joint rules for portfolio margining determinations4,sec4 #djc4 ,capital requirements to address netting agreements4,sec4 #djd4 ,prohibiting interest and yield on payment stablecoins4,sec4 #dje4 ,expanded securities portfolio margin accounts under the ,securities ,investor ,protection ,act of #aigj4,,title ,v--,responsible regulatory innovation,sec4 #eja4 ,,cftc-,,sec ,micro-,innovation ,sandbox4,sec4 #ejb4 ,international cooperation4,sec4 #ejc4 ,automated regulatory compliance study4,sec4 #ejd4 ,report on legislative recommendations4,sec4 #eje4 ,tokenization of securities4,sec4 #ejf4 ,voluntary adoption of ,national ,institute of ,standards and ,technology post-quantum cryptography standards4,sec4 #ejg4 ,international coordination to combat digital asset illicit finance4,sec4 #ejh4 ,annual report on foreign digital asset trading volume1 compliance with ,united ,states standards and remediation actions4,sec4 #eji4 ,,ai innovation labs4,,title ,,vi--,protecting software developers and software innovation,sec4 #fja4 ,protecting software developers4,sec4 #fjb4 ,safe harbor for nonfungible tokens4,sec4 #fjc4 ,study on nonfungible tokens4,sec4 #fjd4 ,blockchain ,regulatory ,certainty ,act4,sec4 #fje4 ,keep ,your ,coins ,act4,,title ,,vii--,protecting customer property,sec4 #gja4 ,customer property protections for ancillary assets and digital commodities in bankruptcy4,sec4 #gjb4 ,insolvency safe harbor4,,title ,,viii--,customer protection,sec4 #hja4 ,educational materials4,sec4 #hjb4 ,savings clauses4,sec4 #hjc4 ,study on expanding financial literacy4,sec4 #hjd4 ,consultation with ,,sipc regarding mandatory broker-dealer disclosures to investors concerning the status of payment stablecoins and digital commodities4,,title ,,ix--,other matters,sec4 #ija4 ,joint ,advisory ,committee on ,digital ,assets4,sec4 #ijb4 ,memorandum of understanding4,sec4 #ijc4 ,fin,c,e,n appropriations4,sec4 #ijd4 ,build ,now ,act4,sec4 #ije4 ,rulemakings4,sec4 #ijf4 ,effective date4 #b4 ,definitions ,in this ,act3 7#a7 ,ancillary asset2 ancillary asset originator2 network token ,the terms ancillary asset1 ancillary asset originator1 and network token have the meanings given those terms in section #d;,b7a7 of the ,securities ,act of #aicc1 as added by this ,act4 7#b7 ,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#c7 ,commission ,except where otherwise expressly provided1 the term ,commission means the ,securities and ,exchange ,commission4 7#d7 ,coordinated control ,with respect to any distributed ledger system and a related ancillary asset1 the term coordinated control has the meaning given the term by the ,commission pursuant to rules adopted under section #ajd7;b74 7#e7 ,decentralized governance system 7,a7 ,in general ,the term decentralized governance system means1 with respect to a distributed ledger system1 any transparent1 rules-based system permitting persons to form consensus or reach agreement in the development1 provision1 publication1 maintenance1 or administration of the distributed ledger system1 in which participation is not limited to1 or under the 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 those 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 entity1 including a decentralized unincorporated nonprofit association or other entity created pursuant to ,state law1 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,d7 ,rule of construction ,for purposes of this ,act1 and the amendments made by this ,act1 a decentralized governance system shall not be deemed to be a person or a group of persons acting under common control4 7#f7 ,digital asset2 digital asset service provider ,the terms digital asset and digital asset service provider have the meanings given those terms in section #b of the ,,genius ,act 7#ab ,u4,s4,c4 #eija74 7#g7 ,digital asset intermediary ,the term digital asset intermediary means a person that is engaged in digital asset activities and required by law to register with the ,commodity ,futures ,trading ,commission or with the ,commission under the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq474 7#h7 ,digital commodity ,the term digital commodity has the meaning given the term in section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a71 as added by this ,act4 7#i7 ,distributed ledger ,the term distributed ledger means technology-- 7,a7 through which data is shared across a network that creates a public digital ledger of verified transactions or information among network participants2 and 7,b7 in which cryptography is used to link the data described in subparagraph 7,a7 to-- 7i7 maintain the integrity of the digital ledger described in that subparagraph2 and 7ii7 execute other functions4 7#aj7 ,distributed ledger application ,the term distributed ledger application means executable software that is deployed to and maintained on a distributed ledger and composed of source code that is publicly available1 including a smart contract or any network of smart contracts1 or other similar technology4 7#aa7 ,distributed ledger protocol ,the term distributed ledger protocol means publicly available source code of a distributed ledger that is executed by the network participants of a distributed ledger to facilitate its functioning1 or other similar technology4 7#ab7 ,distributed ledger system ,the term distributed ledger system means a distributed ledger 7together with its distributed ledger protocol71 a distributed ledger application1 or a network of distributed ledger applications4 7#ac7 ,related person ,the term related person1 with respect to an ancillary asset originator or an ancillary asset-- 7,a7 means-- 7i7 any person that is1 or within the preceding #cf-month period was-- 7,i7 a founder or person serving in a similar capacity with respect to the ancillary asset originator2 and 7,,ii7 a beneficial owner of not less than #d percent of the total amount of outstanding units of an ancillary asset associated with the ancillary asset originator2 7ii7 any person that is1 or in the preceding #ab-month period was1 an executive officer1 director1 trustee1 general partner1 owner of more than #aj percent of any class of equity shares of the ancillary asset originator1 or person serving in a similar capacity with respect to the ancillary asset originator2 7iii7 any person1 or group of persons under common control1 that beneficially owns1 or in the preceding #f-month period owned1 #aj percent or more of the total amount of outstanding units of the ancillary asset2 and 7iv7 any person1 or group of persons under common control1 that beneficially owns1 or in the preceding #f-month period owned1 covered tokens 7as that term is defined in section #ajd7;a77 that equal not less than #b percent of the total amount of outstanding units of the ancillary asset2 and 7,b7 does not include a decentralized governance system4 7#ad7 ,securities laws ,the term securities laws has the meaning given the term in section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a774 7#ae7 ,smart contract ,the term smart contract means a self-executing contract or program that-- 7,a7 is stored on a distributed ledger system2 and 7,b7 automatically executes or enforces digital asset transactions upon the occurrence of explicit1 pre-determined conditions encoded in the contract or program1 without intervention1 other than to provide data1 by any entity or natural person4 ,i ,responsible securities innovation #aja4 ,short title ,this title may be cited as the ,lummis-,gillibrand ,responsible ,financial ,innovation ,act of #bjbf4 #ajb4 ,disclosure requirements for certain transactions involving ancillary assets 7a7 ,in general ,the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;a et seq47 is amended by inserting after section #d;,a 7#ae ,u4,s4,c4 #gg;d-#a7 the following3 #d;,b4 ,requirements with respect to certain transactions involving ancillary assets 7a7 ,definitions ,in this section3 7#a7 ,ancillary asset ,the term ancillary asset means a network token1 the value of which is dependent upon the entrepreneurial or managerial efforts of an ancillary asset originator or a related person1 as those concepts are further specified by the ,commission by regulation4 7#b7 ,ancillary asset originator 7,a7 ,in general ,the term ancillary asset originator means1 with respect to a particular ancillary asset1 a person that 7whether directly or through #a or more subsidiary or controlled entities7-- 7i7 initially offers1 sells1 or distributes the ancillary asset2 or 7ii7 during the #ab-month period beginning on the date on which the ancillary asset is initially offered1 sold1 or distributed1 controls or causes the initial offer1 sale1 or distribution of that ancillary asset4 7,b7 ,joint and several liability ,for the purposes of this paragraph1 if the person that initially offered1 sold1 or distributed an ancillary asset 7or otherwise sold1 distributed1 controlled1 or caused the initial offer1 sale1 or distribution of the ancillary asset7 did not receive the largest amount of those ancillary assets distributed in the #ab-month period following the commencement of that offer1 sale1 or distribution1 then that person1 solely for purposes of subsection 7c71 shall be jointly and severally considered to be an ancillary asset originator with respect to that ancillary asset 7with the person that controlled such offer1 sale1 or distribution7 along with the person 7including a person under direct or indirect control of that person7 that received the largest amount of those ancillary assets in that period1 other than ancillary assets received-- 7i7 in an intermediary capacity2 7ii7 solely through a gratuitous distribution2 7iii7 through an offer1 sale1 or distribution of a security to the public registered under section #e2 or 7iv7 otherwise in a broad and public manner that the ,commission determines1 pursuant to regulation1 should not subject the person to disclosure requirements under subsection 7d74 7,c7 ,rulemaking ,not later than #cfj days after the date of enactment of this section1 the ,commission shall1 after providing notice and the opportunity for comment1 issue rules regarding the circumstances under which persons that are jointly and severally considered an ancillary asset originator pursuant to subparagraph 7,b7 are responsible for furnishing the disclosures required under subsection 7d7 on behalf of the ancillary asset originator4 7#c7 ,certification covered party ,the term certification covered party means-- 7,a7 an ancillary asset originator2 7,b7 a subsidiary of the ancillary asset originator2 7,c7 a related person of the ancillary asset originator2 or 7,d7 any entity that directly or indirectly controls or is controlled by a common entity with the ancillary asset originator4 7#d7 ,decentralized governance system2 digital asset2 digital asset intermediary2 related person2 securities laws ,the terms decentralized governance system1 digital asset1 digital asset intermediary1 related person1 and securities laws have the meanings given those terms in section #b of the ,digital ,asset ,market ,clarity ,act4 7#e7 ,gratuitous distribution 7,a7 ,in general ,the term gratuitous distribution-- 7i7 means a distribution of a network token1 including a distribution effected by an agent or other service provider engaged solely in an administrative or ministerial capacity1 in exchange for not more than a nominal value of cash1 property1 services1 or other assets in a broad1 equitable1 and non-discretionary manner2 and 7ii7 includes1 without limitation1 the mechanisms and methods of distribution described in subparagraph 7,b74 7,b7 ,mechanisms and methods of distribution ,the mechanisms and methods of distribution described in this subparagraph are the following3 7i7 ,self staking ,the distribution of a unit of a network token1 as a programmatic result of validating or staking activity for a distributed ledger system's consensus mechanism1 including the staking of a network token1 and the operation of a node1 validator1 or substantially similar software for such activity where the owner of the staked network token and the operator of the node1 validator1 or substantially similar software are the same person or entity4 7ii7 ,self-custodial staking with a third party ,the distribution of a unit of a network token1 as a programmatic result of validating or staking activity for a distributed ledger system's consensus mechanism1 including the staking of a network token1 and the operation of a node1 validator1 or substantially similar software for such activity in which-- 7,i7 the owner of the staked network token1 and operator of the node1 validator1 or substantially similar software for such activity are different persons or entities2 and 7,,ii7 the operator of the node1 validator1 or substantially similar software does not maintain custody or control of the staked network token4 7iii7 ,liquid staking ,the distribution of network tokens1 as the issuance1 transfer1 or redemption of liquid staking tokens representing a pro rata interest in staked network tokens1 and their associated rewards1 provided that such tokens are issued as administrative or ministerial receipts and are not providing discretionary management authority4 7iv7 ,custodial and ancillary staking services 7,i7 ,in general ,subject to the rules issued pursuant to subclause 7,,ii71 the provision of custodial or ancillary staking services enabling the owner of a network token to participate in validating or staking activity for a distributed ledger system's consensus mechanism that results in the programmatic distribution of a unit of a network token1 provided that such custodial or ancillary services are exclusively administrative or ministerial in nature4 7,,ii7 ,rulemaking to define the custodial and ancillary staking services ,the ,commission shall issue rules defining the custodial and ancillary staking services described in subclause 7,i7 that are exclusively administrative or ministerial in nature1 consistent with what is necessary or appropriate for the public interest or for the protection of investors4 7v7 ,programmatic and automated distributions ,the automated1 programmatic1 protocol-defined1 or rules-based distribution of network tokens achieved through the transparent functioning of a distributed ledger system1 a distributed ledger1 or distributed ledger applications1 in which-- 7,i7 distributions occur pursuant to public1 transparent1 rules-based parameters that are publicly available and are accessible on a permissionless basis1 without individualized or real-time negotiation with recipients2 7,,ii7 recipients receive network tokens as a direct1 programmatic result of objective1 verifiable network participation1 consumption1 or contribution1 including consensus participation1 data availability1 bandwidth1 governance1 or use and interaction with the protocol or application2 7,,iii7 the number of network tokens received is proportionate to the verifiable service1 usage1 or contribution2 7,,iv7 any expected utility or value of the network tokens arises primarily from decentralized network participation and market forces1 rather than the discretionary actions of any single person or affiliated group2 and 7,v7 no person or group has unilateral authority to alter1 restrict1 or direct the issuance parameters or distribution mechanisms of the distributed ledger system1 and any modification occurs only through a decentralized governance system4 7vi7 ,technology-neutral clause ,the distribution employing a mechanism1 protocol1 or technology not specifically described in clauses 7i7 through 7v71 without regard to whether such mechanism1 protocol1 or technology is in existence at the time of enactment of this section1 and without regard to terminology or underlying technical framework1 provided such distribution meets the requirements described in subparagraph 7,a77i74 7#f7 ,investment company ,the term investment company has the meaning given the term in section #c7;a7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#c7;a774 7#g7 ,network token 7,a7 ,in general ,the term network token means a digital commodity that is intrinsically linked to a distributed ledger system and that derives1 or is reasonably expected to derive1 its value from the use of such distributed ledger system1 and1 pursuant to the ,digital ,asset ,market ,clarity ,act and the amendments made by the ,digital ,asset ,market ,clarity ,act1 is treated as a non-security solely for purposes of the securities laws4 7,b7 ,disqualifying financial rights ,the term network token does not include any of the following3 7i7 ,any security1 consistent with the categories of disqualifying financial rights described in clause 7ii74 7ii7 ,an investment contract or a certificate of interest or participation in any profit-sharing agreement that represents1 gives the holder1 or is substantially economically or functionally equivalent to1 any of the following1 as the ,commission shall establish by rule3 7,i7 ,a debt or equity interest1 or an option on a debt or equity interest1 in a person4 7,,ii7 ,liquidation rights with respect to a person4 7,,iii7 ,an entitlement to1 or a reasonable expectation of1 an interest1 dividend1 or other payment1 or direct or indirect transfer of value1 from a person 7other than a decentralized governance system74 7,,iv7 ,an express or implied financial interest in 7including a limited partnership interest or interest in intellectual property of71 or provided by1 a person 7other than a decentralized governance system74 7iii7 ,any interest that is1 represents1 or is functionally equivalent to an interest in an investment company or a company 7as defined in section #b of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#b77 that would be an investment company under section #c7;a7 of that ,act 7#ae ,u4,s4,c4 #hj;a-#c7;a77 but for the exclusions provided from that definition by section #c7;c7 of that ,act 7#ae ,u4,s4,c4 #hj;a-#c7;c774 7iv7 ,any interest that is1 represents1 or is functionally equivalent to an interest in any entity or person that is not an investment company but holds or will hold assets other than securities4 7,c7 ,rule of construction ,a digital commodity-- 7i7 shall be deemed to be intrinsically linked to a distributed ledger system if the digital commodity is directly related to the functionality or operation of the distributed ledger system or to the activities or services for which the distributed ledger system is created or utilized2 and 7ii7 shall not be disqualified from being deemed a network token due to the granting of economic interests or voting capabilities with respect to a distributed ledger system or its decentralized governance system1 as further clarified by the ,commission through the final rules adopted under section #aje of the ,lummis-,gillibrand ,responsible ,financial ,innovation ,act of #bjbf4 7b7 ,treatment of network tokens and transactions 7#a7 ,in general ,the offer1 sale1 or distribution of an ancillary asset by1 or caused by1 an ancillary asset originator1 including through an underwriter1 shall be considered to be an offer1 sale1 or distribution of an investment contract involving an ancillary asset1 except with respect to a gratuitous distribution4 7#b7 ,treatment as non-security ,except as provided in this section1 and subject to paragraph 7#c71 a network token shall be treated as a non-security1 to the extent materially consistent with the requirements and conditions of this section1 for purposes of -- 7,a7 section #b7;a77#a72 7,b7 section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a772 7,c7 section #b7;a7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#b7;a772 7,d7 section #bjb7;a7 of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#b7;a772 7,e7 section #af of the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #ghlll72 or 7,f7 any applicable requirement of ,state law that is functionally equivalent to the provisions described in subparagraphs 7,a7 through 7,e71 including any provision of ,state law that directly or indirectly prohibits1 limits1 or imposes any conditions on the use1 offer1 sale1 transfer1 or disposition of a network token in a manner that is-- 7i7 not substantially similar to prohibitions1 limitations1 or conditions imposed by that ,state relating to assets that are commodities under the laws of that ,state2 and 7ii7 inconsistent with this section4 7#c7 ,secondary market treatment 7,a7 ,in general ,except as provided in this section 7including the limitation under subparagraph 7,b771 and to the extent materially consistent with the requirements and conditions of this section1 the offer1 sale1 or distribution of a network token by a person shall be treated as not involving the offer1 sale1 or distribution of a security under-- 7i7 section #b7;a77#a72 7ii7 the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq472 7iii7 the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#a et seq472 7iv7 the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#a et seq472 7v7 the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #gh;aaa et seq472 and 7vi7 any applicable requirement of ,state law that is functionally equivalent to the provisions described in clauses 7i7 through 7v71 including any provision of ,state law that directly or indirectly prohibits1 limits1 or imposes any conditions on the use1 offer1 sale1 transfer1 or disposition of a network token in a manner that is-- 7,i7 not substantially similar to prohibitions1 limitations1 or conditions imposed by that ,state relating to assets that are commodities under the laws of that ,state2 and 7,,ii7 inconsistent with this section4 7,b7 ,limitation ,subparagraph 7,a7 shall not apply if the applicable network token is offered1 sold1 or distributed pursuant to the offer1 sale1 or distribution of a security by an ancillary asset originator or underwriter4 7#d7 ,treatment of gratuitous distributions 7,a7 ,in general ,a gratuitous distribution1 by itself1 shall be presumed to not constitute an offer1 sale1 or distribution of a security for the purposes of-- 7i7 section #b7;a77#a72 7ii7 section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a772 7iii7 section #b7;a7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#b7;a772 7iv7 section #bjb7;a7 of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#b7;a772 7v7 section #af of the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #ghlll72 or 7vi7 any applicable requirement of ,state law1 or any provision of ,state law that is functionally equivalent to the provisions described in clauses 7i7 through 7v71 including any provision of ,state law that directly or indirectly prohibits1 limits1 or imposes any conditions on the use1 offer1 sale1 transfer1 or disposition of a network token in a manner that is-- 7,i7 not substantially similar to prohibitions1 limitations1 or conditions imposed by that ,state relating to assets that are commodities under the laws of that ,state2 and 7,,ii7 inconsistent with this section4 7,b7 ,savings clause ,nothing in this paragraph may be construed to limit1 impair1 or otherwise affect the anti-fraud or anti-manipulation authorities of the ,commission1 the ,commodity ,futures ,trading ,commission1 or a ,state regulator4 7#e7 ,prior certification 7,a7 ,submission and default treatment 7i7 ,in general 7,i7 ,presumption ,for purposes of this section1 there shall be a rebuttable presumption that a network token1 including a network token distributed in the manner described in paragraph 7#d71 is an ancillary asset unless the originator of that network token1 or a digital asset intermediary 7as provided under subsection 7c77#d771 submits to the ,commission a completed written certification1 supported by reasonable evidence1 as defined by the ,commission1 sufficient to demonstrate that the network token is not an ancillary asset4 7,,ii7 ,contents ,a certification submitted under subclause 7,i7 shall include a statement in accordance with subsection 7d77#c77;,b77i74 7ii7 ,notification ,the ,commission shall notify the ,commodity ,futures ,trading ,commission of each certification made pursuant to clause 7i7 and of any final agency action with respect to that certification4 7iii7 ,reciprocal notice ,the ,commission shall receive a copy of any certification and supporting materials submitted to the ,commodity ,futures ,trading ,commission under section #bjc7;d7 of the ,digital ,commodity ,intermediaries ,act4 7,b7 ,automatic effectiveness ,a certification submitted under subparagraph 7,a7 by an originator or a digital asset intermediary shall become effective upon the earlier of-- 7i7 the date on which the ,commission notifies the originator or digital asset intermediary in writing that the ,commission does not object to the certification2 or 7ii7 if the ,commission has not issued a rebuttal to the originator or digital asset intermediary in accordance with subparagraph 7,c71 #fj days after the date on which the originator or digital asset intermediary submits the certification4 7,c7 ,commission denial 7i7 ,authority to deny ,subject to clauses 7ii7 and 7iii71 the ,commission may deny a certification submitted under subparagraph 7,a7 by an originator or digital asset intermediary only during the #fj-;day period described in subparagraph 7,b77ii7 or upon determining1 based on reasonable evidence1 that a material change in circumstances has occurred after the submission of the certification1 whether or not the certification has taken effect4 7ii7 ,notice of intent to deny ,if the ,commission intends to deny a certification submitted under subparagraph 7,a71 the ,commission shall-- 7,i7 either not later than #bj business days after the date on which the certification is submitted1 or promptly after determining that a material change in circumstances has occurred1 provide to the applicable originator or digital asset intermediary notice of the intent of the ,commission to deny that certification2 and 7,,ii7 provide to the applicable originator or digital asset intermediary a #aj-;day period following the provision of notice under subclause 7,i7 during which-- 7aa7 interested persons shall have an opportunity to submit written data1 views1 and arguments relating to that certification2 and 7bb7 the ,commodity ,futures ,trading ,commission may1 at the discretion of the ,commodity ,futures ,trading ,commission1 submit input regarding whether the applicable asset-- 7,,aa7 satisfies the requirements for being considered an ancillary asset2 or 7,,bb7 includes any disqualifying financial right described in subsection 7a77#g77;,b74 7iii7 ,requirements after notice of intent ,after the #aj-;day period described in clause 7ii77,,ii71 the ,commission shall-- 7,i7 upon request of the applicable originator or digital asset intermediary1 provide an opportunity for the oral presentation of data1 views1 and arguments by certification covered parties2 7,,ii7 have a vote of the ,commission 7which1 notwithstanding section #d;,a of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;d-#a71 may not be delegated to an employee or employee board or to any individual ,commissioner7 to deny the certification after a finding that the applicable asset-- 7aa7 is an ancillary asset2 or 7bb7 includes any disqualifying financial right described in subsection 7a77#g77;,b72 and 7,,iii7 notify the ,commodity ,futures ,trading ,commission of each denial made under subclause 7,,ii74 7iv7 ,interested person ,for purposes of this subparagraph1 the term interested person means1 with respect to a network token-- 7,i7 the ancillary asset originator with respect to that network token 7referred to in this clause as the originator72 7,,ii7 a subsidiary of the originator2 7,,iii7 a related person of the originator2 7,,iv7 any entity that directly or indirectly controls or is controlled by a common entity with the originator2 7,v7 any broker or dealer 7as those terms are defined in section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a7771 or an exchange registered pursuant to section #f of that ,act 7#ae ,u4,s4,c4 #gh;f71 that operates in connection with digital assets2 or 7,,vi7 any person registered with the ,commodity ,futures ,trading ,commission that operates or proposes to operate in connection with digital assets4 7,d7 ,certification filed by digital asset intermediary 7i7 ,in general ,a certification submitted by a digital asset intermediary under this paragraph shall only become effective if-- 7,i7 the digital asset intermediary has-- 7aa7 conducted a reasonable inquiry of publicly available information1 appropriate under the circumstances1 regarding whether the applicable originator has engaged in entrepreneurial and managerial efforts with respect to the applicable network token during the most recent #ahj-;day period1 or is likely to engage in those efforts in the future2 and 7bb7 concluded that the efforts described in item 7aa7 have not occurred or are not reasonably likely to occur2 and 7,,ii7 subject to clause 7ii71 the applicable originator has certified that there is not 7and1 during the most recent #ahj-;day period1 there has not been7 material1 non-public information regarding entrepreneurial or managerial efforts with respect to the applicable network token in the possession of the originator or a related party4 7ii7 ,limitation ,clause 7i77,,ii7 shall not be required if the applicable digital asset intermediary1 after a reasonable inquiry1 appropriate under the circumstances1 determines that the applicable originator1 or any person jointly and severally liable pursuant to subsection 7a77#b77;,b71 is not capable of submitting the applicable certification4 7,e7 ,final agency action ,denial under this paragraph constitutes final agency action reviewable under applicable law4 7,f7 ,tolling ,any applicable period specified in this paragraph may be tolled1 for periods of not longer than #fj days1 during the #c-year period following the effective date of the ,digital ,asset ,market ,clarity ,act1 upon a showing in writing that the originator or digital asset intermediary has not substantially responded to a request for information from the ,commission within a reasonable time4 7,g7 ,withdrawal ,an originator or digital asset intermediary may withdraw a certification submitted under subparagraph 7,a7 at any time before approval4 7,h7 ,designated commission office ,the ,commission shall designate an office that shall-- 7i7 acknowledge receipt of certifications submitted under subparagraph 7,a72 7ii7 support those seeking certification under subparagraph 7,a7 by providing guidance regarding the mechanics of preparing and submitting those certifications2 and 7iii7 route certifications submitted under subparagraph 7,a71 together with any associated comments or recommendations1 to the appropriate division or office of the ,commission for review4 7,i7 ,misstatements or omissions ,any material misstatement or omission to state a material fact1 including with respect to continuing compliance1 in a certification that has become effective under this paragraph shall constitute grounds for the ,commission1 consistent with the securities laws1 to issue an order denying1 suspending1 or revoking the effectiveness of the certification and to pursue any appropriate enforcement action4 7c7 ,disclosure requirements for certain transactions involving ancillary assets 7#a7 ,specified initial and periodic disclosure requirements 7,a7 ,in general ,an ancillary asset originator shall be subject to the initial and periodic disclosure requirements under subsection 7d7 upon the occurrence of the earlier of the following3 7i7 ,any offer1 sale1 or distribution of an ancillary asset after the effective date of the ,digital ,asset ,market ,clarity ,act by1 or that is caused by1 that ancillary asset originator pursuant to-- 7,i7 ,regulation ,crypto1 as adopted pursuant to section #ajc of the ,lummis-,gillibrand ,responsible ,financial ,innovation ,act of #bjbf2 7,,ii7 the filing of an effective registration statement under this ,act2 7,,iii7 the filing of an offering statement described in section #c7;b77#b72 or 7,,iv7 an offering conducted pursuant to section #d7;a77#f74 7ii7 7,i7 ,the first secondary market offer1 sale1 or distribution of an ancillary asset in the ,united ,states after the effective date of the ,digital ,asset ,market ,clarity ,act that constitutes a public offering1 whether by the ancillary asset originator or any other person4 7,,ii7 ,for the purposes of subclause 7,i71 the term public offering shall be interpreted consistent with the meaning of that term under section #d7;a77#b74 7,b7 ,exclusion ,subparagraph 7,a7 shall not apply if-- 7i7 the aggregate gross proceeds from the offer1 sale1 or distribution of the applicable ancillary asset 7together with any related assets sold in those offers1 sales1 or distributions7 were #e1jjj1jjj or less 7adjusted for inflation7 during the #ab-month period immediately following the date of the first such offer1 sale1 or distribution2 or 7ii7 the average daily aggregate value of trading in the applicable ancillary asset in all spot markets open to the public in the ,united ,states for which trading volume is generally available is #e1jjj1jjj or less 7adjusted for inflation7 during the #ab-month period 7or such shorter period as the ,commission may determine7 immediately following the commencement of compliance with the disclosure requirements under subsection 7d7 7as determined pursuant to paragraph 7#b7 of this subsection71 based on the knowledge of the ancillary asset originator after due inquiry 7or1 if the ancillary asset has not yet traded on spot markets open to the public in the ,united ,states1 the trading volume is reasonably expected to be #e1jjj1jjj or less 7adjusted for inflation7 during the #ab-month period immediately following the reporting date specified by paragraph 7#b774 7,c7 ,calculation ,for the purposes of this paragraph1 the calculation of daily aggregate value shall be based on a reasonable calculation of public data4 7#b7 ,commencement of compliance with specified initial and periodic disclosure requirements 7,a7 ,in general ,an ancillary asset originator subject to the requirements of paragraph 7#a7 shall comply with the disclosure requirements under subsection 7d7-- 7i7 before-- 7,i7 any initial offer1 sale1 or distribution described in paragraph 7#a77;,a77i72 or 7,,ii7 a secondary market offer1 sale1 or distribution described in paragraph 7#a77;,a77ii72 and 7ii7 semiannually thereafter4 7,b7 ,exclusion ,the requirements of this paragraph shall not apply to an offer1 sale1 or distribution of an ancillary asset that occurs after the effective date of the ,digital ,asset ,market ,clarity ,act if an ancillary asset originator has submitted a certification under subsection 7d77#c77;,b7 and the ,commission has not denied that certification within a #fj-;day period after the completion of the process under that subsection4 7#c7 ,transition rule 7,a7 ,in general ,an ancillary asset originator that initially offered1 sold1 or distributed 7or otherwise controlled or caused the offer1 sale1 or distribution of7 a security involving an ancillary asset before the effective date of the ,digital ,asset ,market ,clarity ,act shall comply with the periodic disclosure requirements under subsection 7d71 if applicable1 beginning on the date that is #a year after that effective date4 7,b7 ,effect on certification ,an ancillary asset originator1 or any other certification covered party1 subject to this paragraph that meets the requirements of subsection 7d77#c7 may furnish a certification as provided in that subsection without complying with the periodic disclosure requirements under subsection 7d71 if the ,commission has not denied that certification within a #fj-;day period after the completion of the process under that subsection4 7,c7 ,period of disclosures ,the disclosures required under subparagraph 7,a7 shall apply with respect to the #c-year period preceding the effective date described in that subparagraph4 7#d7 ,digital asset intermediaries 7,a7 ,in general ,other than as provided under subparagraph 7,b71 with respect to an ancillary asset that is listed for trading on a digital asset intermediary1 that digital asset intermediary may1 in lieu of the applicable ancillary asset originator1 satisfy the requirements of subsection 7d7 in accordance with such rules as the ,commission shall jointly adopt with the ,commodity ,futures ,trading ,commission4 7,b7 ,allocation of disclosure responsibility 7i7 ,originator filings ,a digital asset intermediary may not satisfy the requirements of subsection 7d7 in lieu of the applicable ancillary asset originator1 if-- 7,i7 the ancillary asset originator is incorporated1 organized1 or otherwise registered under the laws of the ,united ,states or of any ,state2 and 7,,ii7 the applicable ancillary asset is-- 7aa7 offered1 sold1 or distributed after the effective date of the ,digital ,asset ,market ,clarity ,act pursuant to-- 7,,aa7 an investment contract that is offered1 sold1 or distributed pursuant to ,regulation ,crypto1 as adopted pursuant to section #ajc of the ,lummis-,gillibrand ,responsible ,financial ,innovation ,act of #bjbf2 7,,bb7 the filing of an effective registration statement under this ,act 7other than a registration statement on the form described in section #bci4ca or #bci4cc of title #ag1 ,code of ,federal ,regulations1 or the successor to either such form72 7,,cc7 the filing of an offering statement described in section #c7;b77#b72 or 7,,dd7 an offering conducted pursuant to section #d7;a77#f72 or 7bb7 first offered or sold after the effective date of the ,digital ,asset ,market ,clarity ,act in a transaction described in paragraph 7#a77;,a77ii74 7ii7 ,commission determination 7,i7 ,in general ,if1 after notice1 comment1 and the opportunity for a hearing1 the ,commission determines that it is in the public interest or necessary for the protection of investors1 including with respect to an ancillary asset originator incorporated or organized in a foreign jurisdiction1 the ,commission may require an ancillary asset originator1 after a transition period1 to file the disclosures required under subsection 7d74 7,,ii7 ,extraterritorial effect ,subclause 7,i7 shall apply extraterritorially4 7,c7 ,standard of liability ,notwithstanding any other provision of this ,act1 it shall be unlawful for a digital asset intermediary to file disclosures under subsection 7d7 pursuant to this paragraph that contain any material misstatement or omission to state a material fact required to be stated therein1 or necessary to make the statements therein not misleading1 unless that digital asset intermediary did not know 7and1 in the exercise of reasonable care1 could not have known7 of that misstatement or omission4 7#e7 ,failure to comply ,subject to the requirements of this section1 an ancillary asset shall not be listed for trading on a digital asset intermediary if the ,commission and the ,commodity ,futures ,trading ,commission jointly find that the ancillary asset originator that initially offered1 sold1 or distributed the ancillary asset after the effective date of the ,digital ,asset ,market ,clarity ,act 7or1 if a digital asset intermediary is satisfying the requirements of this subsection in lieu of that ancillary asset originator in accordance with paragraph 7#d71 such digital asset intermediary7 has materially failed to furnish the required disclosures under this subsection after a reasonable opportunity to cure1 as provided by joint rule of the ,commission and the ,commodity ,futures ,trading ,commission in a manner that is consistent with the considerations under subsection 7d77#e74 7d7 ,specified initial and periodic disclosure requirements 7#a7 ,in general 7,a7 ,furnishing of information ,an ancillary asset originator that is subject to the requirements of paragraph 7#a7 or 7#c7 of subsection 7c71 or a digital asset intermediary acting in accordance with subsection 7c77#d71 shall furnish to the ,commission1 in such form as the ,commission may prescribe by rule after providing notice and the opportunity for comment1 and until the requirement terminates under paragraph 7#c7 of this subsection1 the information described in paragraph 7#b7 of this subsection1 to the extent that the information is material and known1 or reasonably knowable1 to the ancillary asset originator or digital asset intermediary4 7,b7 ,requirements for rules ,a rule prescribed under subparagraph 7,a7 shall be reasonably tailored1 including by adjusting the scope1 form1 and content of required disclosures1 based on-- 7i7 the size of the applicable ancillary asset originator in accordance with section #ajh7;a7 of the ,lummis-,gillibrand ,responsible ,financial ,innovation ,act of #bjbf2 7ii7 the aggregate amount of ancillary assets offered1 sold1 or distributed by the applicable ancillary asset originator to the public in the ,united ,states2 and 7iii7 whether the applicable ancillary asset and any related distributed ledger system is subject to coordinated control1 as defined by the ,commission pursuant to rules adopted under section #ajd7;b7 of the ,lummis-,gillibrand ,responsible ,financial ,innovation ,act of #bjbf4 7#b7 ,categories of information ,the information required under paragraph 7#a7 shall include the following with respect to the applicable ancillary asset originator and the related ancillary asset3 7,a7 ,basic corporate information regarding the ancillary asset originator and the ancillary asset activities of the ancillary asset originator1 which may include the following items1 as the ,commission shall determine by rule3 7i7 ,the experience of the ancillary asset originator 7or persons controlling the ancillary asset originator7 in developing ancillary assets4 7ii7 ,if the ancillary asset originator 7or persons controlling the ancillary asset originator7 has previously distributed ancillary assets1 information on the subsequent distribution history of those ancillary assets1 including price history1 if the information is publicly available4 7iii7 ,the activities that the ancillary asset originator has taken in the relevant disclosure period1 and is projecting to take in the #a-year period following the submission of the disclosure1 with respect to promoting the use1 value1 or resale of the ancillary asset 7including any activity to facilitate the creation or maintenance of a trading market for the ancillary asset and any distributed ledger system1 application1 or system that uses the ancillary asset74 7iv7 ,the anticipated cost of the activities of the ancillary asset originator described in clause 7iii71 whether the ancillary asset originator has unencumbered1 liquid funds equal to that amount1 and1 if the ancillary asset originator does not have those funds1 the anticipated plan of operations of the ancillary asset originator for the portion of time where those liquid funds are less than the anticipated cost of the activities of the ancillary asset originator4 7v7 ,the experience of the ancillary asset originator with the use of a distributed ledger system or distributed ledger technology4 7vi7 ,the identities and expertise of the board of directors 7or equivalent body7 and senior management of the ancillary asset originator1 the experience or functions of whom are material to the development or value of the ancillary asset1 as well as any personnel changes relating to the ancillary asset originator during the period covered by the disclosure4 7vii7 ,financial statements of the ancillary asset originator that are-- 7,i7 if the aggregate amount of such ancillary assets offered1 sold1 or distributed to the public does not exceed #be1jjj1jjj in gross proceeds1 reviewed by a public accountant that is independent of the ancillary asset originator2 or 7,,ii7 if the aggregate amount of such ancillary assets offered1 sold1 or distributed to the public exceeds #be1jjj1jjj in gross proceeds1 audited by a public accountant that is independent of the ancillary asset originator4 7viii7 ,a description of any legal proceedings in which the ancillary asset originator is engaged4 7ix7 ,risk factors arising from the activities of the ancillary asset originator with respect to the ancillary asset1 and not generally applicable to other kinds of ancillary assets1 that may limit the utility or liquidity of the ancillary asset1 investor demand with respect to the ancillary asset1 or the market price or value of the ancillary asset4 7x7 ,information relating to ownership of the ancillary asset by-- 7,i7 persons owning not less than #aj percent of any class of equity security or other ownership interest of the ancillary asset originator2 and 7,,ii7 the board of directors 7or equivalent body7 and senior management of the ancillary asset originator1 if those individuals1 in the aggregate1 own not less than #e percent of the ancillary asset4 7xi7 ,for any material transactions involving the ancillary asset between the ancillary asset originator and any related person1 a description1 in the aggregate1 of the parties1 the number of ancillary assets involved1 and a summary of any material features of the transactions1 including any material terms or ongoing obligations4 7xii7 ,a summary1 in the aggregate by year1 of transactions in ancillary assets during the #d-year period preceding the furnishing of the disclosure1 by the ancillary asset originator and persons that directly or indirectly control the ancillary asset originator4 7xiii7 ,purchases or similar acquisitions of ancillary assets by the ancillary asset originator and affiliates of the ancillary asset originator4 7xiv7 ,a statement1 made in good faith1 from the chief financial officer of the ancillary asset originator or equivalent official1 stating whether the ancillary asset originator reasonably expects to maintain or have the financial resources to continue business as a going concern for the #ab-month period following the furnishing of the disclosure1 absent a change in circumstances4 7xv7 ,the current state and timeline for the development of the distributed ledger system to which the ancillary asset relates1 detailing if1 how1 and when the distributed ledger system and the related ancillary asset are intended to no longer be subject to coordinated control1 including by related persons1 if the distributed ledger system has not yet received a certification under section #ajd7;d7 of the ,lummis-,gillibrand ,responsible ,financial ,innovation ,act of #bjbf4 7,b7 ,economic and technical information relating to the ancillary asset1 which may include the following items1 as the ,commission shall determine by rule3 7i7 ,a general description of the ancillary asset and the distributed ledger system to which that ancillary asset relates1 including-- 7,i7 a plain-,english description of how the applicable distributed ledger1 distributed ledger system1 or distributed ledger application functions2 7,,ii7 the intended or known functionality and uses of the ancillary asset and any associated fees for use or disposition of the ancillary asset2 7,,iii7 the market for the ancillary asset2 7,,iv7 other assets or services that may compete with the ancillary asset2 7,v7 the total supply of the ancillary asset or the manner and rate of the ongoing production or creation of the ancillary asset2 and 7,,vi7 the governance and consensus mechanism for the ancillary asset and that distributed ledger system1 if applicable1 including for validating transactions and implementing changes to the distributed ledger system1 the method of generating or mining ancillary assets1 and any process for burning or destroying units of the ancillary asset on a distributed ledger system4 7ii7 ,if the ancillary asset originator has offered1 sold1 or otherwise provided ancillary assets to affiliates1 investors1 employees1 intermediaries1 or resellers1 a description of the amount of assets offered1 sold1 or otherwise provided to such persons and a summary of any material resale restrictions or other material obligations arising from related contracts1 agreements1 or other arrangements4 7iii7 ,if ancillary assets were distributed by the ancillary asset originator without charge or upon meeting certain conditions1 a description of the distributions1 in the aggregate1 along with the identity of any recipient that received more than #e percent of the total amount of ancillary assets 7calculated as a percentage of the total supply of such asset at the time of distribution74 7iv7 ,the amount of ancillary assets owned by the ancillary asset originator4 7v7 ,for the #ab-month period following the furnishing of the disclosure1 a description of the current state and anticipated timeline for the development of the distributed ledger system to which that ancillary asset relates1 including-- 7,i7 plans of the ancillary asset originator to support 7or to cease supporting7 the use or development of the ancillary asset1 including markets for the ancillary asset and that distributed ledger system2 7,,ii7 the various roles that exist or are intended to exist in connection with any applicable distributed ledger1 distributed ledger system1 or distributed ledger application1 such as users1 service providers1 developers1 transaction validators1 and governance participants2 7,,iii7 a discussion of any mechanisms by which control or authority are exerted with respect to that distributed ledger system1 if applicable1 or the related ancillary asset2 and 7,,iv7 any critical operational dependencies of any applicable distributed ledger1 distributed ledger system1 or distributed ledger application or of the related ancillary asset4 7vi7 ,risk factors that may materially affect the liquidity of the ancillary asset1 investor demand with respect to the ancillary asset1 or the market price or value of the ancillary asset4 7vii7 ,to the extent available to the ancillary asset originator1 the average daily price for a constant unit of value of the ancillary asset during the relevant reporting period1 as well as the #ab-month high and low prices for the ancillary asset1 as calculated based on the #c exchanges with the largest trading volume in that ancillary asset4 7viii7 ,if applicable1 and subject to cybersecurity best practices1 information relating to any external audit of the code and functionality of the ancillary asset1 including the entity performing the audit and the experience of the entity in conducting similar audits4 7ix7 ,information relating to custodial services available for the ancillary asset4 7x7 ,information on intellectual property rights claimed or disputed relating to the ancillary asset4 7xi7 ,a description of the technology underlying the initial distribution and trading of the ancillary asset1 including the source code for the ancillary asset1 if applicable1 and technical requirements for holding1 accessing1 and transferring the ancillary asset4 7xii7 ,if applicable1 a description of the steps necessary to independently access1 search1 and verify the transaction history of the ancillary asset4 7,c7 ,in addition to the information expressly required to be included under subparagraphs 7,a7 and 7,b71 the ancillary asset originator or digital asset intermediary1 as applicable1 shall provide such further material information1 if any1 as may be necessary to ensure that the statements made in the disclosure are not1 in light of the circumstances under which the statements are made1 materially misleading4 7#c7 ,termination of requirements 7,a7 ,termination ,the obligation of an ancillary asset originator to provide disclosures under paragraph 7#a7 shall terminate on the date that a certification becomes effective under subparagraph 7,b71 including through an approval or deemed approval4 7,b7 ,certification 7i7 ,in general ,a certification covered party may submit to the ,commission a certification1 based on the knowledge of the certification covered party after due inquiry and supported by reasonable evidence1 that states-- 7,i7 that-- 7aa7 during the #ahj-;day period preceding the date on which the certification covered party submits the certification1 and as of the date of submission1 no certification covered party has engaged in more than a nominal level of entrepreneurial or managerial efforts 7as defined by the ,commission by rule71 which shall not1 for the purposes of this clause1 include providing administrative services alone2 7bb7 any efforts described in item 7aa7 were not a primary factor in determining the value of the related ancillary asset 7which may include that any essential promises made by the certification covered party have been fulfilled72 and 7cc7 a certification is effective under section #ajd7;d7 of the ,lummis-,gillibrand ,responsible ,financial ,innovation ,act of #bjbf2 7,,ii7 in good faith that the certification covered party does not reasonably expect there to be any efforts that would render the certification covered party unable to provide a new certification following the date of the certification2 and 7,,iii7 that substantially all material information that is reasonably expected to contribute to the value of the ancillary assets offered1 sold1 or distributed to the public by the ancillary asset originator is1 and is reasonably expected to remain1 available to the public4 7ii7 ,change in circumstances 7,i7 ,effectiveness of the certification ,a certification under clause 7i7 shall remain effective until the date on which any certification covered party engages in entrepreneurial or managerial efforts that would render the certification covered party unable to meet the standards of the certification4 7,,ii7 ,new disclosures required ,on and after the date described in subclause 7,i71 the certification covered party undertaking efforts described in that subclause shall be responsible for furnishing to the ,commission the disclosures required under paragraph 7#a71 including a description of the change in circumstances4 7,,iii7 ,periodic disclosures ,the furnishing of disclosures pursuant to subclause 7,,ii7 shall restart the schedule for periodic disclosures under paragraph 7#a74 7,,iv7 ,prior certifications ,a certification submitted under clause 7i7 before a change in circumstances shall not be deemed false or misleading solely by reason of subsequent reengagement under this clause4 7iii7 ,commission denial 7,i7 ,in general ,the ,commission may deny a certification submitted under clause 7i7 by a certification covered party by-- 7aa7 issuing a written notice of objection to the certification submitted under clause 7i7 or upon determining that more than a nominal level of entrepreneurial or managerial efforts has been undertaken by any certification covered party after the submission of the certification2 and 7bb7 providing to the certification covered party #aj days notice of the intent of the ,commission to deny that certification1 during which period interested persons shall have an opportunity to submit written data1 views1 and arguments relating to that certification4 7,,ii7 ,requirements after notice of intent ,after the #aj-;day period described in subclause 7,i77bb71 the ,commission shall-- 7aa7 upon request of the certification covered party1 provide an opportunity for the oral presentation of data1 views1 and arguments by any interested persons2 and 7bb7 have a vote of the ,commission on whether to grant or deny the certification1 based on a finding as to whether the applicable ancillary asset meets the standard for certification under clause 7i74 7,,iii7 ,final agency action ,denial under this clause constitutes final agency action reviewable under applicable law4 7iv7 ,deemed approval ,if the ,commission fails to issue a written notice of objection or non-objection within #ij days after submission of a certification under clause 7i71 the certification shall be deemed approved by the ,commission4 7v7 ,withdrawal ,a certification covered party may withdraw a certification submitted under clause 7i7 at any time before that certification is approved or denied4 7vi7 ,designated ,commission office ,the ,commission shall designate an office that shall-- 7,i7 acknowledge the receipt of certifications submitted under clause 7i72 7,,ii7 support certification covered parties seeking certification under clause 7i7 by providing guidance regarding the mechanics of preparing and submitting those certifications2 and 7,,iii7 route certifications submitted under clause 7i71 together with any associated comments or recommendations1 to the appropriate division or office of the ,commission for review4 7vii7 ,advance review 7,i7 ,in general ,a certification covered party may submit a certification under clause 7i7 before the offer1 sale1 or distribution of a network token4 7,,ii7 ,intended originator ,in submitting for a certification for advance review under subclause 7,i71 a certification covered party shall identify the person intending to offer1 sell1 or distribute the applicable network token1 and that person shall be treated as the applicable ancillary asset originator for the purposes of this subparagraph4 7viii7 ,tolling ,any applicable period specified in this subparagraph may be tolled1 for periods of not longer than #fj days1 during the #c-year period following the effective date of the ,digital ,asset ,market ,clarity ,act1 upon a showing in writing that the submitting certification covered party has not substantially responded to a request for information from the ,commission within a reasonable time4 7ix7 ,misstatements or omissions ,any material misstatement or omission to state a material fact1 including with respect to continuing compliance1 in a certification that has become effective under this subparagraph shall constitute grounds for the ,commission1 consistent with the securities laws1 to-- 7,i7 issue an order denying1 suspending1 or revoking the effectiveness of that certification2 and 7,,ii7 pursue any appropriate enforcement action4 7#d7 ,voluntary disclosure ,an ancillary asset originator may voluntarily furnish to the ,commission the information required under this subsection if the ancillary asset originator determines that it is reasonably likely that the ancillary asset originator will become subject to the requirements of paragraph 7#a7 or 7#c7 of subsection 7c7 in the future4 7#e7 ,rulemaking considerations ,in adopting rules under this subsection1 the ,commission shall-- 7,a7 require only such information as the ,commission finds to be necessary or appropriate to protect investors1 maintain fair1 orderly1 and efficient markets1 and facilitate capital formation1 innovation1 and efficiency2 7,b7 include in any final versions of those rules a cost-benefit analysis evaluating the effects of any such rule on innovation1 efficiency1 competition1 maintaining fair and orderly markets1 and capital formation1 including the competitiveness of ,united ,states market participants2 and 7,c7 act jointly with the ,commodity ,futures ,trading ,commission to establish a process for implementing the requirements of this subsection1 including with respect to listing and disclosures1 that is consistent and coordinated with the listing process for digital asset intermediaries4 7#f7 ,limitations ,rules adopted under this subsection shall not require the inclusion of financial statements of an ancillary asset originator1 except with respect to the disclosure of financial information under paragraph 7#b74 7e7 ,exemptions ,the ,commission may1 by order1 exempt an ancillary asset originator or digital asset intermediary1 or any class of ancillary asset originators or digital asset intermediaries1 from specified requirements under subsection 7d7 if it is in the public interest or for the protection of investors1 consistent with the purposes of this section and subject to such conditions as the ,commission determines necessary to protect investors and in the public interest4 7f7 ,confidential treatment of certain information ,subject to ,commission rules and procedures1 an ancillary asset originator required to furnish to the ,commission disclosures under subsection 7d71 or a digital asset intermediary furnishing those disclosures in lieu of such an ancillary asset originator1 may submit a request for confidential treatment of information included in such disclosures pursuant to procedures the ,commission shall establish and that are modeled on or identical to section #bcj4djf of title #ag1 ,code of ,federal ,regulations1 or any successor regulation4 7g7 ,effect of failure to comply ,the failure of an ancillary asset originator or digital asset intermediary to comply with a provision of this section shall not1 by itself1 cause an ancillary asset offered1 sold1 or distributed by that ancillary asset originator 7or that the ancillary asset originator caused to be offered1 sold1 or distributed7 to be a security under any applicable law4 7h7 ,liability for false or misleading statements 7#a7 ,in general ,it shall be unlawful for an ancillary asset originator1 in any initial and periodic disclosure1 certification1 or other document furnished under this section1 to make an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading4 7#b7 ,rule of construction ,nothing in this subsection may be construed as limiting the application of section #bdj4aj;b-#e of title #ag1 ,code of ,federal ,regulations1 or any successor regulation1 to false or misleading disclosure statements or preventing any private right of action otherwise available under the securities laws4 7i7 ,special disposition restrictions by related persons 7#a7 ,in general ,the ,commission shall adopt rules1 consistent with section #ajd of the ,lummis-,gillibrand ,responsible ,financial ,innovation ,act of #bjbf1 establishing limitations on the disposition of certain ancillary assets with specified characteristics by related persons4 7#b7 ,considerations ,in adopting rules under paragraph 7#a71 the ,commission shall consider what is necessary or appropriate to protect investors1 promote capital formation1 and maintain fair and orderly markets1 which may include the prevention of insider self-dealing or other abuses of a privileged position4 7j7 ,safe harbor for forward-,looking statements ,in any action against an ancillary asset originator or digital asset intermediary arising under this ,act that is based on an untrue statement of a material fact or omission of a material fact necessary to make the statement not misleading1 no liability shall arise with respect to any forward-looking statement 7including any statement of plans1 objectives1 projections1 expectations1 or assumptions concerning future performance1 financial position1 development milestones1 asset utility1 system adoption1 or market conditions7 made in an ancillary asset disclosure1 statement1 or other document furnished pursuant to this section1 if the statement is-- 7#a7 identified as forward-looking2 and 7#b7 accompanied by meaningful cautionary language that identifies important factors that could cause actual results to differ materially4 7k7 ,transactions before effective date 7#a7 ,primary transactions ,notwithstanding any other provision of law1 neither the ,commission nor any private plaintiff may initiate1 pursue1 or maintain any action1 or an appeal of an action1 for a violation of section #e or #ab7;a77#a7 of this ,act arising from any offer1 sale1 or distribution of ancillary assets occurring before the effective date of the ,digital ,asset ,market ,clarity ,act1 provided that the ancillary asset originator or a certification covered party complies with any applicable requirements under subsection 7c77#c74 7#b7 ,primary transactions related to fraud ,nothing in paragraph 7#a7 shall limit the ability of the ,commission to bring an action based on the anti-fraud or anti-manipulation authorities of the ,commission4 7#c7 ,secondary transactions ,notwithstanding any other provision of law1 the offer1 sale1 or distribution of a network token by a person occurring before the effective date of the ,digital ,asset ,market ,clarity ,act shall be treated as not involving the offer1 sale1 or distribution of a security under-- 7,a7 section #b7;a77#a72 7,b7 section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a772 7,c7 section #b7;a7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#b7;a772 7,d7 section #bjb7;a7 of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#b7;a772 7,e7 section #af of the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #ghlll72 or 7,f7 any applicable requirement of ,state law that is functionally equivalent to the provisions described in subparagraphs 7,a7 through 7,e71 including any provision of ,state law that directly or indirectly prohibits1 limits1 or imposes any conditions on the use1 offer1 sale1 transfer1 or disposition of a network token in a manner that is-- 7i7 not substantially similar to prohibitions1 limitations1 or conditions imposed by that ,state relating to assets that are commodities under the laws of that ,state2 and 7ii7 inconsistent with this section4 7#d7 ,no inference of liability ,nothing in paragraph 7#a71 7#b71 or 7#c7 may be construed as an admission1 acknowledgment1 or inference of liability for any act1 transaction1 or conduct occurring before the effective date of the ,digital ,asset ,market ,clarity ,act4 7#e7 ,rules of construction ,nothing in this subsection may be construed to-- 7,a7 impair vested rights or contractual obligations lawfully established before the effective date of the ,digital ,asset ,market ,clarity ,act2 or 7,b7 limit the authority of the ,commission to bring an action against an ancillary asset originator or a related person for securities fraud or manipulation in connection with a statement1 a disclosure1 or conduct by that ancillary asset originator or related person1 except that the ,commission may not exercise that authority to treat a network token as a security or regulate secondary market trading4 7l7 ,rules of construction ,nothing in this section may be construed to-- 7#a7 preclude the ,commission from bringing an appropriate action or entering into a settlement agreement relating to a violation or alleged violation of this section2 7#b7 permit compliance with this section to be used in any administrative or judicial proceeding as evidence that an ancillary asset is a security2 7#c7 prohibit the offer1 sale1 or distribution of a digital asset in reliance on an exemption from registration under this ,act1 other than ,regulation ,crypto 7as adopted pursuant to section #ajc of the ,lummis-,gillibrand ,responsible ,financial ,innovation ,act of #bjbf72 or 7#d7 require more than #a person to furnish the disclosures required under subsection 7d71 unless otherwise provided by the ,commission by rule4 7m7 ,anti-,evasion 7#a7 ,anti-evasion ,the ,commission may issue such regulations as the ,commission considers necessary or appropriate in the public interest or for the protection of investors to administer and prevent willful evasion of-- 7,a7 this section2 7,b7 sections #ajc and #ajd of the ,lummis-,gillibrand ,responsible ,financial ,innovation ,act of #bjbf2 and 7,c7 with respect to an ancillary asset originator and related persons1 the securities laws amended by the ,lummis-,gillibrand ,responsible ,financial ,innovation ,act of #bjbf4 7#b7 ,considerations ,in adopting rules under this section-- 7,a7 the form1 label1 and written documentation of an agreement1 contract1 or transaction1 or an entity1 shall not be dispositive in determining whether the agreement1 contract1 or transaction1 or the entity1 has been entered into or structured to willfully evade the requirements of this section2 7,b7 the ,commission may consider whether1 based on the totality of facts and circumstances1 the principal purpose of any arrangement1 allocation of rights1 interposition of entities1 or sequencing of steps is to willfully circumvent the requirements of this section or the restrictions set forth in section #ajd of the ,lummis-,gillibrand ,responsible ,financial ,innovation ,act of #bjbf1 by satisfying the literal terms while defeating the purpose and policy of this section2 7,c7 for purposes of subparagraph 7,b71 factors that may be considered1 without being dispositive1 in determining whether a principal purpose to willfully circumvent this section exists may include-- 7i7 removal of a disqualifying financial right described in subsection 7a77#g77;,b7 from the instrument coupled with its re-introduction through a substantially equivalent right held by a related person or controlled vehicle1 including1 by way of example1 any nominally independent foundation1 decentralized autonomous organization1 laboratory1 or similar arrangement2 7ii7 circular or non-commercial flows of value among related persons designed to simulate network utility2 and 7iii7 timing of steps designed to trigger1 accelerate1 or delay certification or termination of disclosure obligations without a material change in circumstances relating to the asset2 and 7,d7 the ,commission shall provide that evasion shall not have occurred if an agreement1 contract1 or transaction is entered into for a legitimate business purpose and is not structured with a principal purpose of willfully circumventing the requirements of this section4 7n7 ,fiduciary obligations 7#a7 ,fiduciary duties under ,state law ,nothing in this section1 or in any rule issued under this section1 may be construed to limit1 preempt1 or otherwise affect any fiduciary duty of an ancillary asset originator1 or of any director1 officer1 or controlling person of an ancillary asset originator1 arising under the laws of any ,state4 7#b7 ,preservation of fiduciary and other duties to customers1 clients1 and shareholders ,nothing in this section1 or in any rule issued under this section1 may be construed to limit1 preempt1 or otherwise affect any fiduciary duty that any person owes to a customer1 client1 or shareholder under any other provision of ,federal or ,state law1 including in connection with the offer1 sale1 transfer1 distribution1 or custody of an ancillary asset4 7o7 ,savings clause ,except as provided by the ,digital ,asset ,market ,clarity ,act and the amendments made by that ,act1 nothing in this section may be construed to limit the authority of the ,commission under the securities laws4 4 7b7 ,rulemaking ,not later than #cfj days after the date of enactment of this ,act1 the ,commission shall conduct a notice and comment rulemaking as necessary or appropriate to carry out section #d;,b of the ,securities ,act of #aicc1 as added by subsection 7a74 #ajc4 ,exemption and rulemaking for certain transactions involving ancillary assets 7a7 ,adoption of ,regulation ,crypto ,the ,commission shall adopt rules under the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;a et seq47 and the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq471 which shall be referred to collectively as ,regulation ,crypto1 to implement subsections 7b71 7c71 and 7d7 of this section4 7b7 ,exemption for certain transactions involving ancillary assets 7#a7 ,exemption 7,a7 ,in general ,rules adopted by the ,commission under this section shall provide that the registration requirements of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;a et seq47 shall not apply to an offer1 sale1 or distribution of an investment contract involving an ancillary asset1 if the offer1 sale1 or distribution does not exceed the greater of-- 7i7 #ej1jjj1jjj in gross proceeds per calendar year for a period of not longer than #d years2 or 7ii7 #aj percent of the total dollar value of those ancillary assets that are outstanding1 as of the date of that offer1 sale1 or distribution4 7,b7 ,continued application of certain provisions ,sections #ab7;a77#b7 and #ag of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggl7a77#b71 #ggq7 shall apply with respect to an offer1 sale1 or distribution of an investment contract involving an ancillary asset that is described in subparagraph 7,a74 7#b7 ,limitation ,an ancillary asset originator may not raise more than #bjj1jjj1jjj in total gross proceeds in reliance on the rules adopted under subsection 7a74 7#c7 ,review and adjustment for inflation 7,a7 ,in general ,not later than #b years after the date of enactment of this ,act1 and every #b years thereafter1 the ,commission shall-- 7i7 review the amounts described in paragraphs 7#a77;,a77i7 and 7#b72 7ii7 adjust the amounts described in paragraphs 7#a77;,a77i7 and 7#b7 to account for inflation2 and 7iii7 increase the amounts described in paragraphs 7#a77;,a77i7 and 7#b7 as the ,commission determines appropriate1 if that action would be in the public interest and consistent with the protection of investors4 7,b7 ,report ,if the ,commission1 after conducting a review under subparagraph 7,a71 determines not to increase the amount described in paragraph 7#a77;,a77i7 or 7#b7 7other than to adjust that amount for inflation1 as required under subparagraph 7,a77ii7 of this paragraph71 the ,commission shall submit to the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate and the ,committee on ,financial ,services of the ,house of ,representatives a report detailing the reasons that the ,commission did not increase that amount4 7c7 ,conditions for exemption ,the following conditions shall apply to the exemption provided under subsection 7b73 7#a7 ,initial disclosures ,not later than #cj days before the date on which the applicable ancillary asset originator1 any affiliate of the ancillary asset originator1 or any underwriter of an investment contract1 offers1 sells1 or distributes an ancillary asset in reliance on the rules adopted under subsection 7a71 the ancillary asset originator shall furnish to the ,commission the disclosures required under section #d;,b7d7 of the ,securities ,act of #aicc1 as added by this ,act1 subject to the periodic semiannual disclosure requirements of that section4 7#b7 ,coordinated control ,if the applicable ancillary asset is reliant on a distributed ledger system that1 together with that ancillary asset1 is subject to coordinated control1 including by related persons1 the restrictions on disposition under section #ajd shall apply4 7#c7 ,criteria ,the applicable ancillary asset originator may not be-- 7,a7 a company that is not organized under1 and subject to1 the laws of a ,state or territory of the ,united ,states or the ,district of ,columbia2 7,b7 a development-stage company that either-- 7i7 has no specific business plan or purpose2 or 7ii7 has indicated that the business plan of the company is to merge with or acquire an unidentified company2 7,c7 an investment company 7as defined in section #c7;a7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#c7;a777 or a company 7as defined in section #b of that ,act 7#ae ,u4,s4,c4 #hj;a-#b77 that would be an investment company under section #c7;a7 of that ,act 7#ae ,u4,s4,c4 #hj;a-#c7;a77 but for the exclusions provided from that definition by section #c7;c7 of that ,act 7#ae ,u4,s4,c4 #hj;a-#c7;c771 provided that1 solely for the purposes of evaluating eligibility to rely on the exemption provided under subsection 7b71 an ancillary asset originator shall not be deemed to be an investment company solely by virtue of investing1 reinvesting1 owning1 holding1 or trading ancillary assets1 including ancillary assets offered for sale by the ancillary asset originator2 7,d7 a person issuing fractional undivided interests in other commodities2 7,e7 a person that is or has been subject to any order of the ,commission entered pursuant to section #ab7;j7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghl7j77 after the date of enactment of this ,act and during the #e-year period preceding the offer and sale2 7,f7 a person that is or has been disqualified pursuant to section #bcj4ejf7;d7 of title #ag1 ,code of ,federal ,regulations1 or any successor regulation1 unless waived by order of the ,commission2 7,g7 a person that is or has been disqualified pursuant to section #bcj4bea through #bcj4bfc of title #ag1 ,code of ,federal ,regulations 7commonly referred to as ,regulation ,a71 or any successor regulations1 unless waived by order of the ,commission2 or 7,h7 a person convicted of a felony offense involving insider trading1 embezzlement1 cybercrime1 money laundering1 financing of terrorism1 or financial fraud1 within the last #aj years4 7#d7 ,furnishing notice of reliance ,the applicable ancillary asset originator shall electronically furnish to the ,commission a notice of reliance on the rules adopted under subsection 7a7 not fewer than #cj days before the date on which the ancillary asset originator first offers1 sells1 or distributes an ancillary asset in reliance on those rules1 which shall contain the following information3 7,a7 ,the name of the ancillary asset originator4 7,b7 ,a statement by a person duly authorized by the ancillary asset originator that the conditions of those rules are satisfied4 7,c7 ,the website where the summary documents of the ancillary asset originator1 if any1 may be found and made available for public consumption4 7,d7 ,an email address at which the ancillary asset originator may be contacted4 7#e7 ,public availability ,the ,commission shall require that the disclosures furnished to the ,commission under section #d;,b7d7 of the ,securities ,act of #aicc1 as added by this ,act1 be made publicly available in a manner that provides timely and continuing access4 7#f7 ,form and manner ,the disclosures furnished to the ,commission under section #d;,b7d7 of the ,securities ,act of #aicc1 as added by this ,act1 shall be prepared1 furnished1 and made public in the form and manner prescribed by the ,commission1 including through the use of electronic furnishing1 web posting1 machine-readable formats1 and plain-,english legends1 as the ,commission determines necessary or appropriate in the public interest or for the protection of investors4 7d7 ,status under securities laws 7#a7 ,in general ,a disclosure furnished under section #d;,b of the ,securities ,act of #aicc1 as added by this ,act1 including an initial or periodic disclosure furnished under subsection 7d7 of such section #d;,b1 and any other document furnished under the rules adopted under subsection 7a7 of this section1 shall be deemed to be-- 7,a7 a prospectus solely-- 7i7 for purposes of section #ab7;a77#b7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggl7a77#b772 and 7ii7 with respect to the person that is the purchasing party in a transaction made in reliance on the rules adopted under subsection 7a72 and 7,b7 a statement solely for purposes of-- 7i7 section #ag7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggq7a772 7ii7 section #aj7;b7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;j7b772 and 7iii7 section #bdj4aj;b-#e of title #ag1 ,code of ,federal ,regulations1 or any successor regulation4 7#b7 ,registration statement 7,a7 ,in general ,a disclosure furnished under section #d;,b of the ,securities ,act of #aicc1 as added by this ,act1 including an initial or periodic disclosure furnished under subsection 7d7 of such section #d;,b1 or any other document furnished pursuant to the rules adopted under subsection 7a71 shall not be deemed to be a registration statement for purposes of section #aa of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggk7 or to have been filed under the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq474 7,b7 ,civil liability ,liability under section #ab7;a77#b7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggl7a77#b77 relating to a disclosure furnished under section #d;,b of the ,securities ,act of #aicc1 as added by this ,act1 including an initial or periodic disclosure furnished under subsection 7d7 of such section #d;,b1 or any other document furnished pursuant to the rules adopted under subsection 7a71 shall only apply to the person making statements in that disclosure or other document1 and only a person that purchased an ancillary asset in a transaction involving disclosures provided pursuant to the rules adopted under subsection 7a7 shall have a claim under such section #ab7;a77#b74 7#c7 ,forward-looking statements ,in any action against an ancillary asset originator under this title or the amendments made by this title that is based on an untrue statement of a material fact or omission of a material fact necessary to make the statement not misleading1 no liability shall arise with respect to any forward-looking statement 7including a statement of plans1 objectives1 projections1 expectations1 or assumptions concerning future performance1 financial position1 development milestones1 digital asset utility1 system adoption1 or market conditions7 made in a disclosure1 statement1 or other document furnished pursuant to section #d;,b of the ,securities ,act of #aicc1 as added by this ,act1 including an initial or periodic disclosure furnished under subsection 7d7 of such section #d;,b1 or furnished under this section1 if the statement is-- 7,a7 identified as forward-looking2 and 7,b7 accompanied by meaningful cautionary language that identifies important factors that could cause actual results to differ materially4 #ajd4 ,special disposition restrictions by related persons 7a7 ,definitions ,in this section3 7#a7 ,certification covered party ,the term certification covered party means1 with respect to an ancillary asset-- 7,a7 the ancillary asset originator2 7,b7 a subsidiary of the ancillary asset originator2 7,c7 a related person of the ancillary asset originator2 or 7,d7 any entity that directly or indirectly controls or is controlled by a common entity with an ancillary asset originator4 7#b7 ,covered token ,the term covered token means any unit of an ancillary asset that was acquired from the ancillary asset originator with respect to that ancillary asset or an agent or underwriter thereof4 7#c7 ,distributed ledger control person ,the term distributed ledger control person means1 with respect to a distributed ledger system1 any person or group of persons under common control1 other than a decentralized governance system1 that 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 distributed ledger system or a related ancillary asset4 7b7 ,coordinated control 7#a7 ,in general ,the ,commission shall adopt rules1 based on the criteria described in paragraph 7#b71 to define the circumstances under which a distributed ledger system1 together with a related ancillary asset1 is considered to be under coordinated control4 7#b7 ,considerations ,in adopting rules under paragraph 7#a71 the ,commission shall consider the following criteria as indicia that a distributed ledger system described in that paragraph1 together with the related ancillary asset1 is considered to be under coordinated control3 7,a7 ,open digital system ,the extent to which the distributed ledger system is not-- 7i7 a distributed ledger1 the protocol of which is freely and publicly available2 7ii7 a distributed ledger application the source code of which is-- 7,i7 freely and publicly available via open-source code2 and 7,,ii7 recorded on a distributed ledger described in clause 7i72 or 7iii7 an analogue to a distributed ledger or distributed ledger application described in clause 7i7 or 7ii71 as determined by the ,commission by rule or order4 7,b7 ,permissionless and credibly neutral digital system ,the extent to which a person or group of persons under common control has-- 7i7 the unilateral authority1 via operation of the distributed ledger system1 to restrict1 censor1 or prohibit use of the distributed ledger system1 including any applicable system-based user activity2 or 7ii7 private permissions1 hard-coded privileges1 or similar capabilities granted by the source code of the distributed ledger system that provides preferential treatment compared to other similarly situated persons4 7,c7 ,distributed digital network ,the extent to which a person or group of persons under common control has beneficial ownership of1 in the aggregate1 more than #di percent of the total amount of outstanding units of the ancillary asset or voting power with respect to any governance system that relates to the distributed ledger system4 7,d7 ,autonomous distributed ledger system ,the extent to which-- 7i7 the distributed ledger system has not yet reached an autonomous state2 and 7ii7 a person or group of persons under common control has the unilateral authority1 directly or indirectly1 to alter or change the functionality1 operation1 or rules of consensus or agreement of the distributed ledger system4 7,e7 ,economic independence ,the extent to which the primary programmatic mechanisms of the distributed ledger system that are intended to facilitate substantial value accrual to the ancillary asset through the functioning of the distributed ledger system are not yet functional4 7#c7 ,safe harbors 7,a7 ,in general ,the ,commission shall establish safe harbors under which a distributed ledger system1 together with a related ancillary asset1 will not be considered to be under coordinated control for the purposes of section #ajc7;c77#b74 7,b7 ,decentralized governance systems 7i7 ,in general ,for the purposes of this section1 a decentralized governance system shall not be considered to be a person or a group of persons under common control4 7ii7 ,distributed ledger systems ,for the purposes of this section1 a distributed ledger system1 together with any related ancillary asset1 shall not be precluded from being considered to not be under coordinated control 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 that 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 7,c7 ,emergency measures ,for the purposes of this section1 a pre-defined1 temporary1 rules-based cybersecurity emergency measure that is exercised by an incident response or security council exclusively in response to a specific and documented cybersecurity incident or imminent threat pursuant to publicly disclosed1 on-chain authorization mechanisms1 that is strictly limited in scope and duration solely to address that cybersecurity incident or imminent threat1 and that is exercised without unilateral control by any single person1 shall not alone constitute common control or an agreement to work in concert1 if those rules and mechanisms1 including the procedures and operational limits governing the emergency measure1 are disclosed in publicly available written documentation reasonably available to the applicable ,federal agency by a decentralized autonomous organization or similar legal entity sufficiently in advance of any exercise of the emergency measure4 7,d7 ,nonexclusive ,the safe harbors established under subparagraphs 7,a71 7,b71 and 7,c7 shall not be exclusive and the ,commission shall consider such other circumstances as the ,commission finds in the public interest or for the protection of investors4 7#d7 ,evidence ,the ,commission may1 in adopting rules under this subsection1 require such certifications1 third party verifications1 or other evidence as the ,commission determines necessary or appropriate to determine whether a distributed ledger system is under coordinated control for the purposes of section #ajc7;c77#b74 7#e7 ,rule of construction ,for purposes of this subsection-- 7,a7 the existence or termination of coordinated control shall be determined independently of whether entrepreneurial or managerial efforts described in section #d;,b of the ,securities ,act of #aicc1 as added by this ,act1 have been completed2 and 7,b7 the elimination of coordinated control shall be a prerequisite to the completion of efforts described in subparagraph 7,a74 7c7 ,special restrictions on disposition ,the ,commission shall adopt rules that provide that1 with respect to transactions involving an ancillary asset for which disclosures are required pursuant to section #d;,b7d7 of the ,securities ,act of #aicc1 as added by this ,act1 when a sale of that ancillary asset is made by a related person1 the following restrictions on that sale shall apply3 7#a7 ,sales prior to certification ,if the covered token was acquired after the effective date of this ,act and principally relies on a distributed ledger system1 the covered token may be sold by a related person before that distributed ledger system is certified as not subject to coordinated control1 pursuant to subsection 7d71 if-- 7,a7 with respect to that distributed ledger system1 the disclosures required pursuant to section #d;,b7d7 of the ,securities ,act of #aicc1 as added by this ,act1 have been furnished2 7,b7 the holder of the covered token has held the units for not less than #ab months2 and 7,c7 the amount of covered tokens sold in any #ab-month period by the related person is-- 7i7 not greater than an amount to be determined by the ,commission pursuant to notice and comment rulemaking not later than #cfj days after the date of enactment of this ,act1 which rulemaking shall consider what is necessary or appropriate in the public interest1 including1 among other things1 the protection of investors1 whether the action will promote efficiency1 competition1 and capital formation1 and how to foster the development of distributed ledger systems that are not subject to coordinated control2 and 7ii7 in no case equal to or greater than the amount determined by the ,commission pursuant to the rulemaking described in paragraph 7#b77;,c74 7#b7 ,sales after certification ,if the covered token was acquired after the effective date of this ,act and principally relies on a distributed ledger system that is certified as not subject to coordinated control pursuant to subsection 7d71 the covered token may be sold by a related person1 if-- 7,a7 with respect to that distributed ledger system1 the disclosures required pursuant to section #d;,b7d7 of the ,securities ,act of #aicc1 as added by this ,act1 have been furnished2 7,b7 the holder of the covered token has held the units for not less than #f months2 and 7,c7 the amount of covered tokens sold in any #ab-month period by the related person is not greater than an amount to be determined by the ,commission pursuant to rulemaking that shall not be less than #aj percent of the total amount of outstanding units of such ancillary assets4 7#c7 ,sales of pre-existing covered tokens ,if the covered token was acquired before the effective date of this ,act and principally relies on a distributed ledger system1 the covered token may be sold by a related person if-- 7,a7 in the case that the distributed ledger system has not been certified as not subject to coordinated control pursuant to subsection 7d7-- 7i7 the disclosures required pursuant to section #d;,b7d7 of the ,securities ,act of #aicc1 as added by this ,act1 have been furnished2 and 7ii7 the holder of the covered token has held the units for not less than #ab months2 and 7,b7 in the case that the distributed ledger system has been certified as not subject to coordinated control pursuant to subsection 7d71 the holder of the covered token has held the units for not less than #f months4 7#d7 ,limitations on transactions by distributed ledger control persons ,if the holder of an ancillary asset that principally relies on a distributed ledger system that has been certified as not subject to coordinated control is a distributed ledger control person with respect to that distributed ledger system1 that control person may resell that ancillary asset if-- 7,a7 that control person furnishes notice to the ,commission1 in a form and manner determined by the ,commission1 that the person has or intends to obtain an authority described in subparagraph 7,b7 with respect to the distributed ledger system2 7,b7 that distributed ledger control person furnishes disclosures to the ,commission1 in a form and manner determined by the ,commission1 describing the material activities1 as determined by the ,commission1 of the control person2 7,c7 with respect to that distributed ledger system1 disclosures have been furnished pursuant to section #d;,b7d7 of the ,securities ,act of #aicc1 as added by this ,act2 and 7,d7 that control person has satisfied such other requirements applicable to that control person that may be established by the ,commission to prevent manipulation or distortion of the value of the ancillary asset1 including resale restrictions consistent with those applied to related persons that are not control persons4 7d7 ,certification of non-,control by related persons 7#a7 ,submission ,with respect to an ancillary asset1 a certification covered party may furnish to the ,commission a written certification1 in such form and manner as the ,commission may specify by rule consistent with subsection 7b71 stating that the distributed ledger system is not under coordinated control4 7#b7 ,automatic effectiveness ,a certification furnished under paragraph 7#a7 shall become effective1 and the distributed ledger system shall be deemed not to be under coordinated control1 on the date that is the earlier of-- 7,a7 the date on which the ,commission notifies the certification covered party in writing that the ,commission does not object to the certification2 or 7,b7 if the ,commission has not denied the certification under paragraph 7#c71 the date that is #ij days after the date on which the certification is furnished1 or such shorter period as the ,commission may determine by rule4 7#c7 ,denial 7,a7 ,in general ,the ,commission may deny a certification furnished under paragraph 7#a7-- 7i7 only during the #ij-;day period beginning on the date on which the certification is furnished1 or such shorter period as the ,commission may determine by rule1 or upon determining1 based on reasonable evidence1 that a material change in circumstances has occurred after the furnishing of the certification2 and 7ii7 by providing to the certification covered party #aj days notice of the intent of the ,commission to deny that certification4 7,b7 ,requirements after notice of intent ,after the #aj-;day period described in subparagraph 7,a77ii71 the ,commission shall-- 7i7 conduct a hearing2 and 7ii7 vote to deny the certification if there is a finding that the applicable ancillary asset does not meet the standard for certification that the operations of the distributed ledger system are not under such coordinated control4 7,c7 ,final agency action ,denial under this paragraph constitutes final agency action reviewable under applicable law4 7#d7 ,verification ,the ,commission may1 by rule1 require appropriate third-party verification of a certification furnished under paragraph 7#a74 7e7 ,disgorgement 7#a7 ,in general ,any profit realized by a related person from the sale of an ancillary asset in violation of the restrictions under subsection 7c7 shall inure to1 and be recoverable by1 the holders of the ancillary asset1 irrespective of any intention of holding the asset4 7#b7 ,enforcement ,an action to recover profit described in paragraph 7#a7-- 7,a7 may be instituted at law or in equity in any court of competent jurisdiction of the ,united ,states by-- 7i7 the applicable ancillary asset originator2 7ii7 the owner of any units of the applicable ancillary asset2 or 7iii7 the owner of any units of the applicable ancillary asset1 in the name and on behalf of the ancillary asset originator1 if the ancillary asset originator-- 7,i7 fails or refuses to bring the action within #fj days after a written request by any owner of not less than #e percent of the total amount of outstanding units of that ancillary asset2 or 7,,ii7 fails to diligently prosecute the action2 and 7,b7 shall be brought not later than #b years after the date that profit was realized4 7f7 ,exemption from disposition restrictions ,the ,commission shall adopt rules that provide for the following exemptions from1 or waivers to1 disposition restrictions described in subsection 7c73 7#a7 ,material hardship exemption 7,a7 ,in general ,subject to subparagraph 7,b71 the ,commission shall adopt rules and procedures to exempt parties from related person restrictions with respect to an ancillary asset where those restrictions conflict with an obligation or requirement arising from one of the following material hardships on a related person with respect to the ancillary asset or the ancillary asset originator3 7i7 ,the death of the related person4 7ii7 ,the bankruptcy or insolvency of the related person4 7iii7 ,the dissolution1 merger1 or acquisition of a corporate person4 7iv7 ,tax liability relating to the receipt of the applicable ancillary asset4 7v7 ,such other material hardships as may be designated by the ,commission4 7,b7 ,requirements ,the rules and procedures adopted under subparagraph 7,a7 shall be designed to mitigate the risk that parties may seek to structure holdings to evade resale restrictions and exempt or waive the application of resale restrictions only to the extent necessary to address the identified material hardship4 7#b7 ,liquidity provision exemption ,the ,commission shall adopt rules to exempt from disposition restrictions parties buying or selling an ancillary asset through regular two-sided bidding and offering for the purposes of providing market liquidity1 provided that such activities are not undertaken for the purpose of evading the requirements of this section4 7#c7 ,agency exemption ,the ,commission shall adopt rules that exempt a party acting as a custodian1 trading platform1 broker1 dealer or other agent from being treated as the owner of customer or client assets or from being restricted in facilitating sales on behalf of a customer or client if the agent is otherwise determined to be a related person4 7#d7 ,exchange-traded product and passive fund exemption ,the ,commission shall adopt rules to exempt from disposition restrictions1 as appropriate-- 7,a7 exchange-traded products1 the shares of which are created and redeemed by authorized participants and registered with the ,commission2 and 7,b7 passive pooled investment vehicles1 whether or not the shares of which are registered with the ,commission4 7g7 ,related person disclosure requirements ,the ,commission shall adopt rules that provide for reporting to the ,commission certain information with respect to ancillary asset holdings or transactions relating to ancillary assets by related persons1 subject to the disposition restrictions provided in subsection 7c73 7#a7 ,disclosure reports 7,a7 ,disclosure of related person status ,any person1 or group of persons under common control1 directly or indirectly1 that acquire beneficial ownership of #aj percent or more of the total amount of outstanding units of any such ancillary asset1 measured as of the end of any calendar quarter1 shall furnish initial and continuing reports as determined by the ,commission4 7,b7 ,sales of covered tokens by related person prior to certification of non-control ,quarterly reports relating to the number of ancillary assets sold by a related person in a form as required by the ,commission4 7,c7 ,sales of covered tokens by related person after certification of non-control ,quarterly reports relating to the number of ancillary assets sold by a related person that holds1 at any point during the applicable calendar quarter1 in excess of #e percent of the total amount of outstanding units of such ancillary asset in a form as required by the ,commission4 7,d7 ,sales of pre-existing covered tokens by related person ,quarterly reports relating to the number of ancillary assets sold by a related person that holds in excess of #e percent of the total amount of outstanding units of such ancillary asset in a form as required by the ,commission4 7#b7 ,confidential treatment ,the ,commission may provide for confidential treatment of information provided under this subsection1 or may exempt certain related persons from the requirement to furnish a report required under this subsection1 pursuant to procedures the ,commission shall establish and that are modeled on or identical to section #bcj4djf of title #ag1 ,code of ,federal ,regulations1 or any successor regulation4 7#c7 ,good-faith furnishing standard 7,a7 ,in general ,any obligation to furnish information under this section applies only to the furnisher acting on its own behalf and is limited to information that is material and known1 or reasonably knowable after due inquiry1 to that furnisher4 7,b7 ,reliance ,a furnisher described in subparagraph 7,a7 may reasonably rely on public sources and third-party attestations where appropriate4 7,c7 ,liability ,furnishing in good faith pursuant to this section shall not create liability for information outside the furnisher's possession1 custody1 or control1 or for omissions of information the furnisher could not reasonably obtain without breaching legal privilege1 contractual confidentiality1 or other applicable law4 7,d7 ,other persons ,any person other than the furnisher may1 in good faith and absent knowledge to the contrary1 presume that a report required under paragraph 7#a7 has been timely furnished4 7#d7 ,life cycle event considerations ,the ,commission shall adopt rules establishing streamlined processes for the following life cycle events3 7,a7 ,successor disclosures in corporate transactions ,the transfer of disclosure obligations under this section to a successor entity in the event of a merger1 acquisition1 or sale of substantially all assets relating to the ancillary asset activities1 including a notice of succession4 7,b7 ,cessation of work ,the cessation or suspension of ongoing disclosure obligations under this section where the ancillary asset originator or related person no longer engages1 and does not reasonably expect to engage1 in entrepreneurial or managerial efforts with respect to the ancillary asset or its associated distributed ledger system1 including a notice of cessation of work4 7,c7 ,contractual termination ,the termination of disclosure obligations under this section that attach solely by virtue of a person's status as a related person when a contractual arrangement with the ancillary asset originator or distributed ledger system has concluded1 including a notice of cessation of contractual relationship4 7h7 ,rule of construction ,nothing in this section may be construed to-- 7#a7 limit or impair the anti-fraud or anti-manipulation authorities of the ,commission2 or 7#b7 preclude reliance on ,regulation ,crypto1 as adopted under section #ajc1 or any other effective registration statement or exemption from registration under the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;a et seq471 as amended by this ,act4 #aje4 ,characteristics of network tokens 7a7 ,in general ,not later than #a year after the date of enactment of this ,act1 the ,commission shall adopt rules that provide that-- 7#a7 a network token shall not be considered as providing a disqualifying financial right under section #d;,b7a77#g77;,b7 of the ,securities ,act of #aicc1 as added by this ,act1 if the market value of the network token is primarily derived1 or is reasonably expected to be primarily derived1 from a distributed ledger system or from the broader adoption and use of such a system1 including where-- 7,a7 the mechanisms of the distributed ledger system collect1 receive1 accrue1 or distribute consideration from the functioning of the distributed ledger system2 7,b7 the network token provides governance capabilities with respect to a distributed ledger system or a decentralized governance system2 7,c7 the value of the network token appreciates or depreciates due to the use of1 or in response to the efforts1 operations1 or financial performance of1 the distributed ledger system to which the network token relates or its decentralized governance system2 or 7,d7 for a network token that meets the definition of an ancillary asset1 the value of the network token appreciates or depreciates due to the efforts of the ancillary asset originator or related person2 and 7#b7 participants in offers or sales of network tokens providing financial interests described in paragraph 7#a7 shall not be precluded from relying on the exemption from registration under section #d;,b7b7 of the ,securities ,act of #aicc1 as added by this ,act4 7b7 ,effect of rulings and actions before date of enactment 7#a7 ,in general ,if1 before the date of enactment of this ,act1 a court of the ,united ,states1 in a non-appealable final judgment1 found that a digital asset transaction was not an offer1 sale1 or distribution of a security1 a digital asset transferred pursuant to that offer1 sale1 or distribution shall not be considered to be a security under any provision of law described in subsection 7b77#b7 of section #d;,b of the ,securities ,act of #aicc1 as added by this ,act4 7#b7 ,network tokens ,a network token shall not be considered to be an ancillary asset1 and shall not be considered to be a security under any provision of law described in subsection 7b77#b7 of section #d;,b of the ,securities ,act of #aicc1 as added by this ,act1 if1 on ,january #a1 #bjbf1 any units of that network token were the principal asset of an exchange-traded product-- 7,a7 not registered under the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#a et seq472 and 7,b7 the shares of which are listed and traded on a national securities exchange registered under section #f of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;f74 #ajf4 ,exemptive authority 7a7 ,continued applicability ,nothing in this ,act1 or any amendment made by this ,act1 may be construed to amend1 limit1 impair1 or otherwise affect the authority of the ,commission to grant an exemption pursuant to any provision of law that is in effect on the day before the date of enactment of this ,act1 including pursuant to any of the following3 7#a7 ,section #bh of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggz-#c74 7#b7 ,section #cf of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghmm74 7#c7 ,section #f7;c7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#f7;c774 7#d7 ,section #bjf;,a of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#f;a74 7#e7 ,section #cjd7;d7 of the ,trust ,indenture ,act of #aici 7#ae ,u4,s4,c4 #gg;ddd7d774 7#f7 ,section #d7;g7 of the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #gh;ddd7g774 7b7 ,general exemptive authority ,section #bh of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggz-#c7 is amended1 in the matter preceding the matter relating to ,schedule ,a-- 7#a7 by striking by rule or regulation and inserting by rule1 regulation1 or order2 and 7#b7 by adding at the end the following3 ,the ,commission shall1 by rule or regulation1 determine the procedures under which an exemptive order under this section shall be granted and may1 in the sole discretion of the ,commission1 decline to entertain any application for an order of exemption under this section44 #ajg4 ,modernization of recordkeeping requirements ,the ,commission shall adopt rules to modernize the recordkeeping requirements under the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq471 the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#a et seq471 and the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#a et seq471 including to facilitate the utilization of distributed ledger records4 #ajh4 ,modernization of securities regulations for digital asset activities 7a7 ,tailoring of existing requirements ,the ,commission shall-- 7#a7 amend1 rescind1 replace1 or supplement by rule1 order1 guidance1 exemptive relief1 or any other appropriate action 7provided such action is consistent with chapter #e of title #e1 ,united ,states ,code1 and other applicable law7 each regulation1 form1 interpretive statement1 or other requirement within the jurisdiction of the ,commission that is not otherwise amended by this ,act 7or required to be amended because of a provision of this ,act or an amendment made by this ,act71 to the extent that such provision applies to any digital asset activity1 including any activity involving a security that is issued1 recorded1 or transferred using distributed ledger technology1 to the extent that the provision is outdated1 unnecessary1 or unduly burdensome in light of the unique technological characteristics of digital assets or substantially similar technology1 which may include regulatory provisions governing-- 7,a7 customer protection1 including custody of digital assets or substantially similar technology2 7,b7 transfer agent rules2 7,c7 books and records1 or recordkeeping requirements2 7,d7 clearance and settlement rules2 7,e7 broker-dealer1 alternative trading system1 and exchange rules2 7,f7 issuer disclosure and ongoing reporting requirements tailored to digital asset securities or substantially similar technology involving securities2 and 7,g7 the use of vaults1 digital asset receipts1 or receipts involving substantially similar technology1 vault tokens1 or liquidity provider tokens2 and 7#b7 in imposing future obligations as those obligations relate to digital assets or substantially similar technology1 do so in a manner consistent with the requirements described in paragraph 7#a74 7b7 ,rule of construction ,nothing in this section may be construed to limit the authority of the ,commission to pursue fraud1 manipulation1 or deceptive practices involving digital assets or substantially similar technology4 7c7 ,use of existing authority ,when considering1 proposing1 adopting1 or engaging in any rule or program or developing new rules or programs1 including those mandated or authorized under this ,act1 or any amendment made by this ,act1 the activities of the ,commission 7which may include the solicitation of data and other input from investors1 regulated entities1 and market participants or the representatives of any of those persons7 shall be considered actions taken under subsection 7e7 of section #ai of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggs7 and shall be subject to subsection 7f7 of that section4 7d7 ,continued applicability of ,state consumer protection laws ,except as expressly provided by this ,act1 or an amendment made by this ,act1 nothing in this ,act 7or in any such amendment7 shall preempt any ,state consumer protection law1 including common law1 or a remedy available under any such law4 7e7 ,preemption for exemptions and digital asset activities under the securities act ,section #ah of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggr7 is amended-- 7#a7 in subsection 7b7-- 7,a7 in paragraph 7#c7-- 7i7 in the paragraph heading1 by inserting in qualified transactions or after sales2 7ii7 in the first sentence1 by inserting in a qualified transaction or after the security2 and 7iii7 in the second sentence-- 7,i7 by striking term qualified purchaser and inserting terms qualified transaction and qualified purchaser2 7,,ii7 by inserting and categories of transactions1 including secondary transactions1 after securities2 and 7,,iii7 by inserting and with due regard to the facilitation of capital formation and the promotion of innovation before the period at the end2 and 7,b7 in paragraph 7#d7-- 7i7 in subparagraph 7,a71 by inserting or1 if the issuer is not required to file such reports1 where the ,commission otherwise determines1 consistent with the public interest and the protection of investors and with due regard to the facilitation of capital formation and the promotion of innovation before the semicolon at the end2 7ii7 in subparagraph 7,d77ii71 by inserting in a qualified transaction or after offered or sold2 7iii7 in subparagraph 7,f71 by striking or at the end2 7iv7 in subparagraph 7,g71 by striking the period at the end and inserting 2 or2 and 7v7 by adding at the end the following3 7,h7 ,commission rules or regulations issued under section #bh1 except that this subparagraph does not apply to rules or regulations adopted before the date of enactment of this subparagraph4 4 7f7 ,exempting network tokens from ,state securities laws 7#a7 ,in general ,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 network tokens ,a network token1 as defined in section #d;,b7a71 shall be treated as a covered security4 4 7#b7 ,rule of construction ,nothing in this section1 section #d;,b of the ,securities ,act of #aicc 7as added by this ,act71 or the amendments made by this section may be construed to limit the authority 7as of the day before the date of enactment of this ,act7 described in section #ah7;c77#a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggr7c77#a77 of a securities commission 7or any agency or office performing like functions7 of any ,state with respect to a covered security or any security4 7g7 ,preemption for ancillary asset activities under the ,securities ,act of #aicc ,section #ah7;b7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggr7b771 as amended by subsection 7f7 is amended by adding at the end the following3 7#f7 ,limitations on state law regarding ancillary assets 7,a7 ,definitions ,in this paragraph1 the term ancillary asset has the meaning given the term in section #d;,b7a74 7,b7 ,exemption in connection with ancillary assets ,an ancillary asset offered1 sold1 or distributed in reliance on ,regulation ,crypto1 as adopted under section #ajc of the ,lummis-,gillibrand ,responsible ,financial ,innovation ,act of #bjbf1 shall be treated as a covered security4 4 7h7 ,preservation of ,regulation ,best ,interest 7#a7 ,in general ,subject to paragraph 7#b71 nothing in this ,act1 any amendment made by this ,act1 or any rule issued under this ,act or pursuant to any such amendment may be construed to limit1 preempt1 or otherwise affect the obligations of a broker or dealer registered with the ,commission under section #ae of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho7 or section #bdj4ael-#a of title #ag1 ,code of ,federal ,regulations 7commonly known as ,regulation ,best ,interest71 or any successor regulation4 7#b7 ,application ,paragraph 7#a7 shall not apply with respect to any person registered with the ,commodity ,futures ,trading ,commission4 7i7 ,preservation of investment adviser fiduciary duties ,nothing in this ,act1 any amendment made by this ,act1 or any rule issued under this ,act or pursuant to any such amendment may be construed to limit1 preempt1 or otherwise affect the fiduciary duty that an investment adviser 7as defined in section #bjb of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#b77 owes to a client under section #bjf of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#f7 or any other provision of ,federal or ,state law1 including in connection with investment advice regarding a digital commodity4 #aji4 ,insider trading with respect to ancillary asset transactions 7a7 ,definition ,in this section1 the term distributed ledger control person has the meaning given the term in section #ajd7;a74 7b7 ,application of securities laws ,any provision of the securities laws1 or any regulation issued under the securities laws1 including any duty that arises under the securities laws or under such a regulation1 that applies with respect to a person that purchases1 sells1 or offers to sell a security1 security-based swap1 or security-based swap agreement while in possession of material nonpublic information1 or communicates such information in connection with or in the transaction1 shall apply to any offer1 sale1 or purchase of a security1 security-based swap1 or security-based swap agreement in which an ancillary asset is offered1 sold1 or purchased1 including any offer1 sale1 or purchase conducted pursuant to ,regulation ,crypto1 as adopted pursuant to section #ajc1 whether conducted by an ancillary asset originator1 a related person1 or any other person4 7c7 ,rulemaking 7#a7 ,in general ,the ,commission shall adopt rules to implement subsection 7b71 which shall-- 7,a7 include rules providing an affirmative defense for an offer1 sale1 or purchase of an ancillary asset made pursuant to a written plan adopted before the applicable person became aware of material nonpublic information1 which shall be consistent with section #bdj4aj;b#e-a of title #ag1 ,code of ,federal ,regulations1 or any successor regulation2 and 7,b7 be interpreted and applied in a manner that is consistent with1 and may not be construed to expand or contract1 the principles of1 and judicial precedent interpreting 7by the ,supreme ,court of the ,united ,states71 the securities laws and the regulations issued under the securities laws1 as those principles and that judicial precedent are in effect1 as of the day before the date of enactment of this ,act4 7#b7 ,considerations ,in adopting rules under paragraph 7#a71 the ,commission shall consider1 subject to subsection 7e71 whether1 and under what circumstances1 an offer1 sale1 purchase1 or communication should be addressed by those rules1 including by-- 7,a7 a distributed ledger control person1 any person acting on behalf of1 or in concert with1 an ancillary asset originator1 related person1 or distributed ledger control person1 or a person that obtained material nonpublic information in the course of a relationship of trust and confidence with an ancillary asset originator or related person1 where material nonpublic information regarding an ancillary asset originator or an ancillary asset was-- 7i7 obtained pursuant to or in breach of a duty of trust or confidence2 7ii7 deceptively obtained through theft1 bribery1 misrepresentation1 or espionage or in violation of any ,federal law protecting computer data2 or 7iii7 obtained from an ancillary asset originator or related person1 the conduct of which is described in subparagraph 7,b72 or 7,b7 an ancillary asset originator or related person that purchases1 sells1 or otherwise distributes an ancillary asset1 or communicates material nonpublic information regarding an ancillary asset originator or ancillary asset1 while aware of material nonpublic information that is required to be disclosed in any disclosure furnished1 or required to be furnished1 under section #d;,b of the ,securities ,act of #aicc1 as added by this ,act1 or ,regulation ,crypto1 as adopted pursuant to section #ajc4 7d7 ,enforcement ,a violation of subsection 7b71 or any rule adopted under subsection 7c71 shall be treated as a violation of the securities laws and subject to the penalties under sections #ba;,a and #cb of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghu-#a1 #gh;ff7 and to all other remedies available under the securities laws4 7e7 ,rule of construction ,consistent with section #d;,b7b77#c7 of the ,securities ,act of #aicc1 as added by this ,act1 nothing in this section may be construed to apply the securities laws1 or any regulation issued under the securities laws 7including any rule adopted under subsection 7c771 to any secondary market transaction in an ancillary asset that is not otherwise a transaction in a security1 security-based swap1 or security-based swap agreement4 #aaj4 ,securities ,investor ,protection ,corporation applicability ,section #af7ad7 of the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #ghlll7#ad77 is amended by inserting after the second sentence the following3 ,the term security does not include a digital commodity44 #aaa4 ,investor and consumer protection enforcement 7a7 ,preservation of certain rights1 authorities1 laws1 and obligations ,subject to subsection 7b71 nothing in this ,act1 any amendment made by this ,act1 or any rule1 requirement1 or regulation promulgated pursuant to this ,act may be construed to prohibit1 limit1 impair1 or otherwise affect-- 7#a7 any person from bringing a civil action to enforce any private right of action for fraud1 deceit1 manipulation1 or deceptive practices1 to the extent that such private right of action is expressly provided for in this ,act or an amendment made by this ,act1 or is otherwise available under ,federal law1 including with respect to conduct involving an ancillary asset1 network token1 digital commodity1 or any transaction1 disclosure1 certification1 notice1 report1 statement1 communication1 or other document involving any such asset2 7#b7 except as expressly provided in this ,act or an amendment made by this ,act1 any ,federal or ,state regulator1 acting within the scope of authority otherwise provided by law1 from bringing an administrative or civil enforcement action under-- 7,a7 the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq471 including the provisions of that ,act that are added by this ,act and relate to digital commodities and the jurisdiction of the ,commodity ,futures ,trading ,commission2 7,b7 the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;a et seq471 as amended by this ,act1 the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq471 as amended by this ,act1 or the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#a et seq472 7,c7 ,state commodities laws1 subject to the provisions of this ,act1 and the amendments made by this ,act1 relating to the jurisdiction of the ,commodity ,futures ,trading ,commission2 or 7,d7 section #ah7;c77#a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggr7c77#a771 or any functionally equivalent anti-fraud or anti-manipulation provision of ,state securities law 7including any ,state securities law with respect to a security or a transaction in a security to the extent enforcement of that anti-fraud or anti-manipulation provision of ,state securities law is not preempted by section #ah of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggr771 with respect to an investment contract involving an ancillary asset1 or other transaction involving any such asset1 for which this ,act or an amendment made by this ,act expressly preserves or provides for the application of anti-fraud or anti-manipulation authority2 7#c7 except as expressly provided in this ,act or an amendment made by this ,act1 any generally applicable ,state law1 including a law relating to fraud1 deceit1 unfair or deceptive acts or practices1 consumer protection1 banking1 payments1 property1 contracts1 criminal law1 or unlawful conduct or practices1 or the remedies available under any such law1 with respect to conduct involving a digital asset1 ancillary asset1 network token1 or digital commodity1 or any transaction1 activity1 person1 or service involving any such asset1 provided that such law does not impose any licensing1 registration1 qualification1 or other requirement that is expressly preempted1 or otherwise expressly limited1 by this ,act or an amendment made by this ,act2 7#d7 the fiduciary obligations of an investment adviser1 as defined in section #bjb7;a7 of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#b7;a771 under section #bjf of that ,act 7#ae ,u4,s4,c4 #hj;b-#f71 any rule or regulation issued under such section #bjf1 or any other provision of ,federal or ,state law1 including in connection with investment advice regarding a digital asset1 ancillary asset1 network token1 digital commodity1 or substantially similar technology2 or 7#e7 any right or remedy under ,federal consumer financial law1 including under section #ajaa of the ,consumer ,financial ,protection ,act of #bjaj 7#ab ,u4,s4,c4 #edia7 or the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #da et seq471 or authority under ,federal consumer financial law with respect to any person1 subject to the limitations under section #ajbg of the ,consumer ,financial ,protection ,act of #bjaj 7#ab ,u4,s4,c4 #eeag71 including subsections 7i7 and 7j7 of such section #ajbg4 7b7 ,limitations and rules of construction ,nothing in subsection 7a7 may be construed to-- 7#a7 preserve1 create1 or authorize any ,federal or ,state registration1 licensing1 qualification1 or merit-review requirement under ,state law with respect to an ancillary asset1 network token1 digital commodity1 transaction1 person1 or activity1 to the extent that such requirement is preempted or otherwise limited by this ,act or an amendment made by this ,act2 7#b7 create1 preserve1 or authorize any private right of action under ,federal or ,state law with respect to an ancillary asset1 network token1 digital commodity1 or transaction involving any such asset2 7#c7 permit any claim1 action1 proceeding1 requirement1 liability1 obligation1 or remedy to be brought1 maintained1 imposed1 or enforced under ,federal or ,state securities or commodities law to the extent that such claim1 action1 proceeding1 requirement1 liability1 obligation1 or remedy depends upon1 is predicated on1 or would require a determination that an ancillary asset1 network token1 digital commodity1 or any transaction1 activity1 person1 or service involving any such asset has a status or characterization under ,federal or ,state securities or commodities law that is contrary to an express classification or treatment provided by this ,act or an amendment made by this ,act2 7#d7 expand1 contract1 or otherwise alter the jurisdiction1 exclusive or otherwise1 of the ,commission1 the ,commodity ,futures ,trading ,commission1 or any ,state regulator2 7#e7 limit1 impair1 or otherwise affect the treatment of any asset1 transaction1 or interest as a covered security for purposes of section #ah of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggr72 or 7#f7 create any new private right of action under ,federal or ,state law1 except that nothing in this paragraph may be construed to limit1 impair1 or otherwise affect any private right of action preserved under subsection 7a77#a71 expressly provided in this ,act or an amendment made by this ,act1 or otherwise available under ,federal law4 ,,ii ,protecting against illicit finance #bja4 ,treatment under the ,bank ,secrecy ,act and sanctions laws 7a7 ,amendment ,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 that ,act that permits direct customer access4 7b7 ,bank secrecy act requirements 7#a7 ,regulations ,the ,secretary of the ,treasury1 acting through the ,director of the ,financial ,crimes ,enforcement ,network1 and in consultation with the ,commodity ,futures ,trading ,commission1 shall issue requirements consistent with the requirements of futures commission merchants to apply the ,bank ,secrecy ,act to digital commodity brokers1 digital commodity dealers1 and digital commodity exchanges that are tailored to the size and complexity of such entities1 including by requiring each such entity to-- 7,a7 establish and maintain an anti-money laundering and countering the financing of terrorism program1 which shall include-- 7i7 an appropriate risk assessment2 7ii7 the development of internal policies1 procedures1 and controls2 7iii7 the designation of a compliance officer2 7iv7 an ongoing employee training program2 and 7v7 an independent audit function to test such program2 7,b7 retain appropriate records of transactions2 7,c7 monitor and report suspicious activity1 which may include use of appropriate distributed ledger analytics2 and 7,d7 maintain an effective customer identification program to identify and verify account holders and carry out appropriate customer due diligence4 7#b7 ,compliance with sanctions ,a digital commodity broker1 digital commodity dealer1 or digital commodity exchange shall comply with all laws and regulations related to ,united ,states sanctions administered by the ,office of ,foreign ,assets ,control4 7c7 ,sense of ,congress ,it is the sense of ,congress that nothing in this section shall limit the applicability of any law imposing or authorizing the imposition of economic sanctions by the ,united ,states4 #bjb4 ,digital asset examination standards 7a7 ,definitions ,in this section3 7#a7 ,federal functional regulator ,the term ,federal functional regulator has the meaning given the term in section #eji of the ,gramm-,leach-,bliley ,act 7#ae ,u4,s4,c4 #fhji74 7#b7 ,financial institution ,the term financial institution has the meaning given the term in section #ecab7;a77#b7 of title #ca1 ,united ,states ,code4 7b7 ,examination and review ,the ,secretary of the ,treasury1 in consultation with ,federal functional regulators1 shall establish1 coordinated to the extent feasible1 risk-based examination standards to assess financial institutions involved in the digital asset sector for compliance with anti-money laundering and countering the financing of terrorism requirements under the ,bank ,secrecy ,act4 #bjc4 ,preventing ,illicit ,finance ,through ,partnership ,act 7a7 ,short title ,this section may be cited as the ,preventing ,illicit ,finance ,through ,partnership ,act4 7b7 ,definitions ,in this section3 7#a7 ,bank ,the term bank has the meaning given the term in section #ajaj4ajj of title #ca1 ,code of ,federal ,regulations 7or any corresponding similar regulation74 7#b7 ,certified or recognized information-sharing or interdiction network ,the term certified or recognized information-sharing or interdiction network means a real-time1 secure1 public-private mechanism that-- 7,a7 facilitates the detection1 interdiction1 and prevention of illicit finance violations through rapid information exchange between government and regulated entities2 and 7,b7 is-- 7i7 certified by the ,secretary of the ,treasury for the purpose of supporting interdiction and investigative actions consistent with law enforcement or regulatory authorities2 or 7ii7 recognized by the ,secretary of the ,treasury as an existing 7as of the day before the date of enactment of this ,act71 effective public-private partnership network that meets standards for security1 accountability1 and participation that are equivalent to the standards that would be required by the ,secretary of the ,treasury for certification under clause 7i74 7#c7 ,covered agency ,the term covered agency means-- 7,a7 the ,department of ,justice1 including the ,federal ,bureau of ,investigation and the ,drug ,enforcement ,administration2 7,b7 the ,department of the ,treasury1 including the ,financial ,crimes ,enforcement ,network1 the ,internal ,revenue ,service1 and the ,office of ,foreign ,assets ,control2 and 7,c7 the ,department of ,homeland ,security4 7#d7 ,designated private sector entity ,the term designated private sector entity means a private sector entity designated under subsection 7d74 7#e7 ,director ,the term ,director means the ,director of the ,financial ,crimes ,enforcement ,network4 7#f7 ,illicit finance violation ,the term illicit finance violation means the illicit use of digital assets4 7#g7 ,illicit use ,the term illicit use includes fraud1 money laundering1 terrorist financing1 the purchase and sale of illicit goods1 trafficking of fentanyl 7including fentanyl precursors and trade in other illicit drugs71 sanctions evasion1 theft of funds1 funding of illegal activities1 transactions relating to child sexual abuse material or elder fraud abuse1 and any other financial transaction involving the proceeds of specified unlawful activity1 as defined in section #aief7;c7 of title #ah1 ,united ,states ,code4 7#h7 ,money services business ,the term money services business has the meaning given the term in section #ajaj4ajj of title #ca1 ,code of ,federal ,regulations 7or any corresponding similar regulation74 7c7 ,establishment of program ,the ,secretary of the ,treasury shall establish a pilot program under which covered agencies and designated private sector entities securely share information focused on potential illicit finance violations and threats and emerging risks relating to illicit finance violations4 7d7 ,designation of private sector entities 7#a7 ,required action 7,a7 ,initial companies ,not later than #ij days after the date of enactment of this ,act1 the ,director and the ,secretary shall designate #aj private sector entities that are money services businesses1 #aj private sector entities that are digital commodity brokers1 digital commodity dealers1 or digital commodity exchanges1 and #aj private sector entities that are banks to participate in the pilot program established under subsection 7c71 if such entities agree and volunteer to participate in the program4 7,b7 ,biannual review ,not less frequently than once every #f months1 the ,director shall review and1 as appropriate1 replace the private sector entities designated under this paragraph4 7,c7 ,rule of construction ,nothing in this section may be construed as-- 7i7 requiring an entity to participate in the pilot program established under this section2 or 7ii7 enabling the ,director to select an entity to participate in the pilot program without the consent of such entity4 7#b7 ,optional designation ,in addition to the #cj private sector entities designated under paragraph 7#a71 the ,director may designate-- 7,a7 #a or more information sharing and analysis centers to participate in the pilot program2 7,b7 #a or more participants in a certified or recognized information sharing or interdiction network2 or 7,c7 #a or more private sector entities1 as appropriate1 relating to a particular type of illicit activity4 7e7 ,information sharing with private sector entities ,a covered agency that initiates an investigation into a potential illicit finance violation1 or identifies a threat or emerging risk relating to an illicit finance violation1 may share with any designated private sector entity such information about the investigation1 threat1 or emerging risk as the covered agency determines is appropriate4 7f7 ,use of information by private sector entities ,information received by a designated private sector entity under this section may not be used for any purpose other than identifying and reporting on activities that may involve illicit finance violations or threats and emerging risks relating to illicit finance violations1 unless otherwise prescribed by regulation or permitted by the covered agency sharing the information4 7g7 ,means of sharing information ,the covered agencies and designated private sector entities may share information about potential illicit finance violations1 or threats and emerging risks relating to illicit finance violations1 with each other-- 7#a7 through a portal established by the ,secretary of the ,treasury or a similar mechanism determined appropriate by the ,secretary of the ,treasury2 7#b7 through secure email2 7#c7 at monthly meetings1 which shall be facilitated by the ,secretary of the ,treasury2 or 7#d7 through a certified or recognized information-sharing or interdiction network4 7h7 ,limitation on liability ,a designated private sector entity that transmits1 receives1 or shares information for the purposes of identifying and reporting activities that may constitute illicit finance violations1 or threats and emerging risks relating to illicit finance violations1 shall not be liable to any person for such disclosure or for any failure to provide notice of such disclosure to the person who is the subject of such disclosure or any other person identified in such disclosure4 7i7 ,sunset ,the pilot program established under subsection 7c7 shall terminate on the date that is #e years after the date of enactment of this ,act1 unless made permanent through notice and comment rulemaking by the ,department of the ,treasury4 #bjd4 ,financial ,technology ,protection ,act 7a7 ,short title ,this section may be cited as the ,financial ,technology ,protection ,act4 7b7 ,definitions ,in this section3 7#a7 ,appropriate congressional committees ,the term appropriate congressional committees means-- 7,a7 the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate2 7,b7 the ,committee on ,agriculture1 ,nutrition1 and ,forestry of the ,senate2 7,c7 the ,committee on ,financial ,services of the ,house of ,representatives2 and 7,d7 the ,committee on ,agriculture of the ,house of ,representatives4 7#b7 ,distributed ledger analytics company ,the term distributed ledger analytics company means any business providing software1 research1 or other services 7such as tracing tools1 geofencing1 transaction screening1 the collection of business data1 and sanctions screening7 that-- 7,a7 support private and public sector investigations and risk management activities2 and 7,b7 involve cryptographically secured distributed ledgers or any similar technology or implementation4 7#c7 ,emerging technologies ,the term emerging technologies means the critical and emerging technology areas listed in the ,critical and ,emerging ,technologies ,list developed by the ,fast ,track ,action ,subcommittee on ,critical and ,emerging ,technologies of the ,national ,science and ,technology ,council1 including any updates to such list4 7#d7 ,foreign terrorist organization ,the term foreign terrorist organization means an organization that is designated as a foreign terrorist organization under section #bai of the ,immigration and ,nationality ,act 7#h ,u4,s4,c4 #aahi74 7#e7 ,illicit use ,the term illicit use includes fraud1 money laundering1 terrorist financing1 the purchase and sale of illicit goods1 trafficking of fentanyl 7including fentanyl precursors and trade in other illicit drugs71 sanctions evasion1 theft of funds1 funding of illegal activities1 transactions related to child sexual abuse material or elder fraud abuse1 and any other financial transaction involving the proceeds of specified unlawful activity 7as defined in section #aief7;c7 of title #ah1 ,united ,states ,code74 7#f7 ,state sponsor of terrorism ,the term state sponsor of terrorism means a country determined by the ,secretary of ,state to have repeatedly provided support for acts of international terrorism under section #dj of the ,arms ,export ,control ,act 7#bb ,u4,s4,c4 #bghj7 or section #fbj;,a of the ,foreign ,assistance ,act of #aifa 7#bb ,u4,s4,c4 #bcga74 7#g7 ,terrorist ,the term terrorist includes a person carrying out domestic terrorism or international terrorism 7as such terms are defined1 respectively1 under section #bcca of title #ah1 ,united ,states ,code74 7#h7 ,transnational organized crime ,the term transnational organized crime has the meaning given the term in section #bhd of title #aj1 ,united ,states ,code4 7c7 ,independent financial technology working group to combat terrorism1 narcotics trafficking1 and illicit financing 7#a7 ,establishment ,there is established the ,independent ,financial ,technology ,working ,group to ,combat ,terrorism1 ,narcotics ,trafficking1 and ,illicit ,financing 7in this section referred to as the ,working ,group 71 which shall consist of the following3 7,a7 ,the ,secretary of the ,treasury or their designee1 who shall serve as the chair of the ,working ,group4 7,b7 ,a senior-level representative from each of the following3 7i7 ,the ,department of the ,treasury4 7ii7 ,the ,office of ,terrorism and ,financial ,intelligence4 7iii7 ,the ,internal ,revenue ,service4 7iv7 ,the ,department of ,justice4 7v7 ,the ,federal ,bureau of ,investigation4 7vi7 ,the ,drug ,enforcement ,administration4 7vii7 ,the ,department of ,homeland ,security4 7viii7 ,the ,united ,states ,secret ,service4 7ix7 ,the ,department of ,state4 7x7 ,the ,office of the ,director of ,national ,intelligence4 7,c7 ,at least #e individuals appointed by the ,secretary of the ,treasury to represent the following3 7i7 ,digital asset companies4 7ii7 ,distributed ledger analytics companies4 7iii7 ,financial institutions4 7iv7 ,institutions or organizations engaged in research4 7v7 ,institutions or organizations focused on individual privacy and civil liberties4 7,d7 ,such additional individuals as the ,secretary of the ,treasury may appoint as necessary to accomplish the duties described in paragraph 7#b74 7#b7 ,duties ,the ,working ,group shall-- 7,a7 conduct research on the illicit use of digital assets and other related emerging technologies1 including by terrorists1 foreign terrorist organizations1 state sponsors of terrorism1 and transnational organized crime groups2 and 7,b7 develop legislative and regulatory proposals to improve anti-money laundering1 counter-terrorist1 and other counter-illicit financing efforts in the ,united ,states4 7#c7 ,reports 7,a7 ,in general ,not later than #a year after the date of enactment of this ,act1 and annually for the #c years thereafter1 the ,working ,group shall submit to the ,secretary of the ,treasury1 the heads of each agency represented in the ,working ,group pursuant to paragraph 7#a77;,b71 and the appropriate congressional committees a report containing the findings and determinations made by the ,working ,group in the previous year and any legislative and regulatory proposals developed by the ,working ,group4 7,b7 ,final report ,before the date on which the ,working ,group terminates under paragraph 7#d77;,a71 the ,working ,group shall submit to the appropriate congressional committees a final report detailing the findings1 recommendations1 and activities of the ,working ,group1 including any final results from the research conducted by the ,working ,group4 7#d7 ,sunset 7,a7 ,in general ,the ,working ,group shall terminate on the later of-- 7i7 the date that is #d years after the date of enactment of this ,act2 or 7ii7 the date on which the ,working ,group completes any wind-up activities described in subparagraph 7,b74 7,b7 ,authority to wind up activities ,if there are research1 proposals1 or other related activities of the ,working ,group ongoing as of the date that is #d years after the date of enactment of this ,act1 the ,working ,group may temporarily continue working in order to wind up such activities4 7,c7 ,return of appropriated funds ,on the date on which the ,working ,group terminates under subparagraph 7,a71 any unobligated funds appropriated to carry out this subsection shall be transferred to the ,treasury4 #bje4 ,digital asset kiosks 7a7 ,registration ,section #eccj of title #ca1 ,united ,states ,code1 is amended-- 7#a7 in subsection 7d7-- 7,a7 in paragraph 7#a77;,a71 by inserting 1 any person who owns1 operates1 or manages a digital asset kiosk in the ,united ,states or its territories1 after similar instruments2 and 7,b7 by adding at the end the following3 7#c7 ,digital asset2 digital asset address2 digital asset kiosk2 digital asset kiosk operator ,the terms digital asset1 digital asset address1 digital asset kiosk1 and digital asset kiosk operator have the meanings given those terms1 respectively1 in section #eccg4 2 and 7#b7 by adding at the end the following3 7f7 ,registration of digital asset kiosk locations 7#a7 ,in general ,not later than #ij days after the effective date of this subsection1 and not less than once every #ij days thereafter1 the ,secretary of the ,treasury shall require digital asset kiosk operators to submit an updated list containing the physical address of each digital asset kiosk owned or operated by the digital asset kiosk operator4 7#b7 ,form and manner of registration ,each submission by a digital asset kiosk operator pursuant to paragraph 7#a7 shall include-- 7,a7 the legal name of the digital asset kiosk operator2 7,b7 any fictitious or trade name of the digital asset kiosk operator2 7,c7 the physical address of each digital asset kiosk owned1 operated1 or managed by the digital asset kiosk operator that is located in the ,united ,states or the territories of the ,united ,states2 7,d7 the start date of operation of each digital asset kiosk2 7,e7 the end date of operation of each digital asset kiosk1 if applicable2 and 7,f7 each digital asset address used by the digital asset kiosk operator4 7#c7 ,false and incomplete information ,the filing of false or materially incomplete information in a submission required under paragraph 7#a7 shall be deemed a failure to comply with the requirements of this subsection4 4 7b7 ,preventing fraudulent transactions at digital asset kiosks 7#a7 ,in general ,subchapter ,,ii of chapter #ec of title #ca1 ,united ,states ,code1 is amended by adding at the end the following3 #eccg4 ,digital asset kiosk fraud prevention 7a7 ,definitions ,in this section3 7#a7 ,customer ,the term customer means any person that purchases or sells digital assets through a digital asset kiosk4 7#b7 ,distributed ledger analytics ,the term distributed ledger analytics means the analysis of data from public distributed ledgers1 and associated transaction information1 to provide risk-specific information about digital asset transactions and digital asset addresses4 7#c7 ,digital asset ,the term digital asset has the meaning given the term in section #b of the ,,genius ,act 7#ab ,u4,s4,c4 #eija74 7#d7 ,digital asset address ,the term digital asset address means an alphanumeric identifier associated with a digital asset wallet identifying the location to which a digital asset purchased through a digital asset kiosk can be sent or from which a digital asset sold through a digital asset kiosk can be accessed4 7#e7 ,digital asset kiosk ,the term digital asset kiosk means a stand-alone machine that is capable of accepting or dispensing legal tender in exchange for digital assets4 7#f7 ,digital asset kiosk operator ,the term digital asset kiosk operator means a person who owns1 operates1 or manages a digital asset kiosk located in the ,united ,states or its territories4 7#g7 ,digital asset kiosk transaction ,the term digital asset kiosk transaction means the purchase or sale of digital assets via a digital asset kiosk4 7#h7 ,digital asset wallet ,the term digital asset wallet means a software application or other mechanism providing a means for holding1 storing1 and transferring digital assets4 7#i7 ,fin,c,e,n ,the term ,fin,c,e,n means the ,financial ,crimes ,enforcement ,network of the ,department of the ,treasury4 7#aj7 ,new customer ,the term new customer1 with respect to a digital asset kiosk operator1 means a customer during the #ad-;day period beginning on the date of the first digital asset kiosk transaction of the customer with the digital asset kiosk operator4 7#aa7 ,transaction hash ,the term transaction hash means a unique identifier made up of a string of characters that act as a record of and provide proof that a transaction was verified and added to the distributed ledger4 7b7 ,disclosures 7#a7 ,in general ,before entering into a digital asset transaction with a customer1 a digital asset kiosk operator shall disclose in a clear1 conspicuous1 and easily readable manner-- 7,a7 all relevant terms and conditions of the digital asset kiosk transaction1 including-- 7i7 the amount of the digital asset kiosk transaction2 7ii7 the type and nature of the digital asset kiosk transaction2 7iii7 a warning that the digital asset kiosk transaction is final1 is not refundable1 and may not be reversed2 and 7iv7 the type and amount of any fees or other expenses paid by the customer2 7,b7 a warning relating to consumer fraud including-- 7i7 that consumer fraud often starts with contact from a stranger1 and that the customer should never send money to someone the customer does not know2 7ii7 the most common types of fraudulent schemes involving digital asset kiosks1 such as-- 7,i7 impersonation of a government official or a bank representative2 7,,ii7 threats of jail time or financial penalties2 7,,iii7 offers of a job or reward in exchange for payment1 or offers of deals that seem too good to be true2 7,,iv7 claims of a frozen bank account or credit card2 7,v7 requests for donations to charity or disaster relief2 or 7,,vi7 payment to an individual the customer has never met2 and 7iii7 a statement that the customer should contact law enforcement if they suspect fraudulent activity1 such as scams1 including contact information for a relevant law enforcement or government agency4 7#b7 ,additional disclosures ,fin,c,e,n may adopt rules relating to additional disclosures required to be made to customers prior to engaging in a transaction4 7c7 ,acknowledgment of disclosures ,each time a customer uses a digital asset kiosk1 the digital asset kiosk operator shall ensure acknowledgment of all disclosures required under subsection 7b7 via confirmation of consent of the customer at the digital asset kiosk4 7d7 ,receipts ,upon completion of each digital asset kiosk transaction1 the digital asset kiosk operator shall provide the customer with a receipt1 which shall include the following information3 7#a7 ,the name and contact information of the digital asset kiosk operator1 including a telephone number for a customer service helpline4 7#b7 ,the name of the customer4 7#c7 ,the type1 value1 date1 and precise time of the digital asset kiosk transaction1 transaction hash1 and each applicable digital asset address4 7#d7 ,the amount of the digital asset kiosk transaction expressed in ,united ,states dollars4 7#e7 ,all fees charged4 7#f7 ,a statement that the customer should contact law enforcement if they suspect fraudulent activity1 such as scams1 including contact information for a relevant law enforcement or government agency4 7#g7 ,the exchange rate applied4 7#h7 ,any additional information the digital asset kiosk operator determines appropriate4 7e7 ,physical receipts available ,a physical version of the receipt required under subsection 7d7 shall be issued to the customer at the time of the digital asset kiosk transaction1 if the customer opts for such a physical version of the receipt4 7f7 ,anti-,fraud policy 7#a7 ,in general ,each digital asset kiosk operator shall establish1 maintain1 and implement a written anti-fraud policy if required by1 and consistent with1 applicable ,state law in those ,states where the digital asset kiosk operator is licensed4 7#b7 ,federal standard ,a digital asset kiosk operator operating in any ,state that does not require an anti-fraud policy under paragraph 7#a7 shall establish1 maintain1 and implement an anti-fraud policy that1 at a minimum1 includes-- 7,a7 the identification and assessment of fraud-related areas2 7,b7 procedures and controls to protect against risks identified under subparagraph 7,a72 7,c7 allocation of responsibility for monitoring the risks identified under subparagraph 7,a72 and 7,d7 procedures for the periodic evaluation and revision of the anti fraud procedures1 controls1 and monitoring mechanisms under subparagraphs 7,b7 and 7,c74 7g7 ,appointment of compliance officer ,each digital asset kiosk operator shall designate and employ a compliance officer who-- 7#a7 is qualified to coordinate and monitor compliance with this section and all other applicable ,federal and ,state laws1 rules1 and regulations2 7#b7 is employed full-time by the digital asset kiosk operator2 7#c7 is not the chief executive officer of the digital asset kiosk operator2 and 7#d7 does not own or control more than #aj percent of any interest in the digital asset kiosk operator4 7h7 ,use of distributed ledger analytics and wallet pinning 7#a7 ,in general ,each digital asset kiosk operator shall use distributed ledger analytics to prevent sending a digital asset to a digital asset wallet known to be affiliated with fraudulent activity at the time of a digital asset kiosk transaction and to detect transaction patterns indicative of fraud or other illicit activities4 7#b7 ,wallet pinning ,each digital asset kiosk operator shall maintain restrictions that prevent more than #a customer of the digital asset kiosk operator from using the same digital wallet address4 7#c7 ,compliance ,the ,director of ,fin,c,e,n may request evidence from any digital asset kiosk operator to confirm compliance with this subsection4 7i7 ,confirmation required before new customer transactions ,before entering into a digital asset kiosk transaction valued at #ejj or more with a new customer1 the digital asset kiosk operator shall obtain confirmation from the new customer that-- 7#a7 the new customer wishes to proceed with the digital asset kiosk transaction2 and 7#b7 the new customer is not being fraudulently induced into engaging in the transaction4 7j7 ,holding period ,no digital asset kiosk operator shall execute a transaction on behalf of a new customer that sends digital assets to a specific wallet address unless at least #gb hours have elapsed since the initiation of the transaction by the new customer4 7k7 ,transaction limits with respect to new customers ,the ,secretary of the ,treasury shall prescribe by regulation the threshold amounts for reporting or limiting digital asset kiosk transactions1 including aggregate or single-day deposit and withdrawal limits1 as the ,secretary determines are reasonably necessary to deter fraud and illicit finance4 ,such regulations shall consider the unique risks and functionalities of digital asset kiosks and may provide for exceptions1 adjustments1 or exclusions as deemed appropriate by the ,secretary4 7l7 ,interim transaction limits ,until the effective date of regulations prescribed under subsection 7k71 a digital asset kiosk operator shall not permit a new customer to conduct transactions exceeding #c1ejj in the aggregate within any #bd-;hour period4 7m7 ,refunds ,a digital asset kiosk operator shall issue a refund for a customer's transaction fees within #cj days if-- 7#a7 the customer was fraudulently induced into engaging in the digital asset kiosk transaction2 and 7#b7 the customer files a complaint to the digital asset kiosk operator1 which includes-- 7,a7 the name1 address1 and phone number of the customer2 7,b7 the transaction hash of the digital asset kiosk transaction or information sufficient to establish the type1 value1 date1 and time of the digital asset kiosk transaction2 and 7,c7 a copy of a report to a ,state or local law enforcement or government agency made not later than #cj days after the digital asset kiosk transaction4 7n7 ,customer service helpline ,each digital asset kiosk operator shall provide live customer service during business hours1 the phone number for which is regularly monitored and displayed in a clear1 conspicuous1 and easily readable manner upon each digital asset kiosk4 ,during non-business hours1 the digital asset kiosk operator shall maintain an alternative customer service system that may include an automated chatbot1 an online complaint reporting portal1 or other customer service mechanism4 7o7 ,communications with law enforcement ,each digital asset kiosk operator performing business in the ,united ,states shall have a dedicated method of contact1 such as a phone number1 email address1 or other contact method1 for law enforcement and regulatory agencies to contact the digital asset kiosk operator4 ,this contact method shall be displayed and available on the digital asset kiosk operator's website4 7p7 ,civil penalties and state enforcement ,any ,state regulator may bring a civil action or other appropriate proceeding to enforce the provisions of this section and may assess or collect civil penalties or other remedies for violations of this section1 as provided under applicable ,state law4 7q7 ,rule of construction ,nothing in this section may be construed to prohibit a ,state from enacting a law1 rule1 or regulation that provides greater protection to customers4 4 7#b7 ,technical and conforming amendment ,the table of sections for subchapter ,,ii of chapter #ec of title #ca1 ,united ,states ,code1 is amended by adding at the end the following3 #eccg4 ,digital asset kiosk fraud prevention4 4 #bjf4 ,study on illicit use of digital assets 7a7 ,definitions ,in this section3 7#a7 ,foreign terrorist organization ,the term foreign terrorist organization means an organization that is designated as a foreign terrorist organization under section #bai of the ,immigration and ,nationality ,act 7#h ,u4,s4,c4 #aahi74 7#b7 ,transnational organized criminal ,the term transnational organized criminal means an individual who participates in transnational organized crime1 as defined in section #bhd7;i7 of title #aj1 ,united ,states ,code4 7b7 ,review ,not later than #a year after the date of enactment of this ,act1 the ,secretary of the ,treasury1 in consultation with the ,attorney ,general1 shall conduct a comprehensive review of how foreign terrorist organizations and transnational organized criminals utilize digital assets in connection with illicit activities4 7c7 ,report ,not later than #ahj days after completing the review under subsection 7b71 the ,secretary of the ,treasury shall submit to the ,committee on ,agriculture1 ,nutrition1 and ,forestry and the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate and the ,committee on ,agriculture and the ,committee on ,financial ,services of the ,house of ,representatives a report on the findings of the ,secretary1 including-- 7#a7 an assessment of how foreign terrorist organizations and transnational organized criminals utilize digital assets in connection with illicit activities2 and 7#b7 recommendations to assist the ,commission and the ,commodity ,futures ,trading ,commission in strengthening compliance and enforcement of digital assets-related entities registered with their respective agencies4 7d7 ,additional agencies ,the ,secretary of the ,treasury may1 in the sole discretion of the ,secretary of the ,treasury1 solicit input for the report required under subsection 7c7 from any or all of the ,federal functional regulators1 as defined in section #eji of the ,gramm-,leach-,bliley ,act 7#ae ,u4,s4,c4 #fhji71 and the ,commodity ,futures ,trading ,commission4 7e7 ,classified annex ,the report required under subsection 7c7 may include a classified annex1 as appropriate4 ,,iii ,responsible innovation in decentralized finance #cja4 ,rulemaking on application of existing securities intermediary requirements and existing ,bank ,secrecy ,act requirements to non-decentralized finance trading protocols 7a7 ,definitions ,in this section3 7#a7 ,decentralized finance trading protocol ,the term decentralized finance trading protocol means a distributed ledger system through which multiple participants can execute a financial transaction-- 7,a7 in accordance with an automated rule or algorithm that is predetermined and non-discretionary2 and 7,b7 without reliance on a person other than the user to maintain custody or control of any digital assets subject to the financial transaction4 7#b7 ,non-decentralized finance trading protocol 7,a7 ,in general ,the term non-decentralized finance trading protocol means a decentralized finance trading protocol that meets #a or more of the following3 7i7 ,a person or group of persons under common control1 or acting pursuant to an agreement1 arrangement1 or understanding to act in concert1 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 decentralized finance trading protocol4 7ii7 ,the decentralized finance trading protocol 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 distributed ledger system4 7iii7 ,a person or group of persons under common control1 or acting pursuant to an agreement1 arrangement1 or understanding to act in concert1 has the authority1 via operation of the decentralized finance trading protocol1 to restrict1 censor1 or prohibit the use of the decentralized finance trading protocol1 including any applicable system-based user activity4 7,b7 ,special rule ,for purposes of subparagraph 7,a71 a decentralized governance system1 solely by virtue of the operation of the decentralized governance system1 shall not be considered to be a person or a group of persons under common control or acting pursuant to an agreement1 arrangement1 or understanding to act in concert4 7,c7 ,exclusions ,for purposes of this section1 participation in an incident-response or security council1 as described in subsection 7f71 shall not1 by itself1 be deemed to constitute control of a non-decentralized finance trading protocol4 7,d7 ,scoping ,in implementing this section1 the ,commission and the ,department of the ,treasury shall construe the term non-decentralized finance trading protocol in a manner consistent with section #ae;,h of the ,securities ,exchange ,act of #aicd1 as added by section #fja4 7b7 ,rules 7#a7 ,in general ,the ,commission1 in consultation with the ,department of the ,treasury1 shall adopt tailored1 clear1 and specific rules1 after notice and comment1 that clarify how a person1 or group of persons under common control1 or acting pursuant to an agreement1 arrangement1 or understanding to act in concert1 that controls a non-decentralized finance trading protocol and is subject to the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq471 as amended by this ,act1 shall comply with applicable requirements under that ,act1 including with respect to registration1 conduct1 disclosure1 recordkeeping1 supervision1 and other requirements under the securities laws4 7#b7 ,requirements ,the rulemaking required under paragraph 7#a7 shall-- 7,a7 ensure that the rules adopted pursuant to that rulemaking are consistent with the purposes of the securities laws1 including the public interest1 the protection of investors1 and the maintenance of fair and orderly markets2 7,b7 protect the rights of software developers1 publishers1 and users to create1 publish1 and use code and software in a manner consistent with the ,first ,amendment to the ,constitution of the ,united ,states2 7,c7 provide legal clarity for the development1 publication1 and operation of distributed ledger systems and the components therein in a manner consistent with the purposes of this section2 and 7,d7 result in1 by operation of law1 the application and enforcement by the ,department of the ,treasury1 where applicable and pursuant to existing law1 as in effect on the day before the date of enactment of this ,act1 of anti-money laundering and countering the financing of terrorism requirements under the ,bank ,secrecy ,act and other ,federal law with respect to any person or group of persons that the ,commission determines1 through that rulemaking1 is required to register1 or comply as a registrant1 under the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq474 7#c7 ,application 7,a7 ,in general ,any person or group of persons determined under this subsection to be required to register1 or comply as a registrant1 under the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 7referred to in this paragraph as the ,exchange ,act7 shall be subject to that ,act and the ,bank ,secrecy ,act to the extent applicable under existing law1 as in effect on the day before the date of enactment of this ,act1 consistent with the treatment of similarly situated participants under the ,exchange ,act4 7,b7 ,rulemaking ,the ,secretary of the ,treasury1 in consultation with the ,commission1 shall adopt tailored1 clear1 and specific rules1 after providing notice and the opportunity to comment1 that define compliance with obligations under the ,bank ,secrecy ,act and other ,federal laws relating to anti-money laundering and countering the financing of terrorism with respect to any person1 or group of persons under common control 7or acting pursuant to an agreement1 arrangement1 or understanding to act in concert71 that-- 7i7 controls the operation of a non-decentralized finance trading protocol identified in the rulemaking conducted under paragraph 7#a72 7ii7 is required to register1 or comply as a registrant1 under the ,exchange ,act1 as determined in the rulemaking conducted under paragraph 7#a72 and 7iii7 is caused to be treated as a financial institution under the ,bank ,secrecy ,act pursuant to existing law1 as in effect on the day before the date of enactment of this ,act1 as a result of registration or compliance described in clause 7ii74 7c7 ,activity-,based application ,rules adopted under subsection 7b77#a7 shall require the ,commission to determine the applicable requirements only with respect to securities-related activities1 based on the functions performed by the controlling person or group of persons1 including brokerage1 dealing1 trading1 execution1 clearing1 or custody of securities1 without regard to technological form1 distributed architecture1 or purportedly decentralized characterization4 7d7 ,rules of construction 7#a7 ,registration not required ,nothing in this section1 nor any rule adopted under this section1 may be construed to-- 7,a7 require a distributed ledger system or any software code to register with the ,commission in its own capacity2 or 7,b7 prohibit the launch1 deployment1 or operation of a distributed ledger system4 7#b7 ,no expansion of statutory authority ,notwithstanding any rulemaking required under subsection 7b71 and notwithstanding any action the ,commission or the ,secretary of the ,treasury may take under that subsection1 nothing in this section1 including any such rulemaking1 may be construed to-- 7,a7 expand or contract the statutory authority of the ,commission or the ,department of the ,treasury1 as in effect on the day before the date of enactment of this ,act1 under the ,bank ,secrecy ,act2 or 7,b7 limit the use of the authority described in subparagraph 7,a7 to determine1 pursuant to that rulemaking1 the applicability of existing statutory requirements1 as in effect on the day before the date of enactment of this ,act1 to persons or activities described in this section4 7#c7 ,no presumption of applicability ,nothing in this section may be construed to create a presumption that any person or activity described in this section is or is not subject to the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 or the ,bank ,secrecy ,act absent a determination made pursuant to a rulemaking required under this section4 7e7 ,preservation of existing authorities ,nothing in this section may be construed to-- 7#a7 limit the authority of the ,commission under the securities laws to investigate violations1 bring actions1 or issue subpoenas with respect to persons determined1 pursuant to rulemaking1 to be subject to the securities laws under this section2 or 7#b7 limit the authority of the ,secretary of the ,treasury under the ,bank ,secrecy ,act1 including to investigate violations or bring actions with respect to persons determined1 pursuant to rulemaking1 to be subject to the ,bank ,secrecy ,act4 7f7 ,non-,decentralized finance trading protocols 7#a7 ,in general ,in adopting rules under subsection 7b71 the ,commission shall treat a decentralized governance system and any person participating in the decentralized governance system as separate persons unless such persons are under common control or acting pursuant to an agreement1 arrangement1 or understanding to act in concert4 7#b7 ,emergency measures 7,a7 ,in general ,pre-defined1 temporary rules-based cybersecurity emergency measures exercised by an incident-response or security council exclusively in response to a specific and documented cybersecurity incident or imminent threat and pursuant to publicly disclosed1 on-chain authorization mechanisms1 strictly limited in scope and duration solely to address such specific and documented cybersecurity incident or imminent threat1 and without unilateral control by any single person1 shall not1 by themselves1 constitute common control or an agreement1 arrangement1 or understanding to act in concert1 provided that such rules and authorities1 including the procedures and operational limits governing such emergency measures1 are disclosed in publicly available written documentation reasonably available to the applicable ,federal regulator1 by a decentralized governance system or similar legal entity sufficiently in advance of any exercise of such emergency powers4 7,b7 ,prohibition ,the emergency measures described in subparagraph 7,a7 may not be used to implement protocol upgrades1 governance decisions1 or economic changes that are unrelated to the mitigation of the applicable cybersecurity incident or imminent threat1 as described in that subparagraph4 7#c7 ,standards ,the standards criteria for temporary rules-based cybersecurity emergency measures under paragraph 7#b7 shall be established by rulemaking pursuant to subsection 7b74 #cjb4 ,illicit finance obligations for distributed ledger messaging systems 7a7 ,definitions ,in this section3 7#a7 ,distributed ledger messaging system ,the term distributed ledger messaging system-- 7,a7 means a web-hosted software application that provides a user with the ability to create or submit an instruction1 communication1 or message to a distributed ledger application or decentralized finance trading protocol for the purpose of executing a transaction by the user2 and 7,b7 does not include-- 7i7 a distributed ledger application2 7ii7 a distributed ledger protocol2 7iii7 a distributed ledger system2 7iv7 a decentralized finance trading protocol2 7v7 any client1 node1 validator1 or other form of computational infrastructure with respect to a distributed ledger system2 or 7vi7 any software or hardware wallet that facilitates the custody of an individual of their digital assets4 7#b7 ,united ,states sanction law ,the term ,united ,states sanction law means any ,federal law imposing1 or authorizing the imposition of1 economic sanctions4 7b7 ,guidance ,not later than #cfj days after the date of enactment of this ,act1 the ,secretary of the ,treasury shall issue guidance with respect to the economic sanctions and anti-money laundering and countering the financing of terrorism obligations1 risk management practices1 or compliance considerations1 applicable to a distributed ledger messaging system that is owned or operated by a ,united ,states person1 as defined in any law imposing or authorizing the imposition of economic sanctions1 which may include-- 7#a7 the use of commercially reasonable distributed ledger-analytics screening measures1 through industry-standard distributed ledger-analytics tools1 to identify wallet addresses that are owned by sanctioned persons1 involve jurisdictions or financial institutions subject to ,united ,states sanctions1 or activity prohibited by ,united ,states sanctions2 7#b7 blocking1 rejecting1 preventing the routing of1 or otherwise restricting attempted transactions prohibited by ,united ,states sanction laws2 7#c7 blocking or restricting transactions that exhibit indicators of ransomware activity1 illicit finance typologies1 or any other pattern that presents a significant and identifiable illicit finance risk based on a commercially reasonable distributed ledger-analytics assessment to identify transactions that involve ransomware activity and other illicit finance activity2 and 7#d7 implementing and maintaining risk-based measures1 consistent with applicable law1 to identify1 mitigate1 and address anti-money laundering and countering the financing of terrorism risks1 including-- 7,a7 monitoring for risk indicators and limiting exposure to illicit-finance risks1 which may include restricting1 limiting1 or otherwise mitigating exposure to high-risk transactions2 and 7,b7 complying1 as applicable1 with special measures implemented by the ,secretary of the ,treasury under section #ecah;,a of title #ca1 ,united ,states ,code4 7c7 ,enforcement and penalties ,the ,secretary of the ,treasury and any other ,federal agency with relevant jurisdiction have the authority1 as applicable1 to enforce this section using their existing authorities1 as of the day before the date of enactment of this ,act1 under applicable law4 7d7 ,rules of construction ,nothing in this section may be construed to-- 7#a7 alter or amend any laws imposing or authorizing imposition of economic sanctions by the ,united ,states1 including those that apply to ,united ,states persons that own or operate a distributed ledger messaging system2 7#b7 expand or contract the applicability of-- 7,a7 economic sanctions1 anti-money laundering1 or any other illicit finance laws in effect as of the day before the date of enactment of this ,act to any person1 including any person that owns or operates a distributed ledger messaging system2 or 7,b7 the definition of a financial institution under applicable laws1 which shall not apply to non-controlling developers or providers as defined in section #fjd7;b77#c72 or 7#c7 restrict the authority of the ,secretary of the ,treasury to implement1 administer1 and enforce1 including by imposing civil money penalties1 any law imposing or authorizing the imposition of economic sanctions or any law to prevent money laundering or illicit finance otherwise provided by ,federal law to the ,secretary of the ,treasury4 #cjc4 ,special measure relating to certain transmittals of funds ,section #ecah;,a of title #ca1 ,united ,states ,code1 is amended-- 7#a7 in subsection 7a77#b77;,c71 by striking subsection 7b77#e7 and inserting paragraph 7#e7 or 7#f7 of subsection 7b7 and 7#b7 in subsection 7b71 by adding at the end the following3 7#f7 ,special measure for certain transmittals of funds ,if the ,secretary of the ,treasury finds that a jurisdiction outside of the ,united ,states1 #a or more financial institutions operating outside of the ,united ,states1 or #a or more classes of transactions within1 or involving1 a jurisdiction outside of the ,united ,states is of primary money laundering concern in connection with illicit finance through the use of digital assets1 as defined in section #b of the ,,genius ,act 7#ab ,u4,s4,c4 #eija71 the ,secretary may1 by order1 regulation1 or otherwise as permitted by law1 prohibit1 or impose conditions upon1 certain transmittals of funds 7to be defined by the ,secretary by regulation7 by any domestic financial institution or domestic financial agency1 if such transmittal of funds involves any such institution1 class of transaction1 or type of account4 4 #cjd4 ,offshore stablecoin report 7a7 ,definitions ,in this section3 7#a7 ,material volume of transactions ,the term material volume of transactions means a sustained level of transaction activity that is-- 7,a7 publicly observable2 7,b7 exceeds de minimis usage over a #ab-month period2 and 7,c7 is reasonably likely to affect the illicit finance or national security risk exposure of the ,united ,states4 7#b7 ,payment stablecoin ,the term payment stablecoin has the meaning given the term in section #b of the ,,genius ,act 7#ab ,u4,s4,c4 #eija74 7#c7 ,united states-dependent offshore stablecoin ,the term ,united ,states-dependent offshore stablecoin means a payment stablecoin-- 7,a7 that is not issued by a permitted payment stablecoin issuer or any foreign payment stablecoin issuer registered with the ,comptroller 7as those terms are defined in section #b of the ,,genius ,act 7#ab ,u4,s4,c4 #eija772 7,b7 that is issued by a person operating outside of the ,united ,states2 and 7,c7 the value of which is supported or backed by a reserve of assets that has a substantial nexus to the ,united ,states1 which may include-- 7i7 obligations of the ,united ,states1 including ,united ,states ,treasury securities and repurchase agreements backed by ,united ,states ,treasury securities and funds held as deposits at any bank subject to the jurisdiction of the ,united ,states2 7ii7 deposits maintained at a banking entity or insured depository institution located in the ,united ,states1 including correspondent or payable-through accounts2 7iii7 securities issued or guaranteed by the ,united ,states or any agency or instrumentality thereof2 or 7iv7 assets custodied1 cleared1 or settled through payment1 clearing1 or settlement systems located in the ,united ,states4 7b7 ,report ,not later than ,june #cj of the second calendar year that begins after the date of enactment of this ,act1 and every #d years thereafter for not more than #c reports1 the ,secretary of the ,treasury shall submit to the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate and the ,committee on ,financial ,services of the ,house of ,representatives1 and make available on the website of the ,department of the ,treasury1 a report assessing whether there is credible1 articulable1 and publicly supportable evidence of significant illicit finance threats or vulnerabilities associated with any ,united ,states-dependent offshore stablecoin employed in a material volume of transactions4 7c7 ,contents ,each report required under subsection 7b7 shall include-- 7#a7 an assessment of the illicit finance risk of each ,united ,states-dependent offshore stablecoin employed in a material volume of transactions2 7#b7 an assessment of the controls employed by the issuers of ,united ,states-dependent offshore stablecoins to address the use of such stablecoins in illicit finance1 as available2 7#c7 data and information regarding the volume of ,united ,states-dependent offshore stablecoins assessed to be employed in connection with illicit finance1 as available2 7#d7 a general description of the relationships between ,united ,states-dependent offshore stablecoins and the financial system of the ,united ,states1 including principal channels of interaction2 and 7#e7 such other information or analysis as the ,secretary of the ,treasury deems relevant to assessing the illicit finance risks of ,united ,states-dependent offshore stablecoins4 7d7 ,classified annex ,each report required under subsection 7b7 shall be submitted in unclassified form1 but may contain a classified annex4 7e7 ,national strategy ,the reporting requirement under subsection 7b7 may be met as part of the national strategy for combating terrorist and other illicit financing required under sections #bfa and #bfb of the ,countering ,america's ,adversaries ,through ,sanctions ,act 7,public ,law #aae-dd2 #aca ,stat4 #icd7 for the reporting years4 7f7 ,rule of construction ,nothing in this section may be construed to authorize-- 7#a7 the disclosure of any information that is protected from disclosure under ,federal law2 and 7#b7 the collection or use of any information other than publicly available data or information lawfully obtained by the ,department of the ,treasury under existing authorities1 as of the day before the date of enactment of this ,act4 #cje4 ,temporary hold for certain digital asset transactions 7a7 ,definitions ,in this section3 7#a7 ,covered agency ,the term covered agency means any ,state or ,federal law enforcement agency1 including the ,department of the ,treasury4 7#b7 ,covered person ,the term covered person means a person that is-- 7,a7 a permitted payment stablecoin issuer2 7,b7 a foreign payment stablecoin issuer 7as defined in section #b of the ,,genius ,act 7#ab ,u4,s4,c4 #eija77 registered with the ,office of the ,comptroller of the ,currency pursuant to section #ah7;c7 of that ,act 7#ab ,u4,s4,c4 #eiaf7;c772 or 7,c7 a digital asset service provider1 as that term is defined in section #b of the ,,genius ,act 7#ab ,u4,s4,c4 #eija74 7#c7 ,payment stablecoin2 permitted payment stablecoin issuer ,the terms payment stablecoin and permitted payment stablecoin issuer have the meanings given those terms in section #b of the ,,genius ,act 7#ab ,u4,s4,c4 #eija74 7#d7 ,qualified written request ,the term qualified written request means a written communication issued by an authorized official of a covered agency that-- 7,a7 identifies a specific wallet1 address1 account1 or transaction reasonably suspected of being linked to illicit activity2 7,b7 requests a covered person initiate an action with respect to the specified wallet1 address1 account1 or transaction reasonably suspected of being linked to illicit activity1 including delaying the execution of a transaction1 conversion1 or withdrawal involving digital assets2 and 7,c7 includes a designated agency contact4 7#e7 ,temporary hold ,the term temporary hold means a restriction applied by a covered person that delays execution of a transaction1 conversion1 or withdrawal involving digital assets for a reasonable period of time1 not to exceed #cj calendar days1 which may be extended for an additional #aej calendar days pursuant to a qualified written request4 7b7 ,protection from private causes of action 7#a7 ,in general ,any covered person that1 in good faith and in compliance with this section1 or any person complying with a temporary lawful order under subsection 7c7 that1 voluntarily implements a temporary hold shall not be held liable pursuant to any ,federal or ,state private right of action for implementing the temporary hold1 provided that-- 7,a7 the covered person or other person1 as applicable-- 7i7 implements the temporary hold based on a reasonable belief the transaction1 conversion1 or withdrawal relates to a violation or attempted violation of ,state or ,federal law2 or 7ii7 implements the temporary hold after receiving a qualified written request from a covered agency2 7,b7 the covered person-- 7i7 makes reasonable efforts to notify the affected customer of the temporary hold2 7ii7 reasonably determines that notification would impede actual or potential law enforcement efforts2 or 7iii7 receives a qualified written request from a covered agency that requests notification not be attempted2 and 7,c7 the covered person notifies as soon as reasonably practicable an appropriate ,state or ,federal law enforcement agency or the ,federal ,trade ,commission1 provided that such notification is not required when the covered person has received a qualified written request from a covered agency4 7#b7 ,documentation ,a covered person shall-- 7,a7 maintain for the #c-year period following the implementation of a temporary hold documentation of the basis for applying a temporary hold2 and 7,b7 make available the documentation described in subparagraph 7,a7 upon the request of a covered agency or the ,federal ,trade ,commission4 7c7 ,compliance with temporary lawful orders ,a permitted payment stablecoin issuer shall comply with any valid writ1 process1 order1 rule1 decree1 command1 or other requirement issued or promulgated under ,federal law by a court of competent jurisdiction that-- 7#a7 requires a person to freeze or prevent the transfer of payment stablecoins2 7#b7 specifies the payment stablecoins or accounts subject to blocking with reasonable particularity2 and 7#c7 is subject to judicial or administrative review or appeal1 as provided by law4 7d7 ,rules of construction ,nothing in this section may be construed to-- 7#a7 compel or require any covered person to take action to freeze1 seize1 or block digital assets that is not otherwise required under existing ,federal or ,state law1 as in effect on the day before the date of enactment of this ,act2 7#b7 limit or alter the authority of any government agency1 including with respect to authority to pursue enforcement actions2 7#c7 limit or affect the application of-- 7,a7 section #ecah7;g77#c7 of title #ca1 ,united ,states ,code1 and any regulation requiring any financial institution to report suspicious activity2 or 7,b7 any lawful authority to seize or freeze assets pursuant to a lawful order or sanctions designation2 or 7#d7 limit the ability of a covered person to apply a temporary hold to any wallet1 address1 account1 or transaction located outside the ,united ,states4 7e7 ,reporting ,the ,attorney ,general and the ,federal ,trade ,commission may issue regulations or guidance relating to any notification by covered persons pursuant to this section to the ,department of ,justice and the ,federal ,trade ,commission1 respectively4 #cjf4 ,voluntary cybersecurity program for decentralized finance trading protocols 7a7 ,definitions ,in this section3 7#a7 ,covered activities ,the term covered activities means the activities described in section #ae;,h7b7 of the ,securities ,exchange ,act of #aicd1 as added by section #fja4 7#b7 ,decentralized finance trading protocol ,the term decentralized finance trading protocol has the meaning given the term in section #ae;,h7a7 of the ,securities ,exchange ,act of #aicd1 as added by section #fja4 7#c7 ,director ,the term ,director means the ,director of ,,nist4 7#d7 ,,nist ,the term ,,nist means the ,national ,institute of ,standards and ,technology4 7b7 ,establishment of program ,the ,director shall1 in consultation with the ,commission and the ,commodity ,futures ,trading ,commission1 establish a voluntary program for the adoption by persons developing decentralized finance trading protocols or engaging in covered activities of applicable cybersecurity standards published by ,,nist4 7c7 ,development of program criteria 7#a7 ,request for information ,the ,director shall issue a request for information in the ,federal ,register to gather input from experts and industry stakeholders on-- 7,a7 cybersecurity threats1 vulnerabilities1 and risks to decentralized finance trading protocols2 7,b7 auditing and code security standards1 including best practices for code audits2 7,c7 consumer protection and code transparency best practices on decentralized finance trading protocols2 and 7,d7 existing ,,nist standards1 as of the day before the date of enactment of this ,act1 and their applicability to decentralized finance trading protocols4 7#b7 ,report ,the ,director shall develop a report on the software development of decentralized finance protocols to assess technical input from paragraph 7#a74 7#c7 ,publication of program criteria ,after evaluating input provided under paragraph 7#a71 the ,director shall release a special publication containing a detailed evaluation of cybersecurity best practices and existing applicable standards1 as of the day before the date of enactment of this ,act1 for decentralized finance trading protocols1 to provide program criteria to software developers and industry stakeholders under the voluntary program1 which shall include a summary of public comments and responses as to how input was incorporated4 7#d7 ,requests for revision 7,a7 ,in general ,after the ,director publishes the program criteria under paragraph 7#c71 the ,director shall issue a request for comment in the ,federal ,register to gather input on the workability of the program4 7,b7 ,petition ,the public may petition the ,director to reevaluate certain aspects of the program criteria published under paragraph 7#c74 7#e7 ,program updates ,as the technology underpinning decentralized finance trading protocols evolves1 the ,director shall update the special publication under paragraph 7#c7 in compliance with subsection 7d74 7d7 ,program 7#a7 ,application ,a person seeking evaluation of a decentralized finance trading protocol or a covered activity under the program established under subsection 7b7 shall submit to the ,director an application at such time and in such manner as the ,director considers appropriate for purposes of the program4 7#b7 ,review ,in carrying out the program established under subsection 7b71 the ,director shall review each application submitted by a person under paragraph 7#a7 of this subsection4 7#c7 ,determination ,in carrying out a review under paragraph 7#b7 of an application regarding a decentralized finance trading protocol or covered activity1 the ,director shall determine whether the protocol or activity is in compliance with existing applicable standards1 frameworks1 and guidelines published by the ,director under subsection 7c74 7#d7 ,notice ,for each determination made under paragraph 7#c7 pursuant to an application by a person of a decentralized finance trading protocol or covered activity1 the ,director shall transmit to the person a notice of the determination4 7e7 ,benefits of program 7#a7 ,display ,a person that receives notice under subsection 7d77#d7 that the ,director has determined that a decentralized finance trading protocol or a covered activity has adopted the applicable cybersecurity standards published by ,,nist1 the person may publicly display a designation1 seal1 or other identifier issued by the ,director4 7#b7 ,treatment of adoption ,in adopting a regulation or guidance relating to this section1 a ,federal agency shall consider adoption of cybersecurity standards under the program required by subsection 7b7 as evidence of good faith compliance with the law4 7f7 ,rule of construction relating to preemption ,nothing in this section may be construed to preempt any otherwise applicable provision of law of a ,state4 #cjg4 ,amendments to monetary instrument definition 7a7 ,definitions ,in this section3 7#a7 ,self-hosted wallet ,the term self-hosted wallet means a digital interface-- 7,a7 that is used to secure and transfer digital assets2 and 7,b7 under which the owner of digital assets secured and transferred under subparagraph 7,a7 retains independent control over those digital assets4 7#b7 ,united states sanction law ,the term ,united ,states sanction law has the meaning given the term in section #cjb7;a74 7b7 ,monetary instruments ,section #ecab7;a77#c77;,d7 of title #ca1 ,united ,states ,code1 is amended by inserting 1 including digital assets 7as defined in section #b of the ,,genius ,act 7#ab ,u4,s4,c4 #eija771 as may be applicable1 after value4 7c7 ,treasury risk assessment ,as part of the national strategy for combating terrorist and other illicit financing required under sections #bfa and #bfb of the ,countering ,america's ,adversaries ,through ,sanctions ,act 7,public ,law #aae-dd2 #aca ,stat4 #icd71 the ,secretary of the ,treasury shall consider-- 7#a7 illicit activity1 such as money laundering and sanctions evasion1 involving self-hosted wallets2 7#b7 the effectiveness of and gaps in existing 7as of the day before the date of enactment of this ,act7 methods1 techniques1 and strategies used by regulated financial institutions in detecting illicit activity1 such as money laundering1 involving self-hosted wallets2 7#c7 any illicit actors1 including nation state actors1 that pose a high risk of facilitating illicit activity through the use of self-hosted wallets2 7#d7 the benefits of the use of self-hosted wallets to-- 7,a7 enhance user privacy and civil liberties through direct asset custody2 and 7,b7 expand financial inclusion and access for communities underserved by traditional financial institutions2 7#e7 end user and counterparty risks associated with self-hosted wallets1 including consumer fraud1 cybersecurity1 and identity verification2 7#f7 the use of hardware self-hosted wallets to smuggle digital assets for financing cross-border illicit activity2 7#g7 the use of hardware self-hosted wallets for tax evasion and asset concealment2 and 7#h7 other considerations the ,secretary may determine appropriate4 7d7 ,guidance ,the ,secretary of the ,treasury may issue guidance for financial institutions that transact with self-hosted wallets based on the results of the research on benefits and risks required under subsection 7c71 which shall not-- 7#a7 require a regulated entity to collect1 with respect to any transaction1 personally identifiable information about the controller of a self-hosted wallet when the controller is not both the customer of the regulated entity and a party to such transaction1 except as required by ,federal law1 including ,united ,states sanctions laws and regulations or lawful process2 or 7#b7 be construed to hinder1 restrict1 or otherwise impair the authority of any ,federal agency to investigate1 detect1 counteract1 or prevent illegal activity4 #cjh4 ,risk management standards for digital asset intermediaries 7a7 ,in general ,before conducting trading activity 7including routing orders and executing trades7 through a decentralized finance trading protocol1 a digital asset intermediary shall implement risk management standards as described in subsection 7b7 with respect to trading using that decentralized finance trading protocol4 7b7 ,requirements ,the risk management standards applicable to a digital asset intermediary shall be comprised of the following3 7#a7 ,conducting an effective risk analysis with respect to the decentralized finance trading protocol1 including-- 7,a7 money laundering and sanctions evasion risks1 including whether trading will involve activity relating to a primary money laundering concern2 7,b7 fraud and market manipulation2 7,c7 operational and cybersecurity risk1 including settlement2 and 7,d7 implementing robust policies and procedures to mitigate the risks identified under this paragraph4 7#b7 ,disclosing the risks identified under paragraph 7#a7 using plain language to customers4 7#c7 ,maintaining robust1 risk-based capability to detect market manipulation1 fraud1 money laundering1 and sanctions evasion occurring on the decentralized finance trading protocol1 which may include the use of alternative tools that will properly target such risks1 including distributed ledger analytics tools4 7#d7 ,implementing an effective risk-based procedure for determining whether to execute1 reject1 or suspend an incoming or outgoing transaction relating to the decentralized finance trading protocol1 as applicable1 including a determination based on suspected risk of money laundering1 sanctions evasion1 fraud1 or market manipulation4 7#e7 ,consistent with this subsection1 implementing other reasonable standards which may be required by rule4 7c7 ,examinations 7#a7 ,compliance ,the ,commission or the ,commodity ,futures ,trading ,commission1 or other appropriate self-regulatory organization1 shall verify compliance with the requirements of this section as part of a regular examination of the digital asset intermediary at the frequency and under the conditions otherwise provided by law or rule4 7#b7 ,rule of construction ,nothing in this section may be construed to limit the authority of the ,financial ,crimes ,enforcement ,network or the ,office of ,foreign ,assets ,control from conducting examinations1 investigations1 or enforcement actions relating to this section as otherwise provided by law4 7d7 ,rulemaking ,rules shall be adopted to implement this section as follows3 7#a7 ,the ,department of the ,treasury1 in consultation with the ,commission and the ,commodity ,futures ,trading ,commission1 shall adopt rules to implement the money laundering and sanctions evasion risk analysis standards of this section4 7#b7 ,the ,commission and the ,commodity ,futures ,trading ,commission shall adopt rules to implement this section other than the provisions described in paragraph 7#a74 7#c7 ,rules adopted under this paragraph shall be reasonably tailored to the size of the applicable digital asset intermediary and risks of the digital asset intermediary that are reasonably knowable to the digital asset intermediary4 #cji4 ,study on digital asset mixers and tumblers 7a7 ,digital asset mixer and tumbler defined ,in this section1 the term digital asset mixer and tumbler means a smart contract1 or set of smart contracts1 that obfuscate or eliminate the source or other forms of identification of the holder of a digital asset1 including by pooling assets from different holders and redistributing those assets among holders4 7b7 ,report ,not later than #a year after the date of enactment of this ,act1 the ,secretary of the ,treasury shall submit to the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate and the ,committee on ,financial ,services of the ,house of ,representatives a report that analyzes the following issues3 7#a7 ,current 7as of the date on which the report is submitted7 typologies of digital asset mixers and tumblers and historical transaction volume4 7#b7 ,estimates of the percentage of transactions relating to digital asset mixers and tumblers that are used by actors engaged in illicit finance4 7#c7 ,estimates of the reliance1 and financial exposure1 of centralized exchanges and traditional financial institutions to digital asset mixers and tumblers1 and the extent to which centralized exchanges and traditional financial institutions are adequately implementing anti-money laundering and economic sanctions compliance with respect to digital asset mixers and tumblers4 7#d7 ,an assessment of potential non-illicit uses of mixers and tumblers described in paragraph 7#a71 including privacy benefits4 7#e7 ,an analysis of regulatory approaches employed by other jurisdictions relating to digital asset mixers and tumblers4 7#f7 ,recommendations for legislation or regulation relating to digital asset mixers and tumblers4 #caj4 ,,gao study on intermediaries in foreign jurisdictions 7a7 ,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 digital asset intermediaries that-- 7,a7 are primarily located in foreign jurisdictions that lack regulatory requirements that are substantially similar to the requirements of the ,bank ,secrecy ,act2 and 7,b7 provide services to ,united ,states persons2 and 7#b7 provide any regulatory or legislative recommendations to address the risks described in paragraph 7#a74 7b7 ,report ,not later than #a year after the date of enactment of this ,act1 the ,comptroller ,general of the ,united ,states shall submit to ,congress a report containing all findings and determinations made in carrying out the study required under subsection 7a74 #caa4 ,studies on foreign adversary activities 7a7 ,definitions ,in this section3 7#a7 ,foreign adversary ,the term foreign adversary means a foreign government or foreign non-government person determined by the ,secretary of ,commerce to be a foreign adversary under section #gia4d7;a7 of title #ae1 ,code of ,federal ,regulations1 or any successor regulation4 7#b7 ,relevant congressional committees ,the term relevant congressional committees means-- 7,a7 the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate2 7,b7 the ,committee on ,agriculture1 ,nutrition1 and ,forestry of the ,senate2 7,c7 the ,select ,committee on ,intelligence of the ,senate2 7,d7 the ,committee on ,financial ,services of the ,house of ,representatives2 7,e7 the ,committee on ,agriculture of the ,house of ,representatives2 and 7,f7 the ,permanent ,select ,committee on ,intelligence of the ,house of ,representatives4 7b7 ,treasury report ,not later than #a year after the date of enactment of this ,act1 the ,secretary of the ,treasury1 in consultation with the ,commodity ,futures ,trading ,commission and the ,commission1 shall conduct a study and submit a report to the relevant congressional committees1 which may include a classified annex1 that-- 7#a7 identifies any digital asset intermediary that is controlled by a government of a foreign adversary1 or by individuals or entities acting at the direction of a foreign adversary2 7#b7 determines whether any government of a foreign adversary is collecting trading data about ,united ,states persons in digital asset markets2 and 7#c7 evaluates whether any proprietary intellectual property of digital asset intermediaries is being misused or stolen by any government of a foreign adversary4 7c7 ,,gao study and report ,not later than #a year after the date of enactment of this ,act1 the ,comptroller ,general shall conduct a study and submit a report to the relevant congressional committees1 which may include a classified annex1 that-- 7#a7 identifies any digital asset intermediary that is owned by a government of a foreign adversary1 or by individuals or entities acting at the direction of a foreign adversary2 7#b7 determines whether any government of a foreign adversary is collecting trading data about ,united ,states persons in digital asset markets2 and 7#c7 evaluates whether any proprietary intellectual property of digital asset intermediaries is being misused or stolen by any government of a foreign adversary4 #cab4 ,treasury study on cybersecurity standards 7a7 ,study ,the ,secretary of the ,treasury1 in consultation with the ,director of the ,cybersecurity and ,infrastructure ,security ,agency1 the ,director of the ,national ,security ,agency1 and the ,director of the ,national ,institute of ,standards and ,technology1 shall conduct a study on cybersecurity standards applicable to digital asset smart contracts1 custody1 key management1 and smart contract deployment4 7b7 ,report 7#a7 ,in general ,not later than #cfe days after the date of enactment of this ,act1 the ,secretary shall submit to the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate and the ,committee on ,financial ,services of the ,house of ,representatives a report containing-- 7,a7 the findings of the study under subsection 7a72 and 7,b7 any legislative recommendations4 7#b7 ,classified annex ,the report under paragraph 7#a7 may include a classified annex1 as appropriate4 #cac4 ,studies on financial stability risks of decentralized finance trading and credit in digital commodity markets ,not later than #a year after the date of enactment of this ,act1 and every #d years thereafter until #d consecutive reports have been issued1 the ,secretary of the ,treasury1 the ,board of ,governors of the ,federal ,reserve ,system1 the ,commission1 and the ,commodity ,futures ,trading ,commission shall-- 7#a7 conduct a study examining-- 7,a7 the role of decentralized finance protocols in the financial system1 including-- 7i7 the functions of such protocols2 7ii7 the use of such protocols to obtain leverage or financing2 7iii7 the effects of such protocols on the pricing and trading of financial instruments1 including descriptions of any linkages between such protocols and traditional financial instrument2 and 7iv7 the types and volumes of financial activity conducted through such protocols2 7,b7 the risks of decentralized finance protocols to financial stability1 fair and orderly markets1 and otherwise to the financial system of the ,united ,states1 which shall include a quantification of those risks1 to the extent possible2 7,c7 the strategies and guardrails regulators and market participants have used and are using to mitigate risks arising from the use of decentralized finance protocols2 and 7,d7 an assessment of whether the regulatory framework adequately controls any risk with respect to decentralized finance protocols2 7#b7 conduct a separate study examining the risks to financial stability and orderly markets arising from the extension and maintenance of credit with respect to digital assets by digital asset service providers1 including-- 7,a7 the effect of gaps in the regulatory framework for credit extended on digital assets1 such as risks arising from the extension and maintenance of credit on digital assets2 and 7,b7 the interconnections between leverage in the market for digital assets and the financial system2 and 7#c7 submit to the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate1 the ,committee on ,agriculture1 ,nutrition1 and ,forestry of the ,senate1 the ,committee on ,financial ,services of the ,house of ,representatives1 and the ,committee on ,agriculture of the ,house of ,representatives a report on the studies conducted under paragraphs 7#a7 and 7#b71 which-- 7,a7 shall include legislative and regulatory recommendations1 as appropriate2 and 7,b7 may include a classified annex4 ,,iv ,responsible banking innovation #dja4 ,permissibility of digital asset activities 7a7 ,definitions ,in this section3 7#a7 ,appropriate ,federal banking agency2 ,state bank2 ,state bank supervisor2 ,state member bank ,the terms appropriate ,federal banking agency1 ,state bank1 ,state bank supervisor1 and ,state member bank have the meanings given those terms in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac74 7#b7 ,customer-driven transaction ,the term customer-driven transaction-- 7,a7 means a transaction that is entered into for a valid and independent business purpose of a customer2 and 7,b7 does not include a transaction1 the principal purpose of which is to deliver to a financial holding company1 insured ,state bank1 national bank1 or ,federal credit union assets that the financial holding company1 insured ,state bank1 national bank1 or ,federal credit union1 respectively1 could not invest in directly4 7#c7 ,federal branch2 ,state branch ,the terms ,federal branch and ,state branch have the meanings given those terms in section #a7;b7 of the ,international ,banking ,act of #aigh 7#ab ,u4,s4,c4 #caja74 7#d7 ,federal credit union2 insured credit union ,the terms ,federal credit union and insured credit union have the meanings given those terms in section #aja of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageb74 7#e7 ,financial holding company ,the term financial holding company has the meaning given the term in section #b of the ,bank ,holding ,company ,act of #aief 7#ab ,u4,s4,c4 #ahda74 7#f7 ,financial subsidiary ,the term financial subsidiary has the meaning given the term in section #eacf;,a7g77#c7 of the ,revised ,statutes 7#ab ,u4,s4,c4 #bd;a74 7#g7 ,insured ,state bank ,the term insured ,state bank means a ,state bank1 the deposits of which are insured by the ,federal ,deposit ,insurance ,corporation4 7#h7 ,national bank ,the term national bank means a national banking association4 7b7 ,authorized activities for financial holding companies and financial subsidiaries 7#a7 ,in general ,a financial holding company or financial subsidiary may use a digital asset or distributed ledger system to perform1 provide1 or deliver any activity1 function1 product1 or service that the financial holding company is otherwise authorized by law to perform1 provide1 or deliver4 7#b7 ,financial in nature ,the activities described in subsection 7g7 are financial in nature1 or incidental to a financial activity1 for purposes of section #d7k7 of the ,bank ,holding ,company ,act of #aief 7#ab ,u4,s4,c4 #ahdc7k77 and section #eacf;,a7b7 of the ,revised ,statutes 7#ab ,u4,s4,c4 #bd;a7b774 7#c7 ,rule of construction ,nothing in this subsection may be construed to exempt the performance1 provision1 or delivery by a financial holding company or financial subsidiary 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 distributed ledger system4 7c7 ,authorized activities for national banks 7#a7 ,in general 7,a7 ,authorized activities ,a national bank may use a digital asset or distributed ledger 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 ,branches of foreign banks 7i7 ,federal branches ,consistent with section #d7;b7 of the ,international ,banking ,act of #aigh 7#ab ,u4,s4,c4 #cajb7;b771 the activities authorized for a national bank under subparagraph 7,a7 and paragraph 7#b7 shall be permissible for a ,federal branch1 subject to any limitations that would apply to those activities pursuant to the ,international ,banking ,act of #aigh 7#ab ,u4,s4,c4 #caja et seq47 if the activity were not performed1 provided1 or delivered using a digital asset or distributed ledger system4 7ii7 ,rule of construction for ,state branches ,for the purposes of activities engaged in by a ,state branch as principal under section #g7;h7 of the ,international ,banking ,act of #aigh 7#ab ,u4,s4,c4 #caje7;h771 the activities authorized under clause 7i7 are permissible activities of a ,federal branch4 7#b7 ,business of banking and other authorized activities ,the activities described in subsection 7g7 are authorized as part of the business of banking under the paragraph designated as the ,seventh of section #eacf of the ,revised ,statutes 7#ab ,u4,s4,c4 #bd7 or under other applicable law4 7#c7 ,rules of construction ,nothing in this subsection may be construed to-- 7,a7 exempt the performance1 provision1 or delivery by a national bank of an activity1 function1 product1 or service from a prohibition1 restriction1 registration1 limitation1 or other requirement that would apply if the activity were not performed1 provided1 or delivered using a digital asset or distributed ledger system by a national bank2 or 7,b7 expand or contract the meaning of operations are or have been required by the ,comptroller of the ,currency to be limited to those of a trust company and activities related thereto1 as that term is used in section #eafi7;a7 of the ,revised ,statutes 7#ab ,u4,s4,c4 #bg7;a774 7d7 ,state banks ,the activities authorized under subsection 7c7 are permissible activities-- 7#a7 of a national bank for purposes of activities of an insured ,state bank and any subsidiary of an insured ,state bank to engage in as principal under subsections 7a7 and 7d7 of section #bd of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahca;a72 and 7#b7 of a ,state member bank1 and any subsidiary of a ,state member bank1 to engage in as principal4 7e7 ,authorized activities for ,federal credit unions 7#a7 ,in general ,a ,federal credit union may use a digital asset or distributed ledger system to perform1 provide1 or deliver any activity1 function1 product1 or service that the ,federal credit union is otherwise authorized by law to perform1 provide1 or deliver4 7#b7 ,business of credit unions ,the activities described in subsection 7g7 are authorized as part of1 or incidental to1 the authority necessary or requisite to carry on effectively the business for which ,federal credit unions are incorporated under paragraph 7#ag7 of section #ajg of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageg7ag774 7#c7 ,rule of construction ,nothing in this subsection may be construed to exempt the performance1 provision1 or delivery by a ,federal credit union 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 distributed ledger system4 7f7 ,insured credit unions ,the activities authorized for a ,federal credit union under subsection 7e77#a7 shall be permissible for an insured credit union1 subject to authorization by applicable ,state law4 7g7 ,activities described ,the activities described in this subsection are-- 7#a7 providing custodial1 fiduciary1 or safekeeping services for digital assets2 7#b7 providing services related to custodial services for digital assets1 including staking1 facilitating digital asset lending1 distributed ledger governance services1 and advancing funds for the purchase of digital assets or in respect of distributions on digital assets2 7#c7 making loans collateralized by digital assets2 7#d7 engaging in payment activities involving digital assets1 including facilitating customer or principal payments in connection with otherwise permissible activities2 7#e7 operating a node on a distributed ledger2 7#f7 providing self-custodial wallet software2 7#g7 engaging in derivatives transactions1 including related hedging activities1 in a manner consistent with section #g4ajcj of title #ab1 ,code of ,federal ,regulations1 as in effect as of the date of enactment of this ,act2 7#h7 providing brokerage services with respect to any digital asset1 including clearing and execution services1 whether alone or in combination with other permissible activities2 7#i7 facilitating transactions in the secondary market for all types of digital assets on the order of customers as a riskless principal to the extent of engaging in a transaction in which a company1 after receiving an order to buy or sell a digital asset from a customer1 purchases or sells the digital asset for its own account to offset a contemporaneous sale to or purchase from the customer2 7#aj7 holding as principal digital assets for which the banking entity anticipates a reasonably foreseeable need to the extent incidental to an otherwise permissible activity1 which shall include holding digital assets as principal in order to pay fees arising from interactions with a distributed ledger system or for the purposes of risk management1 treasury services1 liquidity management or trade or margin settlement or similar purposes1 subject to the otherwise applicable limitations on the activities of a banking entity pursuant to section #ac of the ,bank ,holding ,company ,act of #aief 7#ab ,u4,s4,c4 #ahea7 and only to the extent that the terms and prohibitions of that section apply to a transaction2 and 7#aa7 underwriting1 dealing in1 or making a market in digital assets in customer-driven transactions1 including related hedging activities in connection with those customer-driven transactions1 subject to the otherwise applicable limitations on the activities of a banking entity pursuant to section #ac of the ,bank ,holding ,company ,act of #aief 7#ab ,u4,s4,c4 #ahea7 and only to the extent that the terms and prohibitions of that section apply to a transaction4 7h7 ,other requirements ,there shall be no other prior notice or approval requirements to engage in the activities described in subsections 7b7 through 7g7 of this section other than those required under title ,,lxii of the ,revised ,statutes1 the ,act entitled ,an ,act to place authority over the trust powers of national banks in the ,comptroller of the ,currency1 approved ,september #bh1 #aifb 7#ab ,u4,s4,c4 #ib;a et seq471 the ,federal ,reserve ,act 7#ab ,u4,s4,c4 #bba et seq471 or the ,bank ,holding ,company ,act of #aief 7#ab ,u4,s4,c4 #ahda et seq47 and the regulations promulgated under those ,acts4 7i7 ,rule of construction ,nothing in this section may be construed to-- 7#a7 exclude other possible permissible activities that are not activities described in subsection 7g72 7#b7 imply that inclusion of an activity described in subsection 7g7 means that the activity is otherwise impermissible2 7#c7 limit the authority of an appropriate ,federal banking agency to determine that activities other than those activities described in subsection 7g7 are permissible for a ,federal credit union or authorized as part of the business of banking1 or financial in nature1 or incidental or complementary thereto1 or other applicable law1 as applicable1 through interpretations1 guidance1 or rulemaking2 or 7#d7 limit the authority of an appropriate ,federal banking agency1 or a ,state bank supervisor1 to supervise and take enforcement action with respect to an insured depository institution 7or1 to the extent applicable1 a financial holding company7 engaging in a digital asset activity authorized by this section that the appropriate ,federal banking agency or ,state bank supervisor1 as applicable1 determines1 pursuant to applicable law1 to be an unsafe or unsound practice or a violation of a law1 rule1 or regulation1 or any condition imposed in writing4 7j7 ,application ,the authorities described in this section shall not apply to nonfungible assets4 #djb4 ,joint rules for portfolio margining determinations 7a7 ,in general ,the ,commodity ,futures ,trading ,commission and the ,commission shall jointly issue rules to facilitate portfolio margining of securities 7including related extensions of credit71 security-based swaps1 futures contracts for future delivery1 options on futures contracts for future delivery1 swaps1 and digital commodities1 or any subset thereof1 for persons registered with either such ,commission1 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 7b7 ,process ,the rules required to be jointly issued under subsection 7a7 shall-- 7#a7 describe the treatment of any account to which the rules relate1 and any assets that may be held therein1 in a proceeding under title #aa1 ,united ,states ,code1 the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #gh;aaa et seq471 title ,,ii of the ,dodd-,frank ,wall ,street ,reform and ,consumer ,protection ,act 7#ab ,u4,s4,c4 #echa et seq471 or any other applicable insolvency law with respect to the person carrying the account2 7#b7 be issued only if that issuance is in the public interest and provides for the appropriate protection of customers1 including appropriate disclosures to each current and potential customer concerning the treatment of any account to which the rules relate1 and any assets that may be held therein1 in a proceeding under title #aa1 ,united ,states ,code1 the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #gh;aaa et seq471 title ,,ii of the ,dodd-,frank ,wall ,street ,reform and ,consumer ,protection ,act 7#ab ,u4,s4,c4 #echa et seq471 or any other applicable insolvency law with respect to the person carrying the account2 7#c7 require the ,commission and the ,commodity ,futures ,trading ,commission to consider the public interest of1 and the protection of investors by1 those rules through the solicitation of public comments2 and 7#d7 require the ,commission and the ,commodity ,futures ,trading ,commission to-- 7,a7 consult with other relevant foreign or domestic regulators1 including the ,board of ,governors of the ,federal ,reserve ,system1 the ,federal ,deposit ,insurance ,corporation1 the ,office of the ,comptroller of the ,currency1 and ,state bank supervisors1 as appropriate2 and 7,b7 if the rules pertain to a securities account carried by a registered broker or dealer that is a member of the ,securities ,investor ,protection ,corporation1 consult with the ,securities ,investor ,protection ,corporation4 #djc4 ,capital requirements to address netting agreements 7a7 ,definitions ,in this section1 the terms depository institution holding company and insured depository institution have the meanings given those terms in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac74 7b7 ,capital requirements ,not later than #cfj days after the date of enactment of this ,act1 the ,board of ,governors of the ,federal ,reserve ,system1 the ,comptroller of the ,currency1 and the ,chair of 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 of the ,federal ,reserve ,system that address netting agreements that provide for termination and close-out netting across multiple types of financial transactions1 consistent with section #djb1 in the event of the default of a counterparty4 #djd4 ,prohibiting interest and yield on payment stablecoins 7a7 ,definitions ,in this section3 7#a7 ,affiliate ,the term affiliate means any entity that controls1 is controlled by1 or is under common control with another entity4 7#b7 ,commissions ,the term ,commissions means the ,commission and the ,commodity ,futures ,trading ,commission4 7#c7 ,comptroller2 foreign payment stablecoin issuer2 payment stablecoin2 permitted payment stablecoin issuer ,the terms ,comptroller1 foreign payment stablecoin issuer1 payment stablecoin1 and permitted payment stablecoin issuer have the meanings given those terms in section #b of the ,,genius ,act 7#ab ,u4,s4,c4 #eija74 7#d7 ,covered party ,the term covered party means any digital asset service provider1 together with all of its affiliates1 but in each case excluding any permitted payment stablecoin issuer or foreign payment stablecoin issuer registered with the ,comptroller4 7#e7 ,deposit ,the term deposit has the meaning given the term in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac74 7#f7 ,restricted recipient ,the term restricted recipient means a ,united ,states person that is a customer or user of a covered party4 7#g7 ,united ,states person ,the term ,united ,states person means a person that is a resident of the ,united ,states or is organized or incorporated under the laws of the ,united ,states4 7b7 ,sense of ,congress ,it is the sense of ,congress that-- 7#a7 depository institutions provide financial services that are integral to the strength of the economy of the ,united ,states and that the payment of consideration by digital asset service providers to ,united ,states customers or users based on their payment stablecoin balances in a manner that is economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit may inhibit the key functions of depository institutions in the economy of the ,united ,states2 and 7#b7 payment stablecoins represent a significant innovation in financial infrastructure that can strengthen the ,united ,states payments system and the primacy of the ,united ,states dollar and that activity-based rewards and incentives tied to the use of payment stablecoins and participation in distributed ledger systems are critical to enabling innovation1 competition1 and consumer adoption4 7c7 ,prohibition on interest and yield 7#a7 ,in general ,no covered party shall1 directly or indirectly1 pay any form of interest or yield 7whether in cash1 tokens1 or other consideration7 to a restricted recipient-- 7,a7 solely in connection with the holding of the payment stablecoins of that restricted recipient2 or 7,b7 on a payment stablecoin balance in a manner that is economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit4 7#b7 ,activity-based or transaction-based rewards and incentives permitted 7,a7 ,in general ,the prohibition under paragraph 7#a7 shall not apply with respect to rewards or incentives based on bona fide activities or bona fide transactions that are not economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit pursuant to the regulations promulgated under paragraph 7#c74 7,b7 ,equivalence to bank deposits ,except as permitted under subparagraph 7,a71 the prohibition under paragraph 7#a7 shall apply to the payment of interest or yield 7whether in cash1 tokens1 or other consideration7 by a covered party to a restricted recipient in connection with a loyalty1 promotional1 subscription1 or incentive program that is economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit4 7#c7 ,rulemaking 7,a7 ,in general ,not later than #a year after the date of enactment of this ,act1 the ,commissions and the ,secretary of the ,treasury shall jointly promulgate regulations through notice and comment rulemaking to clarify the circumstances under which the prohibition and permissible rewards and incentives in paragraphs 7#a7 and 7#b7 shall apply4 ,such rulemaking shall include a non-exhaustive list of permissible activity-based or transaction-based rewards or incentives1 including payments to restricted recipients in connection with or in compensation for any of the following1 provided such payments are not economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit3 7i7 ,a transaction1 payment1 transfer1 conversion1 remittance1 or settlement activity1 including a rebate or incentive provided in connection with the acceptance or use of a payment stablecoin4 7ii7 ,providing liquidity for market-marking activity1 posting of collateral in connection with trading1 or otherwise putting assets at credit or investment risk4 7iii7 ,the use of any product or service1 including participation in governance1 validation1 staking1 or a loyalty1 promotional1 subscription1 or incentive program4 7,b7 ,calculation by reference ,payments to restricted recipients of consideration1 rewards1 or benefits that are permissible pursuant to paragraph 7#b7 and subparagraph 7,a7 of this paragraph may be calculated by reference to a balance1 duration1 tenure1 or any combination of the foregoing4 7#d7 ,evasion ,it shall be unlawful for a covered party to violate the prohibition under paragraph 7#a7 or rules promulgated pursuant to paragraph 7#c74 ,a covered party may not circumvent or evade such prohibition or rules4 ,the ,commissions and the ,secretary may jointly issue such rules as may be necessary or appropriate to prevent circumvention or evasion of the prohibition under paragraph 7#a7 or the rules promulgated pursuant to paragraph 7#c74 7#e7 ,good faith reliance ,a covered party that structures a program in good faith reliance on paragraphs 7#b7 and 7#c7 shall not be subject to penalties if a subsequent rulemaking or adjudication determines the program falls outside paragraphs 7#b7 and 7#c71 provided-- 7,a7 the covered party comes into compliance within #ij days of such determination2 and 7,b7 the violation is not substantially similar to a past violation by the covered party4 7d7 ,prohibition on specified representations 7#a7 ,certain marketing practices ,no covered party shall represent that-- 7,a7 payment stablecoins are investment products1 deposits1 backed by the full faith and credit of the ,united ,states1 guaranteed by the ,united ,states ,government1 subject to deposit insurance by the ,federal ,deposit ,insurance ,corporation1 or subject to share insurance by the ,national ,credit ,union ,administration2 or 7,b7 any compensation 7whether in cash1 tokens1 or other consideration7 paid to a restricted recipient in connection with the holding1 use1 or retention of the payment stablecoins of that restricted recipient is-- 7i7 paid or generated by the payment stablecoin itself1 a permitted payment stablecoin issuer1 or a foreign payment stablecoin issuer registered with the ,comptroller2 7ii7 risk-free or comparable to interest paid on a deposit2 or 7iii7 offered1 administered1 or paid by a person other than the covered party4 7#b7 ,misleading ,no covered party shall omit material information necessary to prevent any marketing1 promotion1 or description described in this subsection from being misleading4 7e7 ,disclosures 7#a7 ,in general ,not later than #a year after the date of enactment of this ,act1 the ,commissions and the ,secretary of the ,treasury shall jointly promulgate rules requiring clear and conspicuous disclosure1 in plain ,english1 of any compensation 7whether in cash1 tokens1 or other consideration7 paid by a covered party in connection with the holding1 use1 or retention of the payment stablecoins of a restricted recipient in a manner that is consistent with subsection 7d74 7#b7 ,requirements ,in promulgating rules under paragraph 7#a71 the ,commissions and the ,secretary of the ,treasury shall require that any required disclosure of compensation described in that paragraph1 and any related term1 representation1 or description-- 7,a7 is presented in a clear1 factual1 nonpromotional1 and non-misleading manner2 7,b7 clearly identifies the circumstances under which such compensation can be paid2 7,c7 clearly identifies the person or persons responsible for offering1 administering1 and paying such compensation1 including whether such persons are affiliated with the issuer of associated payment stablecoins2 7,d7 outlines all material terms with respect to such compensation2 and 7,e7 includes a statement that payment stablecoins are not investment products1 deposits1 backed by the full faith and credit of the ,united ,states1 guaranteed by the ,united ,states ,government1 subject to deposit insurance by the ,federal ,deposit ,insurance ,corporation1 or subject to share insurance by the ,national ,credit ,union ,administration4 7#c7 ,prohibition ,after the date on which the rules promulgated under paragraph 7#a7 become effective1 no covered party shall market the offering of compensation 7whether in cash1 tokens1 or other consideration7 paid by such covered party in connection with the holding1 use1 or retention of the payment stablecoins of a restricted recipient unless the covered party has provided the disclosures required under this subsection4 7#d7 ,satisfaction of requirement ,a covered party that provides the disclosures required under this subsection shall be deemed not to have made a representation that is prohibited under subsection 7d71 provided that-- 7,a7 any marketing1 promotion1 or description with respect to the applicable compensation does not contradict those disclosures2 and 7,b7 those disclosures are presented in plain ,english and in a clear and conspicuous manner4 7f7 ,penalty 7#a7 ,civil monetary penalty ,whoever knowingly and willfully participates in a violation of subsection 7c77#a71 7d77#a71 7d77#b71 or 7e77#c71 or rules issued under subsection 7c77#d71 shall be subject to a civil monetary penalty by the ,department of the ,treasury of not more than #e1jjj1jjj for each such violation4 7#b7 ,determination of the number of violations ,for purposes of determining the number of violations for this subsection1 separate acts of noncompliance are a single violation when the acts are a result of-- 7,a7 a common or substantially overlapping originating cause2 or 7,b7 the same statement or publication4 7g7 ,referral to ,secretary of the ,treasury ,if the ,commission or the ,commodity ,futures ,trading ,commission has reason to believe that any covered party has knowingly and willfully violated subsection 7c77#a71 7d77#a71 7d77#b71 or 7e77#c71 or rules issued under subsection 7c77#d71 the ,commission or the ,commodity ,futures ,trading ,commission1 as applicable1 shall refer the matter to the ,secretary of the ,treasury4 7h7 ,report to ,congress ,not later than #b years after the date of enactment of this ,act1 the ,board of ,governors of the ,federal ,reserve ,system1 the ,comptroller of the ,currency1 the ,federal ,deposit ,insurance ,corporation1 the ,national ,credit ,union ,administration1 and the ,secretary of the ,treasury shall jointly submit to the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate and the ,committee on ,financial ,services of the ,house of ,representatives a report on payment stablecoin activity that-- 7#a7 analyzes and quantifies-- 7,a7 the adoption of ,united ,states dollar-denominated payment stablecoins and of other payment stablecoins issued by permitted payment stablecoin issuers and foreign payment stablecoin issuers registered with the ,comptroller2 7,b7 the effect of ,united ,states dollar-denominated payment stablecoins on the average yields of1 and demand for1 ,united ,states ,treasury securities of various durations2 7,c7 the effect of ,united ,states dollar-denominated payment stablecoins on the use of the dollar in global foreign exchange transactions1 global foreign exchange reserves1 and global trade2 7,d7 the effect of ,united ,states dollar-denominated payment stablecoins on increasing access to financial services for unbanked and underbanked persons1 both domestically and globally2 7,e7 the effect of ,united ,states dollar-denominated payment stablecoins on payment costs of consumers and merchants2 and 7,f7 the adoption of non-,united ,states dollar-denominated stablecoins1 including foreign central bank digital currencies1 and their effect on the use of the dollar in global foreign exchange transactions1 global foreign exchange reserves1 and global trade2 7#b7 describes how compensation1 if any1 is paid by covered parties to restricted recipients with respect to the payment stablecoins of restricted recipients1 including through rewards1 incentives1 or similar programs2 and 7#c7 analyzes and quantifies the effect of any compensation described in paragraph 7#b7 and the effect of prohibitions on the payment of interest or yield by covered parties under this ,act and by issuers of payment stablecoins under section #d7;a77#aa7 of the ,,genius ,act 7#ab ,u4,s4,c4 #eijc7;a77#aa77 on-- 7,a7 the volume1 stickiness1 composition1 and concentration of deposits at depository institutions1 including any deposit outflows from depository institutions and the extent to which community banks and credit unions are disproportionately affected thereby2 7,b7 net interest margin accrued to depository institutions2 7,c7 the average rate of interest paid to depositors at depository institutions2 7,d7 consumer and business access to credit2 7,e7 financial arrangements between depository institutions and digital asset service providers and issuers of payment stablecoins2 and 7,f7 the items described in paragraph 7#a74 7i7 ,no deeming of payment of interest or yield ,for purposes of this section1 a covered party shall not be deemed to violate the prohibition in subsection 7c7 solely because an unaffiliated third party independently makes a payment with respect to a payment stablecoin1 unless the covered party directs or maintains significant influence over the offering of such consideration and the offering of such consideration would otherwise violate the prohibition in subsection 7c74 7j7 ,clarification of scope and regulatory authority 7#a7 ,compensation ,the prohibitions under subsections 7c71 7d71 and 7e7 shall only apply to compensation paid in connection with a payment stablecoin or payment stablecoin balance4 7#b7 ,other assets ,nothing in this section shall be construed to authorize the ,commissions or the ,secretary of the ,treasury to regulate1 restrict1 or prohibit the payment of any compensation paid in connection with any asset other than a payment stablecoin4 7k7 ,non-applicability ,nothing in this section shall-- 7#a7 modify1 alter1 or extend prohibitions on the payment of yield1 interest1 or consideration applicable to permitted payment stablecoin issuers or foreign payment stablecoin issuers1 including under section #d7;a77#aa7 of the ,,genius ,act 7#ab ,u4,s4,c4 #eijc7;a77#aa772 or 7#b7 prohibit the disclosure by covered parties of truthful1 non-misleading factual information or any information otherwise required by ,federal law or regulation4 #dje4 ,expanded securities portfolio margin accounts under the ,securities ,investor ,protection ,act of #aigj 7a7 ,amendments ,the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #gh;aaa et seq47 is amended-- 7#a7 in section #i7;a7 7#ae ,u4,s4,c4 #gh;fff-#c7;a77-- 7,a7 in paragraph 7#d71 by striking and at the end2 7,b7 in paragraph 7#e71 by striking the period at the end and inserting 2 and2 and 7,c7 by adding at the end the following3 7#f7 no advance shall be made by ,,sipc to the trustee to pay or otherwise satisfy any net equity claim of any customer with respect to any digital commodities or swaps held in an expanded securities portfolio margin account4 2 7#b7 in section #aj7;g7 7#ae ,u4,s4,c4 #gh;fff-#d7;g771 by striking #af7ab7 and inserting #af7ac72 and 7#c7 in section #af 7#ae ,u4,s4,c4 #ghlll7-- 7,a7 by redesignating paragraphs 7#g7 through 7#ad7 as paragraphs 7#h7 through 7#ae71 respectively2 7,b7 by inserting after paragraph 7#f7 the following3 7#g7 ,expanded securities portfolio margin account ,the term expanded securities portfolio margin account means a customer account-- 7,a7 that is maintained by a broker or dealer registered with the ,commission2 7,b7 that includes positions in securities1 security-based swaps1 futures contracts1 options on futures contracts1 swaps1 digital commodities1 or other financial instruments1 or any combination thereof1 as permitted by rule jointly issued by the ,commission and the ,commodity ,futures ,trading ,commission2 7,c7 that is subject to portfolio margining requirements approved pursuant to section #djb of the ,digital ,asset ,market ,clarity ,act2 and 7,d7 in which margin requirements are determined on a risk-based1 portfolio-wide basis1 rather than on an instrument-by-instrument basis4 2 and 7,c7 in paragraph 7#aj71 as so redesignated1 in the matter following subparagraph 7,l71 by striking a transaction in the portfolio margining account and inserting the portfolio margining account or expanded securities portfolio margin account4 7b7 ,rules 7#a7 ,definitions ,in this subsection3 7,a7 ,expanded securities portfolio margin account ,the term expanded securities portfolio margin account has the meaning given the term in section #af of the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #ghlll71 as amended by this section4 7,b7 ,,sipc ,the term ,,sipc means the ,securities ,investor ,protection ,corporation4 7#b7 ,issuance of rules ,notwithstanding any provision of the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #gh;aaa et seq471 in jointly issuing rules under section #djb1 the ,commission and the ,commodity ,futures ,trading ,commission1 in consultation with the ,,sipc and the ,secretary of the ,treasury1 shall issue rules relating to the treatment under that ,act of securities 7including related extensions of credit71 security-based swaps1 contracts of sale of a commodity for future delivery1 options on contracts of sale of a commodity for future delivery1 swaps1 digital commodities1 cash1 or other property 7to the extent that such instruments1 cash1 or other property effectively hedge or collateralize a securities position7 held in an account offering portfolio margining carried as a securities account by a registered broker or dealer pursuant to an expanded securities portfolio margin account to facilitate portfolio margining in a manner that protects customers1 including portfolio margin customers1 which shall include rules relating to-- 7,a7 the transfer of accounts2 7,b7 the allocation of customer property among customers2 7,c7 the eligibility of products and positions to be held in an expanded securities portfolio margin account1 including any disclosures to and any elections that may need to be performed by customers2 7,d7 the application of customer protection or segregation requirements as between securities customers who are and are not maintaining positions in an expanded securities portfolio margin account2 7,e7 further defining the terms1 solely as relating to an expanded securities portfolio margin account1 customer1 customer property1 and net equity1 as necessary or appropriate to address non-securities and non-cash positions and assets held in an expanded securities portfolio margin account1 and in a manner consistent with subparagraphs 7,a7 through 7,d72 and 7,f7 any interaction between a securities account and an expanded securities portfolio margin account1 including any funding of debits in one type of account by credits in the other type of account4 7#c7 ,process for issuance of rules ,the requirements of section #djb7;b7 shall apply with respect to the rules issued under this subsection4 7c7 ,effect of rules ,an expanded securities portfolio margin account may not be offered1 maintained1 or utilized until the final rules required under subsection 7b7 are issued4 ,v ,responsible regulatory innovation #eja4 ,,cftc-,,sec ,micro-,innovation ,sandbox 7a7 ,definitions ,in this section3 7#a7 ,commission ,the term ,commission means either of the ,commissions1 as the context requires4 7#b7 ,commissions ,the term ,commissions means the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission4 7#c7 ,eligible firm ,the term eligible firm means a person that is eligible to participate in the ,sandbox1 in accordance with the requirements under this section4 7#d7 ,innovative ,the term innovative means new or emerging technology1 or a novel application of technology1 including artificial intelligence1 that-- 7,a7 provides a financial product1 service1 business model1 or delivery mechanism to the public2 and 7,b7 lacks-- 7i7 a substantially comparable1 widely available analogue in common use in the ,united ,states2 and 7ii7 an analogous ,federal regulatory regime4 7#e7 ,person ,the term person means a person1 as defined in section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a77 or section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a74 7#f7 ,sandbox ,the term ,sandbox means the ,,cftc-,,sec ,micro-,innovation ,sandbox established under subsection 7b74 7#g7 ,self-regulatory organization ,the term self-regulatory organization means a self-regulatory organization1 as defined in-- 7,a7 section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a772 or 7,b7 section #a4eb7;a77#b7 of title #ag1 ,code of ,federal ,regulations1 or any successor regulation4 7b7 ,establishment ,not later than #cfj days after the date of enactment of this ,act1 the ,commissions shall1 by joint notice and comment rulemaking1 establish a ,,cftc-,,sec ,micro-,innovation ,sandbox to enable eligible firms to test innovative activities within the ,united ,states1 subject to-- 7#a7 applicable ,federal and ,state securities and commodities laws2 7#b7 other ,state laws that are not specific to the regulation of securities or commodities2 and 7#c7 the limitations of this section4 7c7 ,eligible firm 7#a7 ,in general ,a ,united ,states-based person shall be an eligible firm1 and shall be eligible to participate in the ,sandbox1 if the person-- 7,a7 submits an application under subsection 7e7 that is approved under that subsection2 7,b7 seeks to conduct an eligible and lawful innovative activity in the ,united ,states2 7,c7 is not subject to-- 7i7 a statutory disqualification1 as defined in section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a772 7ii7 a disqualification under section #h;a7#b7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #ab;a7#b772 or 7iii7 a disqualification under ,state law2 7,d7 does not have a criminal conviction for fraud2 7,e7 agrees to submit to the jurisdiction and oversight of the ,commissions1 to the extent that the person is not subject to that jurisdiction or oversight1 for purposes of1 and while participating in1 the ,sandbox2 7,f7 designates to the ,commissions an individual as a point of contact with respect to activities that the person undertakes as an applicant and participant with respect to the ,sandbox2 7,g7 employs not more than #be employees2 and 7,h7 has annual gross revenues of not more than #aj1jjj1jjj in any fiscal year4 7#b7 ,application of requirements ,the requirements under paragraph 7#a7 shall be satisfied during the entire period in which an eligible firm participates in the ,sandbox4 7d7 ,eligible activities and activity ceilings 7#a7 ,list of eligible activities 7,a7 ,in general ,after providing notice and an opportunity for public comment1 the ,commissions shall maintain and publish a list of eligible innovative activities1 which shall be-- 7i7 updated once every #b years after providing notice and an opportunity for public comment2 7ii7 reasonably tailored to include activities that-- 7,i7 further the purposes of this section2 and 7,,ii7 are consistent with the interests of the public and the protection of investors2 7iii7 sufficiently flexible to accommodate evolving technological developments1 including distributed ledger-based products and services2 and 7iv7 focused exclusively on activities for which specific provisions of the securities laws and commodities laws may create a material impediment to the proposed innovative activity4 7,b7 ,identification of requirements 7i7 ,in general ,for each eligible innovative activity1 the ,commissions shall1 consistent with existing 7as of the day before the date of enactment of this ,act7 statutory and regulatory precedent concerning the respective jurisdiction of each ,commission1 identify the requirements that each ,commission will administer4 7ii7 ,joint jurisdiction ,with respect to an eligible innovative activity that is subject to the jurisdiction of both ,commissions1 the rulemaking under subsection 7b7 shall specify which requirements each ,commission will administer and any coordinated conditions needed to protect investors and market integrity4 7#b7 ,activity ceilings ,for each eligible innovative activity1 the ,commissions shall1 after public input and consultation1 establish individual customer and monetary ceilings1 which shall provide that an eligible firm may not raise or commit more than #bj1jjj1jjj in aggregate customer1 investor1 or counterparty funds in connection with ,sandbox activities4 7#c7 ,annual participation cap ,each of the ,commissions may approve not more than #bj projects per year4 7e7 ,application 7#a7 ,in general ,an eligible firm seeking to participate in the ,sandbox shall submit to the ,commission or ,commissions1 as applicable1 an application that-- 7,a7 describes the proposed innovative activity and the desired outcomes2 7,b7 subject to approval of the applicable ,commission1 identifies the provisions of the securities laws1 or of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq471 from which the eligible firm proposes to be exempt during the period in which the eligible firm participates in the ,sandbox1 which-- 7i7 shall not include any ,federal or ,state anti-fraud law or any other law that is not specific to the regulation of securities or commodities2 and 7ii7 shall be subject to the limitations of this section2 7,c7 sets forth how relief from the provisions of law identified under subparagraph 7,b7 is reasonably necessary to engage in the innovative activity2 7,d7 identifies material risks to investors1 customers1 or market integrity and how the eligible firm will mitigate those risks2 7,e7 certifies that the eligible firm will comply with applicable ,federal and ,state anti-fraud laws2 7,f7 states an exit objective of the eligible firm involving action from the applicable ,commission1 which may include registration1 an exemptive order1 interpretive guidance1 a no-action letter1 or a rulemaking petition1 together with milestones and metrics the eligible firm will use to demonstrate readiness for that exit2 7,g7 states the agreement of the eligible firm to submit to the jurisdiction and oversight of the ,commissions1 to the extent that the eligible firm is not otherwise subject to that jurisdiction and oversight1 for purposes of1 and while participating in1 the ,sandbox2 7,h7 designates to the ,commissions an individual as a point of contact with respect to activities that the eligible firm undertakes as an applicant and participant with respect to the ,sandbox2 and 7,i7 states the agreement of the eligible firm to abide by any condition that either of the ,commissions may impose for engaging in an eligible innovative activity in the ,sandbox4 7#b7 ,deadline for decision ,not later than #ahj business days after the date on which an eligible firm submits an application under this subsection1 the ,commission or ,commissions1 as applicable1 shall make a decision with respect to the application1 after which the eligible firm submitting the application may commence eligible innovative activities in the ,sandbox unless the application is denied4 7#c7 ,updates and status reports ,each eligible firm shall submit to the ,commission or ,commissions1 as applicable1 on a semi-annual basis while participating in the ,sandbox1 an updated application that-- 7,a7 describes any material changes to the information originally provided under paragraph 7#a72 and 7,b7 reports the progress of the eligible firm toward the stated exit objective described in paragraph 7#a77;,f71 including milestones achieved1 remaining impediments1 and any pending requests for official action before the applicable ,commission or the ,commissions4 7#d7 ,unredacted and redacted versions 7,a7 ,in general ,an eligible firm that submits an initial or updated application under this subsection may submit to the applicable ,commission or the ,commissions an unredacted version1 together with a request for confidential treatment1 pursuant to procedures the applicable ,commission shall establish that are modeled on the rules of that ,commission relating to the confidential treatment of information1 which shall include-- 7i7 for the ,securities and ,exchange ,commission1 sections #bjj4hc1 #bcj4djf1 and #bdj4bd;b-#b of title #ag1 ,code of ,federal ,regulations1 or any successor regulations2 and 7ii7 for the ,commodity ,futures ,trading ,commission1 section #ade4i of title #ag1 ,code of ,federal ,regulations1 or any successor regulations4 7,b7 ,omitted information ,an eligible firm may omit information granted confidential treatment under subparagraph 7,a7 from any public posting under subsection 7h7 in accordance with the procedures established under subparagraph 7,a74 7,c7 ,indication of confidential information ,any omission in a public posting under subsection 7h7 shall be clearly indicated by brackets with a prominent legend stating that-- 7i7 confidential information has been omitted2 and 7ii7 an unredacted version has been filed with the applicable ,commission or the ,commissions4 7f7 ,duration of participation 7#a7 ,duration ,except as provided in paragraph 7#b71 an eligible firm may participate in the ,sandbox for a period of not more than #b years1 provided that the eligible firm does not exceed the ceilings established under subsection 7d77#b74 7#b7 ,extension 7,a7 ,sole jurisdiction ,if an eligible innovative activity is subject only to the jurisdiction of #a ,commission1 that ,commission may extend participation by an eligible firm in the ,sandbox by not more than #a additional year1 if that ,commission determines that the eligible firm-- 7i7 is actively pursuing the exit objective described in subsection 7e77#a77;,f7 in good faith2 7ii7 is making demonstrable progress toward achieving such an exit2 and 7iii7 establishes that such an extension is necessary to achieve such an exit4 7,b7 ,joint jurisdiction ,where an eligible innovative activity is subject to the jurisdiction of both ,commissions1 an extension of participation by an eligible firm in the ,sandbox by not more than #a additional year shall be by joint order of the ,commissions after making the findings described in clauses 7i7 through 7iii7 of subparagraph 7,a74 7g7 ,conditions and enforcement 7#a7 ,conditions ,an eligible firm shall comply with applicable regulatory conditions approved by the applicable ,commission or the ,commissions under subsection 7e77#a77;,b71 which shall be consistent with applicable ,federal and ,state anti-fraud laws4 7#b7 ,monitoring ,the ,commissions shall monitor ,sandbox activities and enforce compliance with applicable regulatory conditions and ,federal anti-fraud laws4 7#c7 ,coordination 7,a7 ,in general ,the ,commissions shall coordinate supervision1 information requests1 and examinations to avoid duplication while each ,commission retains full authority under the provisions of law that such ,commission administers4 7,b7 ,cooperation with states ,the ,commissions may cooperate with any ,state in enforcing compliance with applicable regulatory conditions and ,federal and ,state anti-fraud laws with respect to the operation of the ,sandbox4 7#d7 ,self-regulatory organizations ,each self-regulatory organization shall recognize and respect ,sandbox conditions that are applicable to a participant in the ,sandbox4 7#e7 ,cessation of activities ,the ,commissions may1 at any time during the participation of an eligible firm in the ,sandbox1 disqualify the eligible firm from continued participation in the ,sandbox1 order the eligible firm to cease engaging in a permitted activity in the ,sandbox1 revoke a grant of exemptive relief1 or impose additional or more stringent conditions on continuing participation or engagement in a permitted activity in the ,sandbox1 if the ,commissions find that the eligible firm has failed to comply with-- 7,a7 the requirements of this section2 7,b7 the terms or conditions of participation established by the ,commissions2 or 7,c7 other applicable law4 7h7 ,public disclosure 7#a7 ,initial posting ,each eligible firm shall post1 in a prominent location on a public website of the eligible firm1 the information required under subsection 7e77#a71 subject to confidential treatment under subsection 7e77#d71 not later than the date on which the notice becomes effective under subsection 7e77#c74 7#b7 ,updates ,each eligible firm shall post1 in the same manner as under paragraph 7#a71 the information required under subsection 7e77#c71 subject to confidential treatment under subsection 7e77#d71 concurrently with submission to the applicable ,commission or the ,commissions4 7#c7 ,disclosure requirements ,each post under this subsection shall satisfy the disclosure requirements of both ,commissions where the jurisdictions of both ,commissions are implicated4 7i7 ,use of data by commissions ,each ,commission may collect and share data from ,sandbox activities with the other ,commission to inform permanent1 principles-based regulatory frameworks that advance the missions of the ,commissions4 7j7 ,publication by commissions ,not less frequently than annually1 each ,commission shall publish on the public website of the ,commission a report summarizing the activities conducted under this section1 including-- 7#a7 the number and general nature of eligible firms participating in the ,sandbox2 7#b7 the categories of innovative activities tested2 7#c7 the impact of ,sandbox participation on innovation1 investor protection1 market integrity1 and the public interest2 7#d7 the disclosures posted by eligible firms under subsection 7h77#a72 and 7#e7 exit outcomes1 including the types of relief requested and actions taken by the ,commissions4 7k7 ,relationship of sandbox participation to state law 7#a7 ,limited preemption for sandbox participants ,this section1 including participation in the ,sandbox1 and any exemption or relief granted under this section1 shall supersede any ,state securities or commodities law requiring registration1 qualification1 or licensing as a condition of engaging in an approved activity or otherwise regulating that activity as a security or commodity4 7#b7 ,state enforcement preserved ,nothing in this section may be construed to prohibit or limit any ,state securities or commodities regulator1 any ,state bank regulator1 or any ,state law enforcement agency from conducting an investigation or bringing an administrative1 civil1 or criminal enforcement action under-- 7,a7 a ,state law prohibiting fraud or deceit1 or fraudulent1 deceptive1 manipulative1 unethical1 dishonest1 or other unlawful conduct or practices1 in connection with securities or securities transactions2 7,b7 the anti-fraud provisions of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq47 or ,state commodities laws2 or 7,c7 any ,state law of general applicability1 including such a law relating to banking1 consumer protection1 contracts1 property1 or criminal conduct4 7#c7 ,notice filings ,a ,state may require notice of any document filed with either of the ,commissions in connection with participation in the ,sandbox1 together with consent to service of process and reasonable fees1 consistent with section #ah7;c7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggr7c774 #ejb4 ,international cooperation 7a7 ,definition ,in this section1 the term ,commissions means the ,commission and the ,commodity ,futures ,trading ,commission4 7b7 ,cooperation ,in order to promote ,united ,states leadership in effective1 reciprocal1 and innovative global regulation of digital assets1 and to advance the strategic economic and policy interests of the ,united ,states1 the ,commissions1 as appropriate-- 7#a7 shall consult and coordinate with foreign regulatory authorities or other relevant international organizations on the application of consistent international standards with respect to the regulation of digital assets2 7#b7 may enter into such information sharing arrangements as may be determined to be necessary or appropriate in the public interest or for the protection of investors1 customers1 and users of digital assets2 7#c7 shall pursue reciprocal arrangements with foreign regulatory authorities that ensure ,united ,states-based digital asset firms1 exchanges1 and infrastructure providers receive treatment equivalent to that granted to foreign counterparts operating within the ,united ,states2 7#d7 shall advocate in international fora for the development and adoption of technology-neutral1 open standards that preserve lawful access to public distributed ledger infrastructure1 support dollar-denominated digital asset usage1 and safeguard individual rights1 including self-custody and privacy2 and 7#e7 may1 as appropriate1 engage in1 at the least1 cooperative enforcement1 supervisory coordination1 and joint technical assistance1 in a manner that promotes responsible innovation in digital financial markets4 7c7 ,cross-border sandbox ,the ,commissions may leverage the activities described in paragraphs 7#a7 through 7#e7 of subsection 7b7 to establish or participate in cross-border regulatory sandboxes that build upon the ,,cftc-,,sec ,micro-,innovation ,sandbox established pursuant to section #eja4 #ejc4 ,automated regulatory compliance study 7a7 ,definitions ,in this section3 7#a7 ,automated regulatory compliance ,the term automated regulatory compliance means the use of technology1 including data standards1 automation1 and distributed ledger or smart contract functionality1 to automate1 tag1 or otherwise streamline regulatory reporting1 disclosure1 supervisory1 or other compliance obligations4 7#b7 ,innovative ,the term innovative has the meaning given the term in section #eja7;a74 7b7 ,study required ,the ,comptroller ,general of the ,united ,states shall1 in consultation with the ,department of the ,treasury 7including the ,financial ,crimes ,enforcement ,network1 the ,office of ,foreign ,assets ,control1 and the ,office of ,financial ,research71 the ,office of the ,comptroller of the ,currency1 the ,federal ,deposit ,insurance ,corporation1 the ,national ,credit ,union ,administration1 the ,commission1 the ,commodity ,futures ,trading ,commission1 the ,bureau of ,consumer ,financial ,protection1 and the ,federal ,housing ,finance ,agency1 carry out a study of distributed ledger-based compliance tools that-- 7#a7 to the extent feasible1 identifies and evaluates-- 7,a7 the landscape of existing 7as of the day before the date of enactment of this ,act7 distributed ledger-based compliance tools for-- 7i7 statutory and regulatory disclosures2 7ii7 real-time reporting and audit-trail logging2 and 7iii7 anti-money-laundering practices1 sanctions screening1 and customer-identification checks2 7,b7 the feasibility1 benefits1 and risks of allowing regulated entities to satisfy applicable regulatory obligations through on-chain1 code-based1 or other automated mechanisms2 7,c7 the potential for interoperability with automated regulatory compliance mechanisms across and among each of those agencies2 7,d7 the data collection systems of each of those agencies2 and 7,e7 standards or taxonomies1 or other common data elements1 if any1 that those agencies could publish or adopt to support the interoperability described in subparagraph 7,c7 in order to ensure consistency and regulatory access2 7#b7 recommends pilot programs1 guidance1 rule changes1 or amendments to statutes that would be needed to implement effective automated regulatory compliance approaches and any other related approaches addressed in the study2 7#c7 identifies the costs and benefits to issuers of different sizes1 secondary market intermediaries1 regulators1 investors1 and other applicable parties1 including differential impacts on smaller entities and options to reduce those burdens2 7#d7 benchmarks international efforts with respect to automated regulatory compliance mechanisms and consults with any appropriate ,state1 ,federal1 or foreign regulators2 and 7#e7 evaluates whether existing 7as of the day before the date of enactment of this ,act7 oversight1 enforcement1 and liability frameworks are sufficient to-- 7,a7 ensure accountability1 transparency1 fairness1 and consumer protection2 and 7,b7 prevent misuse of distributed ledger-based compliance tools4 7c7 ,report ,not later than #a year after the date of enactment of this ,act1 the ,comptroller ,general of the ,united ,states shall make publicly available a report that includes the results of the study conducted under subsection 7b74 #ejd4 ,report on legislative recommendations 7a7 ,definitions ,in this section3 7#a7 ,appropriate committees of congress ,the term appropriate committees of ,congress means-- 7,a7 the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate2 7,b7 the ,committee on ,agriculture1 ,nutrition1 and ,forestry of the ,senate2 7,c7 the ,committee on ,financial ,services of the ,house of ,representatives2 and 7,d7 the ,committee on ,agriculture of the ,house of ,representatives4 7#b7 ,federal financial regulator ,the term ,federal financial regulator means-- 7,a7 the ,board of ,governors of the ,federal ,reserve ,system2 7,b7 the ,commodity ,futures ,trading ,commission2 7,c7 the ,department of the ,treasury2 7,d7 the ,federal ,deposit ,insurance ,corporation2 7,e7 the ,federal ,housing ,finance ,agency2 7,f7 the ,national ,credit ,union ,administration2 7,g7 the ,office of the ,comptroller of the ,currency2 7,h7 the ,bureau of ,consumer ,financial ,protection2 and 7,i7 the ,commission4 7b7 ,requirement ,not later than #a year after the date of enactment of this ,act1 and every #c years thereafter for a total of not fewer than #ab years after the date of enactment of this ,act1 each ,federal financial regulator shall submit to the appropriate committees of ,congress a report that includes-- 7#a7 a description of the implementation of this ,act and the amendments made by this ,act 7including the adoption of rules and guidance1 and the approval or rejection of applications submitted1 under this ,act and the amendments made by this ,act71 where applicable to the ,federal financial regulator2 and 7#b7 any legislative recommendations for the further effective implementation of this ,act and the amendments made by this ,act4 #eje4 ,tokenization of securities 7a7 ,definitions ,in this section3 7#a7 ,tokenization ,the term tokenization means the process of creating a digital representation of all rights1 obligations1 or interests in a tangible or intangible asset on a distributed ledger or comparable technology4 7#b7 ,tokenized ,the term tokenized1 with respect to an asset1 means that the asset has undergone tokenization4 7b7 ,sense of ,congress ,it is the sense of ,congress that ,states should promptly consider and adopt commercial law frameworks under the ,uniform ,commercial ,code that provide clear and uniform rules for the ownership1 control1 and enforceability of rights relating to digital assets4 7c7 ,study ,not later than #cfj days after the date of enactment of this ,act1 the ,commission shall conduct a comprehensive study of the regulatory treatment of tokenized securities1 including custody standards1 interagency coordination1 cross-border coordination1 and consumer protection4 7d7 ,parity in regulatory treatment 7#a7 ,in general ,subject to paragraph 7#b71 a tokenized security shall be treated1 for all regulatory purposes1 as the security that the tokenized security represents1 except as otherwise provided by-- 7,a7 section #ajf7;a72 or 7,b7 a rule1 regulation1 or order issued by the ,commission4 7#b7 ,requirement ,a rule1 regulation1 or order described in paragraph 7#a77;,b7 may only be issued by the ,commission to adapt the manner in which the applicable regulatory requirements are satisfied1 to the extent necessary or appropriate-- 7,a7 in light of the unique technological or other characteristics of digital assets or substantially similar technology2 and 7,b7 consistent with-- 7i7 what is necessary or appropriate in the public interest2 and 7ii7 protecting investors1 maintaining fair1 orderly1 and efficient markets1 and facilitating capital formation4 7e7 ,prohibition on misrepresentation ,any statement or omission with respect to any material fact that is made by a person in connection with the offer1 sale1 or other representation regarding a tokenized security shall be subject to the securities laws1 including applicable anti-fraud or anti-manipulation provisions under the securities laws4 7f7 ,agency action for tokenized securities 7#a7 ,in general ,the ,commission may issue rules governing tokenized securities pursuant to the requirements of this section4 7#b7 ,requirements ,rules issued under this subsection may address1 consistent with sections #ajf and #ajg1 how requirements applicable to an underlying security apply to custody1 books and records1 reconciliation with transfer agents or other recordkeepers1 auditability1 settlement finality1 treatment of chain reorganizations1 and other operational risks arising from the use of distributed ledger technology or comparable technology4 7g7 ,rule of construction regarding enforcement ,nothing in this section may be construed to prevent the ,commission from enforcing the anti-fraud and anti-manipulation provisions of the securities laws1 and the rules issued under the securities laws1 with respect to tokenized securities1 provided that the elements of those provisions are satisfied4 7h7 ,savings clauses 7#a7 ,tokenized security ,any asset that is a security under the securities laws shall not cease to be a security solely because the asset is issued1 recorded1 represented1 or transferred using distributed ledger technology or comparable technology4 7#b7 ,effect on ,state law ,nothing in this section may be construed1 interpreted1 or applied in a manner that preempts1 supersedes1 invalidates1 or otherwise affects any ,state property transfer rules1 laws1 regulations1 or common law principles relating to the transfer or recording of real tangible or intangible assets or interests therein4 7#c7 ,rulemakings1 orders1 and other actions ,notwithstanding any other provision of this section1 section #ajf shall apply to any rulemaking1 order1 or other action of the ,commission under this section4 7#d7 ,no limit of ability to offer or sell ,nothing in this section1 or any rule1 regulation1 or order promulgated under this section1 may be construed to limit the ability of any person to offer or sell any tokenized security1 consistent with the securities laws4 #ejf4 ,voluntary adoption of ,national ,institute of ,standards and ,technology post-quantum cryptography standards 7a7 ,definitions ,in this section3 7#a7 ,appropriate congressional committees ,the term appropriate congressional committees means-- 7,a7 the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate2 7,b7 the ,committee on ,agriculture1 ,nutrition1 and ,forestry of the ,senate2 7,c7 the ,committee on ,commerce1 ,science1 and ,transportation of the ,senate2 7,d7 the ,committee on ,financial ,services of the ,house of ,representatives2 7,e7 the ,committee on ,agriculture of the ,house of ,representatives2 and 7,f7 the ,committee on ,energy and ,commerce of the ,house of ,representatives4 7#b7 ,director ,the term ,director means the ,under ,secretary of ,commerce for ,standards and ,technology4 7b7 ,findings ,congress finds the following3 7#a7 ,technical standards with respect to digital assets ensure quality1 interoperability1 and reliability in products1 processes1 and services and facilitate innovation4 7#b7 ,the digital asset ecosystem should harness standards to solve coordination problems and foster innovation1 not through regulation1 but through voluntary1 market-driven measures4 7#c7 ,advances in quantum computing threaten existing 7as of the day before the date of enactment of this ,act7 cryptographic standards and the security of digital assets4 7c7 ,voluntary adoption ,the ,director1 in consultation with the ,secretary of ,homeland ,security and the heads of sector risk management agencies1 as appropriate1 shall promote the voluntary adoption and deployment of post-quantum cryptography standards1 including by-- 7#a7 disseminating and making publicly available guidance and resources to help organizations adopt and deploy those standards2 7#b7 providing technical assistance1 as practicable1 to entities that are at high risk of quantum cryptography analytic attacks1 such as entities determined to be critical infrastructure or digital infrastructure providers2 and 7#c7 conducting such other activities determined necessary by the ,director to promote the adoption and deployment of those standards across the ,united ,states4 7d7 ,industry consultation ,in implementing subsection 7c71 the ,director shall1 at a minimum-- 7#a7 solicit regular input from a broad range of industry stakeholders regarding the feasibility and practical challenges of adopting the standards described in that subsection2 7#b7 facilitate ongoing dialogue between the ,national ,institute of ,standards and ,technology and industry participants to identify1 assess1 and address barriers to the adoption of the standards described in that subsection2 7#c7 not later than #b years after the date of enactment of this ,act1 and biennially thereafter until #bjce1 submit to the appropriate congressional committees a report on the implementation of that subsection1 including stakeholder engagement with respect to those actions and continued challenges in adopting the standards described in that subsection2 and 7#d7 not later than #e years after the date of enactment of this ,act1 make available to the public a report on stakeholder engagement and lessons learned in implementing that subsection4 #ejg4 ,international coordination to combat digital asset illicit finance 7a7 ,definition ,in this section1 the term ,strategy means the ,national ,strategy to ,combat ,international ,digital ,asset ,illicit ,finance submitted under subsection 7d74 7b7 ,interagency initiative ,the ,secretary of the ,treasury1 in coordination with the ,secretary of ,state1 the ,attorney ,general1 the ,secretary of ,homeland ,security1 and the heads of such other ,federal departments and agencies as the ,president may designate1 shall lead an interagency initiative to strengthen international cooperation to prevent the misuse of digital assets for illicit finance1 sanctions evasion1 terrorist financing1 or other national-security threats4 7c7 ,objectives ,the initiative established under subsection 7b7 shall-- 7#a7 engage foreign counterparts1 including finance ministries1 central banks1 and financial intelligence units1 to promote anti-money-laundering1 sanctions evasion1 and counter-terrorist financing standards applicable to digital asset activities1 consistent with ,united ,states standards and the framework established under the ,strategy2 7#b7 encourage the adoption and enforcement of effective regulatory and supervisory frameworks for digital asset service providers to ensure transparency and prevent illicit use2 7#c7 identify and prioritize jurisdictions of concern that present significant risk of facilitating illicit digital asset activity and develop coordinated diplomatic1 economic1 and law enforcement strategies to address those risks2 7#d7 support technical assistance and capacity-building programs for partner jurisdictions to enhance anti-money laundering1 sanctions evasion1 and counter-terrorist financing supervision1 enforcement1 and information sharing relating to digital assets2 and 7#e7 report annually to ,congress on progress made toward the objectives described in paragraphs 7#a7 through 7#d71 including a list of cooperative and non-cooperative jurisdictions and any recommendations for additional actions or sanctions4 7d7 ,national ,strategy to ,combat ,international ,digital ,asset ,illicit ,finance ,not later than #bgj days after the date of enactment of this ,act1 the ,secretary of the ,treasury1 in coordination with the ,secretary of ,state1 the ,attorney ,general1 and the ,director of ,national ,intelligence1 shall submit to the ,committee on ,banking1 ,housing1 and ,urban ,affairs1 the ,committee on ,foreign ,relations1 and the ,committee on ,homeland ,security and ,governmental ,affairs of the ,senate1 and the ,committee on ,financial ,services1 the ,committee on ,foreign ,affairs1 and the ,committee on ,homeland ,security of the ,house of ,representatives a ,national ,strategy to ,combat ,international ,digital ,asset ,illicit ,finance1 which shall-- 7#a7 assess global vulnerabilities with respect to the digital assets framework set out in the ,strategy2 7#b7 set measurable goals and timelines for multilateral engagement with respect to digital assets2 7#c7 recommend resource and staffing requirements for ,treasury attaches1 financial intelligence liaisons1 and other personnel necessary to implement the ,strategy2 and 7#d7 identify standards for combating money laundering1 sanctions evasion1 and terrorist financing with respect to digital asset activities applicable to foreign jurisdictions1 which shall be informed by ,united ,states law1 regulation1 and supervisory standards1 including standards relating to-- 7,a7 anti-money laundering and countering the financing of terrorism laws and regulations that identify1 prioritize1 and mitigate illicit finance threats1 including preventive measures for financial institutions and other entities covered by those laws and regulations1 including measures relating to customer due diligence1 recordkeeping1 internal controls1 and the reporting of suspicious transactions2 7,b7 money laundering offenses1 asset seizure1 and confiscation to recover proceeds of crime2 7,c7 terrorist financing and proliferation-financing offenses and related targeted financial sanctions2 and 7,d7 regulation1 supervision1 and enforcement by competent authorities1 including financial intelligence1 law enforcement1 and sanctions measures4 #ejh4 ,annual report on foreign digital asset trading volume1 compliance with ,united ,states standards and remediation actions 7a7 ,in general ,not later than #a year after the date of enactment of this ,act1 and annually thereafter for a period of #d years1 the ,secretary of the ,treasury shall submit to the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate and the ,committee on ,financial ,services of the ,house of ,representatives a report that-- 7#a7 lists the top #bj foreign jurisdictions by volume of digital asset trading activity on foreign digital asset service providers during the calendar year immediately preceding the year of the report2 7#b7 assesses the degree to which each foreign jurisdiction listed under paragraph 7#a7 has implemented anti-money laundering1 sanctions evasion1 and counter-terrorist financing laws1 regulations1 or standards applicable to digital asset activities consistent with the standards and framework identified under the ,national ,strategy to ,combat ,international ,digital ,asset ,illicit ,finance submitted under section #ejg2 and 7#c7 identifies foreign jurisdictions with-- 7,a7 material deficiencies in the implementation or enforcement of the standards described in paragraph 7#b72 and 7,b7 trading volumes that present systemic illicit finance risk to the ,united ,states4 7b7 ,form ,each report required under subsection 7a7 shall be submitted in unclassified form1 but may include a classified annex1 as appropriate4 7c7 ,remediation and engagement report ,for each foreign jurisdiction identified pursuant to subsection 7a77#c71 the ,secretary of the ,treasury shall include in the applicable report-- 7#a7 a description of bilateral diplomatic1 regulatory1 or law enforcement engagements undertaken during the calendar year immediately preceding the year in which the report is submitted to remedy the deficiencies of the foreign jurisdiction2 7#b7 a summary of actions taken by the ,united ,states individually1 or in conjunction with any applicable international body1 to identify high-risk or non-cooperative jurisdictions with respect to digital asset illicit finance1 including public statements identifying those jurisdictions and measures to support their remediation2 7#c7 any commitments obtained from the foreign jurisdiction to address identified deficiencies1 including timeliness and benchmarks2 and 7#d7 an assessment of progress made toward full implementation of the standards identified under the ,national ,strategy to ,combat ,international ,digital ,asset ,illicit ,finance submitted under section #ejg4 #eji4 ,,ai innovation labs 7a7 ,definitions 7#a7 ,,ai test project ,the term ,,ai test project means a financial product1 service1 or activity-- 7,a7 that makes substantial use of artificial intelligence2 7,b7 that is1 or may be1 subject to a ,federal regulation or ,federal statute2 and 7,c7 for which a regulated entity submits an application for the waiver or modification of an applicable regulation subject to an alternative compliance strategy4 7#b7 ,appropriate financial regulatory agency ,the term appropriate financial regulatory agency means-- 7,a7 the appropriate ,federal banking agency1 as defined in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac71 with respect to an institution described in subsection 7q7 of that section2 7,b7 the ,bureau of ,consumer ,financial ,protection1 with respect to a covered person1 as defined in section #ajjb of the ,consumer ,financial ,protection ,act of #bjaj 7#ab ,u4,s4,c4 #edha71 that does not have an appropriate financial regulatory agency under subparagraph 7,a71 7,c71 or 7,d7 of this paragraph2 7,c7 the ,national ,credit ,union ,administration1 with respect to an insured credit union1 as defined in section #aja of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageb72 and 7,d7 the ,federal ,housing ,finance ,agency1 with respect to-- 7i7 a ,federal ,home ,loan ,bank2 7ii7 the ,federal ,home ,loan ,bank ,system2 7iii7 the ,federal ,national ,mortgage ,association2 and 7iv7 the ,federal ,home ,loan ,mortgage ,corporation4 7#c7 ,artificial intelligence2 ,,ai ,the terms artificial intelligence and ,,ai have the meaning given the term artificial intelligence in section #ejjb of the ,national ,artificial ,intelligence ,initiative ,act of #bjbj 7#ae ,u4,s4,c4 #idja74 7#d7 ,financial product or service ,the term financial product or service-- 7,a7 has the meaning given the term in section #ajjb of the ,consumer ,financial ,protection ,act of #bjaj 7#ab ,u4,s4,c4 #edha72 7,b7 includes-- 7i7 activities that are financial in nature1 as defined in section #d7k77#d7 of the ,bank ,holding ,company ,act of #aief 7#ab ,u4,s4,c4 #ahdc7k77#d772 and 7ii7 any financial product or service provided by a person regulated by the ,commission1 as defined in section #ajjb of the ,consumer ,financial ,protection ,act of #bjaj 7#ab ,u4,s4,c4 #edha72 and 7,c7 does not include the business of insurance4 7#e7 ,financial regulatory agency ,the term financial regulatory agency means-- 7,a7 the ,board of ,governors of the ,federal ,reserve ,system2 7,b7 the ,federal ,deposit ,insurance ,corporation2 7,c7 the ,office of the ,comptroller of the ,currency2 7,d7 the ,bureau of ,consumer ,financial ,protection2 7,e7 the ,national ,credit ,union ,administration2 and 7,f7 the ,federal ,housing ,finance ,agency4 7#f7 ,regulated entity ,the term regulated entity means an entity regulated by any financial regulatory agency4 7b7 ,use of artificial intelligence by regulated financial entities 7#a7 ,,ai innovation labs 7,a7 ,establishment ,each financial regulatory agency shall establish1 or identify an office1 division1 or department of the agency that shall serve as1 an ,,ai ,innovation ,lab to enable regulated entities to experiment with ,,ai test projects without unnecessary or unduly burdensome regulation or expectation of enforcement actions1 pursuant to the approval of an application under subparagraph 7,b74 7,b7 ,applications 7i7 ,submission 7,i7 ,in general ,on and after the date that is #a year after the date of enactment of this ,act1 a regulated entity may submit to the appropriate financial regulatory agency an application1 on a form determined by the appropriate financial regulatory agency1 to engage in an ,,ai test project through the ,,ai ,innovation ,lab established or identified under subparagraph 7,a74 7,,ii7 ,contents ,an application submitted under subclause 7,i7 shall include-- 7aa7 a description of the ,,ai test project proposed to be carried out by the regulated entity2 7bb7 an alternative compliance strategy that-- 7,,aa7 identifies a regulation issued by the appropriate financial regulatory agency that the regulated entity requests be waived or modified2 and 7,,bb7 proposes an alternative method for the regulated entity to comply with the regulation1 including an explanation as to why the alternative method is essential to the operation of the entity and how the regulated entity would effectively manage risks associated with the ,,ai test project2 7cc7 an explanation of how under the strategy described in item 7aa71 the ,,ai test project-- 7,,aa7 would serve the public interest1 improve consumer or investor access to a financial product or service1 or promote consumer or investor protection2 7,,bb7 would enhance efficiency or operations1 foster innovation or competitiveness1 improve risk management and security1 or enhance regulatory compliance2 7,,cc7 would not present a systemic risk to the financial system of the ,united ,states2 7,,dd7 is consistent with the purposes of the anti-money laundering and countering the financing of terrorism obligations under subchapter ,,ii of chapter #ec of title #ca1 ,united ,states ,code2 and 7,,ee7 would not present a national security risk to the ,united ,states2 7dd7 a proposed date on which the ,,ai test project would terminate and an explanation as to why such termination date would be appropriate2 7ee7 proposed limitations on the size1 scope1 and growth of the ,,ai test project2 7ff7 a detailed business plan2 and 7gg7 an estimate of the economic impact of the ,,ai test project if approved4 7,,iii7 ,joint applications ,two or more regulated entities may submit a joint application to the same financial regulatory agency under subclause 7,i74 7,,iv7 ,regulations of other agencies 7aa7 ,in general ,a regulated entity may submit an application under this subparagraph that includes an alternative compliance strategy for a regulation issued or enforced by a financial regulatory agency that is not the appropriate financial regulatory agency for the regulated entity4 7bb7 ,requirements ,an application described in item 7aa7 shall be subject to the same requirements as an application described in subclause 7,,ii71 except that-- 7,,aa7 the regulated entity shall submit the application to the appropriate financial regulatory agency and the financial regulatory agency that issued or enforces the regulation that is the subject of the alternative compliance strategy2 and 7,,bb7 the ,,ai test project may not take effect unless the appropriate financial regulatory agency and any other financial regulatory agency that issued or enforces the regulation that is the subject of the alternative compliance strategy jointly approve the application using the process described in clause 7ii74 7,v7 ,notice ,a regulated entity that is regulated or supervised by more than #a financial regulatory agency shall provide notice of any application submitted to the appropriate financial regulatory agency under this section to each financial regulatory agency by which it is regulated or supervised not later than #e business days after the entity submits the application to the appropriate financial regulatory agency4 7ii7 ,agency review 7,i7 ,in general ,except as provided in subclause 7,,iv71 not later than #abj days after the date on which an application is submitted to the appropriate financial regulatory agency under clause 7i71 the appropriate financial regulatory agency shall-- 7aa7 review the application2 and 7bb7 submit to the applicant in writing a determination of the agency4 7,,ii7 ,approval 7aa7 ,in general ,if the applicant shows that it is more likely than not that the application meets the requirements for establishing an alternative compliance strategy and satisfies the standards described in items 7bb7 and 7cc7 of clause 7i77,,ii71 the agency shall approve the application and notify the applicant in writing of-- 7,,aa7 the regulation that is the subject of the alternative compliance strategy2 7,,bb7 the terms of the alternative compliance strategy for the ,,ai test project2 7,,cc7 the date on which the ,,ai test project will terminate2 7,,dd7 any limitations on the size1 scope1 or growth of the ,,ai test project2 and 7,,ee7 any additional limitations or conditions on the ,,ai test project1 as determined by the appropriate financial regulatory agency4 7bb7 ,effect of approval ,with respect to an ,,ai test project1 except as provided in item 7cc71 beginning on the date on which an application submitted under clause 7i7 is approved and ending on the date described in item 7aa77,,cc7-- 7,,aa7 the appropriate financial regulatory agency may enforce a regulation described in item 7aa77,,aa7 only in the manner set out in the alternative compliance strategy described in item 7aa77,,bb72 and 7,,bb7 except as provided in subclause 7,,iii71 a financial regulatory agency that is not the appropriate financial regulatory agency may not enforce a regulation described in item 7aa77,,aa74 7cc7 ,enforcement by another financial regulatory agency ,with respect to an ,,ai test project1 a financial regulatory agency other than the appropriate financial regulatory agency that approves an application under clause 7i77,,iv7 may enforce a regulation described in item 7aa77,,aa7 if the alternative compliance strategy described in item 7aa77,,bb7 provides for enforcement by such financial regulatory agency4 7dd7 ,rule of construction ,nothing in this clause may be construed to limit the authority of a financial regulatory agency to take an enforcement action against a regulated entity with respect to fraud or market manipulation or for engaging in an unsafe or unsound practice relating to an ,,ai test project4 7,,iii7 ,denial 7aa7 ,in general ,if an agency denies an application submitted under clause 7i71 the agency-- 7,,aa7 shall submit to the applicant a written notice explaining the reason for denial2 and 7,,bb7 may not take an enforcement action related to the proposed ,,ai test project against the applicant earlier than the date that is #cj days after the date on which the agency submits the written notice described in subitem 7,,aa74 7bb7 ,resubmittals ,each time an application submitted under clause 7i7 is denied1 the regulated entity-- 7,,aa7 may submit an amended application after receiving feedback from the agency making such denial2 and 7,,bb7 may not resubmit more than #b applications that are substantially similar to the denied application4 7cc7 ,injunctive relief ,notwithstanding item 7aa77,,bb71 a financial regulatory agency1 by and through its own attorneys1 may file a civil action in an appropriate ,united ,states district court to enjoin an active ,,ai test project if the agency determines that the ,,ai test project presents an immediate danger to consumers or investors or presents a risk-- 7,,aa7 to financial markets2 7,,bb7 in the case of an ,,ai test project engaged in by an insured depository institution or an insured credit union1 of loss to a ,federal deposit or share insurance fund2 7,,cc7 of a violation of anti-money laundering and countering the financing of terrorism obligations under subchapter ,,ii of chapter #ec of title #ca1 ,united ,states ,code2 or 7,,dd7 to the national security of the ,united ,states4 7,,iv7 ,extension ,if the financial regulatory agency needs additional time1 the agency may extend the approval deadline by #abj days4 ,after the expiration of the #abj-;day extension period1 if the agency has not made a determination on the application1 the application will automatically be deemed approved and effective4 7,v7 ,additional information ,not later than the initial or extended approval deadline1 as applicable1 a financial regulatory agency may request additional information from the applicant4 7iii7 ,data security ,all data supplied by sponsors of ,,ai test projects to a financial regulatory agency submitted under this section shall be stored and maintained in a secure manner by the financial regulatory agency1 consistent with applicable data security standards4 7iv7 ,regulations ,not later than #ahj days after the date of enactment of this ,act1 each financial regulatory agency shall promulgate regulations that-- 7,i7 shall be published in the ,federal ,register and provide a #fj-;day period for public notice and comment2 7,,ii7 include-- 7aa7 procedures for modifying the ,,ai test projects that are approved by the agency2 7bb7 consequences for failure to comply with the terms of an alternative compliance strategy2 7cc7 a requirement that an ,,ai test project will terminate not earlier than #a year after the ,,ai test project is approved2 7dd7 procedures to extend the termination date described in item 7cc72 7ee7 procedures for confidentiality2 and 7ff7 procedures for coordinating decisions relating to applications submitted jointly by multiple regulated entities or applications submitted to more than one financial regulatory agency4 7#b7 ,report ,not later than #b years after the date of enactment of this ,act1 and each year for #g years thereafter1 each financial regulatory agency shall submit to the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate and the ,committee on ,financial ,services of the ,house of ,representatives an annual report on the outcomes of ,,ai test projects4 ,a report under this subsection may not include the names of participating entities or any proprietary or confidential business information4 ,a report under this subsection shall include aggregated findings1 trends1 and lessons learned from the ,,ai test projects4 7#c7 ,rule of construction ,nothing in this section may be construed to limit the authority of a financial regulatory agency to take an enforcement action against a regulated entity with respect to fraud or market manipulation relating to an ,,ai test project4 ,,vi ,protecting software developers and software innovation #fja4 ,protecting software developers 7a7 ,amendment to the securities act of #aicc ,the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;a et seq47 is amended by inserting after section #bg;,b 7#ae ,u4,s4,c4 #ggz-#b;a7 the following3 #bg;,c4 ,application to software developers 7a7 ,distributed ledger system defined ,in this section1 the term distributed ledger system has the meaning given the term in section #b of the ,digital ,asset ,market ,clarity ,act4 7b7 ,application to software developers ,notwithstanding any other provision of this ,act1 a person shall not be subject to this ,act and the regulations promulgated under this ,act solely based on the person engaging in any of the following activities1 whether singly or in combination1 in relation to the operation of a distributed ledger system or any component thereof3 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 4 7b7 ,amendment to the securities exchange act of #aicd ,the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 is amended by inserting after section #ae;,g 7#ae ,u4,s4,c4 #gho-#aa7 the following3 #ae;,h4 ,application to software developers 7a7 ,definitions ,in this section3 7#a7 ,constitute ,the term constitute means to compile1 assemble1 integrate1 or otherwise combine software components into a complete software system4 7#b7 ,decentralized finance trading protocol 7,a7 ,in general ,the term decentralized finance trading protocol means a distributed ledger system through which multiple participants can execute a financial transaction-- 7i7 in accordance with an automated rule or algorithm that is predetermined and non-discretionary2 and 7ii7 without reliance on a person other than the user to maintain custody or control of the digital assets subject to the financial transaction4 7,b7 ,exclusions 7i7 ,in general ,the term decentralized finance trading protocol does not include a distributed ledger system if-- 7,i7 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 distributed ledger system2 7,,ii7 the distributed ledger 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 distributed ledger system2 or 7,,iii7 a person or group of persons under common control has the unilateral authority1 via operation of the distributed ledger system1 to restrict1 censor1 or prohibit the use of the distributed ledger system1 including any applicable system-based user activity4 7ii7 ,special rule ,for purposes of clause 7i71 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#c7 ,deploy ,the term deploy means to bring software or hardware onto a distributed ledger system for active use4 7#d7 ,digital asset2 distributed ledger application2 distributed ledger system2 distributed ledger protocol2 decentralized governance system2 smart contract ,the terms digital asset1 distributed ledger application1 distributed ledger system1 distributed ledger protocol1 decentralized governance system1 and smart contract have the meanings given those terms in section #b of the ,digital ,asset ,market ,clarity ,act4 7#e7 ,decentralized finance messaging system 7,a7 ,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 protocol4 7,b7 ,additional requirements ,the term decentralized finance messaging system does not include any system that provides any person other than the user with-- 7i7 control over the funds of the user2 or 7ii7 the authority to execute any of the transaction of the user4 7b7 ,application to software developers ,notwithstanding any other provision of this ,act1 a person shall not be subject to this ,act and the regulations promulgated under this ,act solely based on the person engaging in any of the following activities1 whether singly or in combination1 in relation to the operation of a distributed ledger system or any component thereof3 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 ,developing1 publishing1 or constituting-- 7,a7 a distributed ledger system2 or 7,b7 software or systems that create or utilize hardware or software1 including wallets or other systems1 that facilitate the ability of a user to keep1 safeguard1 or have custody of the digital assets or private keys of the user4 7c7 ,rule of construction ,subsection 7b77#c7 does not extend to any activity covered in any of the activities described in subparagraphs 7,a7 through 7,d7 of subsection 7d77#a71 including activity taken following deployment of such software or hardware4 7d7 ,clarification 7#a7 ,in general ,the ,commission shall1 pursuant to notice and comment rulemaking1 clarify the circumstances under which a person shall not be subject to this ,act by reason of engaging solely in #a or more of the following activities in relation to the operation of a decentralized finance trading protocol or any component thereof3 7,a7 ,providing a user interface that enables a user to read and access data4 7,b7 ,administering1 maintaining1 or otherwise distributing a decentralized governance system relating to a decentralized finance trading protocol1 or a decentralized finance trading protocol4 7,c7 ,administering1 maintaining1 or otherwise distributing a decentralized finance messaging system or operating or participating in a smart contract-based liquidity pool in a decentralized finance trading protocol4 7,d7 ,administering1 maintaining1 or otherwise distributing software or systems that create or deploy hardware or software1 including wallets or other systems1 that facilitate the ability of a user to keep1 safeguard1 or maintain custody of the digital assets or related private keys of the user4 7#b7 ,considerations ,in providing the clarification under paragraph 7#a7 the ,commission shall-- 7,a7 ensure that the rules are consistent with the purposes of the securities laws1 including the public interest1 the protection of investors1 and the maintenance of fair and orderly markets2 7,b7 provide that section #ajh7;a7 of the ,lummis-,gillibrand ,responsible ,financial ,innovation ,act of #bjbf shall apply to such rules2 7,c7 protect the rights of software developers1 publishers1 and users to create1 publish1 and use code and software in a manner consistent with the ,first ,amendment to the ,constitution of the ,united ,states2 and 7,d7 provide legal clarity for the development1 publication1 and operation of distributed ledger systems and the components therein in a manner consistent with the purposes of this section4 7#c7 ,rule of construction ,nothing in this subsection may be construed to grant the ,commission authority over persons1 systems1 software1 or activities that do not otherwise fall within the jurisdiction of the ,commission under this ,act1 or to create a presumption that any such activity is subject to this ,act4 7e7 ,anti-,fraud1 anti-,manipulation1 and false reporting ,the determination that a person is not subject to this ,act under subsections 7b7 and 7d7 shall not apply to the anti-fraud1 anti-manipulation1 or false reporting enforcement authorities of the ,commission4 7f7 ,rule of construction ,nothing in this ,act or the rules and regulations promulgated under this ,act may be construed to apply any requirement of the securities laws to a digital commodity1 as defined in section #b of the ,digital ,asset ,market ,clarity ,act1 or expand the authority of the ,commission beyond that which the ,commission had before the date of enactment of the ,digital ,asset ,market ,clarity ,act to regulate the activities described in subsection 7d77#a74 7g7 ,federal preemption 7#a7 ,in general ,notwithstanding any other provision of law1 no securities1 commodities1 or digital assets law of any ,state 7or of any political subdivision of a ,state7 shall apply to an activity described in subsection 7b74 7#b7 ,rule of construction ,nothing in paragraph 7#a7 may be construed to apply to the anti-money laundering1 anti-fraud1 or anti-manipulation authorities of a ,state 7or of any political subdivision of a ,state74 4 7c7 ,applicability ,this section1 and the amendments made by this section1 shall apply to conduct occurring before1 on1 or after the date of enactment of this ,act4 #fjb4 ,safe harbor for nonfungible tokens 7a7 ,definitions ,in this section3 7#a7 ,nonfungible token ,the term nonfungible token means a digital asset recorded on a distributed ledger that-- 7,a7 is individually identifiable and distinguishable from any other digital asset2 7,b7 represents ownership of1 or rights in1 a work of authorship1 art1 a collectible1 a membership1 an access credential1 a certificate of authenticity1 an in-game or in-application item1 or another similar specific item or discrete digital or physical good1 service1 or benefit2 7,c7 is not interchangeable on a #a-to-#a basis with any other token or digital asset2 and 7,d7 may be bought1 sold1 or transferred for consideration4 7#b7 ,promoter ,the term promoter means a person or group that manages1 controls1 or operates an enterprise in which capital is invested1 or any person or group acting on behalf of such a person or group with respect to such an enterprise1 including an affiliate1 agent1 or coordinated actor that contributes to the capital raising efforts of the enterprise4 7b7 ,safe harbor 7#a7 ,in general ,except as provided in paragraph 7#c71 the offer1 sale1 resale1 transfer1 or conveyance of a nonfungible token shall not be deemed to constitute an offer1 sale1 or distribution of a security or investment contract under the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;a et seq471 the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq471 or any equivalent ,state law1 unless the transaction1 in substance1 involves all of the elements of an investment contract4 7#b7 ,rules of construction ,neither of the following shall be considered to be a security under the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;a et seq47 or the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq473 7,a7 ,the resale or secondary market transfer of a nonfungible token1 where the payment for that resale or transfer does not flow to a promoter or is not used to raise new capital for an enterprise4 7,b7 ,a nonfungible token that serves as a collectible1 membership right1 event ticket1 access credential1 or other non-investment-based use case solely because the nonfungible token may appreciate in value or depend in part on the continued efforts or the reputation of the creator or issuer of the nonfungible token4 7#c7 ,exceptions ,the safe harbor under paragraph 7#a7 shall not apply to-- 7,a7 a mass-minted series of items with substantially similar or nearly identical traits that are marketed or sold interchangeably2 7,b7 a fractionalized interest in a nonfungible token2 or 7,c7 an interest representing a beneficial or economic claim on a nonfungible token or an asset that a nonfungible token represents4 7#d7 ,reliance2 prospective effect 7,a7 ,reliance ,a person1 other than an originator or related person1 that reasonably and in good faith relies on the safe harbor under this subsection shall not be subject to any civil or administrative penalties4 7,b7 ,prospective effect ,any determination by the ,commission that the safe harbor under this subsection does not apply to a particular circumstance shall-- 7i7 be prospective only2 and 7ii7 take effect not earlier than #fj days after the date on which the ,commission publicly posts that determination4 #fjc4 ,study on nonfungible tokens 7a7 ,definition ,in this section1 the term nonfungible token has the meaning given the term in section #fjb4 7b7 ,study ,the ,comptroller ,general of the ,united ,states shall carry out a study of nonfungible tokens that analyzes-- 7#a7 the nature1 size1 role1 purpose1 and use of nonfungible tokens2 7#b7 the similarities and differences between nonfungible tokens and other digital commodities1 including digital commodities and payment stablecoins1 and how the markets for those digital commodities intersect2 7#c7 how nonfungible tokens are minted by issuers and subsequently distributed to purchasers2 7#d7 how nonfungible tokens are stored after being purchased by a consumer2 7#e7 the interoperability of nonfungible tokens between different distributed ledger systems2 7#f7 the scalability of different nonfungible token marketplaces2 7#g7 the benefits of nonfungible tokens1 including verifiable digital ownership2 7#h7 the risks of nonfungible tokens1 including-- 7,a7 the infringement of intellectual property rights2 7,b7 cybersecurity risks2 and 7,c7 market risks2 7#i7 whether and how nonfungible tokens have been1 or could be1 integrated with traditional marketplaces1 including marketplaces for music1 real estate1 gaming1 events1 and travel2 7#aj7 whether and how nonfungible tokens have been1 or could be1 used to facilitate commerce or other activities through the representation of documents1 identification1 contracts1 licenses1 and other commercial1 governmental1 or personal records2 7#aa7 any risks to traditional markets from the integration described in paragraph 7#i72 and 7#ab7 the levels and types of illicit activity in nonfungible token markets4 7c7 ,report ,not later than #a year after the date of enactment of this ,act1 the ,comptroller ,general of the ,united ,states shall make publicly available a report that includes the results of the study required under subsection 7b74 #fjd4 ,blockchain ,regulatory ,certainty ,act 7a7 ,short title ,this section may be cited as the ,blockchain ,regulatory ,certainty ,act4 7b7 ,definitions ,in this section3 7#a7 ,developer or provider ,the term developer or provider means any person or business that creates or publishes software to facilitate the creation of1 or provide maintenance to1 a distributed ledger1 or a service associated with a distributed ledger4 7#b7 ,distributed ledger service ,the term distributed ledger service means any information1 transaction1 or computing service or system that provides or enables access to a distributed ledger system by multiple users1 including a service or system that enables users to send1 receive1 exchange1 or store digital assets described by distributed ledger systems4 7#c7 ,non-controlling developer or provider ,the term non-controlling developer or provider means a developer or provider of a distributed ledger service that1 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 to which users are entitled1 without the approval1 consent1 or direction of any third party4 7c7 ,treatment ,notwithstanding any other provision of law1 a non-controlling developer or provider-- 7#a7 shall not be treated as-- 7,a7 a money transmitting business1 as defined in section #eccj of title #ca1 ,united ,states ,code1 and the regulations promulgated under that section2 or 7,b7 engaged in money transmitting1 as defined in section #aifj of title #ah1 ,united ,states ,code2 and 7#b7 on or after the date of enactment of this ,act1 shall not be otherwise subject to any registration requirement that is substantially similar to a requirement 7as in effect on the day before the date of enactment of this ,act7 that applies to an entity described in subparagraph 7,a7 or 7,b7 of paragraph 7#a71 solely on the basis of-- 7,a7 creating or publishing software to facilitate the creation of1 or providing maintenance services to1 a distributed ledger or a service associated with a distributed ledger2 7,b7 providing hardware or software to facilitate a customer's own custody or safekeeping of the digital assets of the customer2 or 7,c7 providing infrastructure support to maintain a distributed ledger service4 7d7 ,clarification of treatment ,subsection 7c7 shall not modify the application of section #aifj7;b77#a77;,c7 of title #ah1 ,united ,states ,code1 to any person 7referred to in this subsection as the initial person7 that acts with the specific intent to transfer1 on behalf of another person1 funds that are known by the initial person to be-- 7#a7 derived from a criminal offense2 or 7#b7 intended to be used to promote or support unlawful activity4 7e7 ,rules of construction ,nothing in this section may be construed-- 7#a7 to affect whether a developer or provider of a distributed ledger service is otherwise subject to classification or treatment as a money transmitter1 or as engaged in money transmitting1 under applicable ,federal or ,state law1 including laws relating to anti-money laundering or countering the financing of terrorism1 based on conduct outside the scope of subsection 7c72 7#b7 to affect whether a developer or provider is otherwise subject to classification or treatment as a financial institution under subchapter ,,ii of chapter #ec of title #ca1 ,united ,states ,code1 this ,act1 any amendment made by this ,act1 or any ,act enacted after the date of enactment of this ,act1 based on conduct outside the scope of subsection 7c72 7#c7 to limit or expand any law pertaining to intellectual property2 7#d7 to prevent any ,state from enforcing any ,state law that is consistent with this section2 or 7#e7 to create a cause of action or impose liability under any ,state or local law that is inconsistent with this section4 #fje4 ,keep ,your ,coins ,act 7a7 ,short title ,this section may be cited as the ,keep ,your ,coins ,act4 7b7 ,definitions ,in this section3 7#a7 ,covered user ,the term covered user means a ,united ,states individual who obtains digital assets to purchase goods or services on behalf of that individual1 without regard to the method in which that individual obtained those digital assets4 7#b7 ,self-hosted wallet ,the term self-hosted wallet means a digital interface-- 7,a7 that is used to secure and transfer digital assets2 and 7,b7 under which the owner of digital assets secured and transferred under subparagraph 7,a7 retains independent control over those digital assets4 7c7 ,self-,custody ,a ,federal agency may not prohibit1 restrict1 or otherwise impair the ability of a covered user to self-custody digital assets using a self-hosted wallet or other means to conduct transactions for any lawful purpose4 7d7 ,rule of construction ,nothing in this section may be construed to limit the authority of the ,secretary of the ,treasury1 the ,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 ,,vii ,protecting customer property #gja4 ,customer property protections for ancillary assets and digital commodities in bankruptcy 7a7 ,definitions for stockbroker liquidation 7#a7 ,in general ,section #gda of title #aa1 ,united ,states ,code1 is amended-- 7,a7 by redesignating paragraphs 7#e7 through 7#i7 as paragraphs 7#g7 through 7#aa71 respectively2 7,b7 by redesignating paragraphs 7#a7 through 7#d7 as paragraphs 7#b7 through 7#e71 respectively2 7,c7 by inserting before paragraph 7#b71 as so redesignated1 the following3 7#a7 ancillary asset has the meaning given that term in section #b of the ,digital ,asset ,market ,clarity ,act2 2 7,d7 in paragraph 7#c71 as so redesignated-- 7i7 in subparagraph 7,a77vi71 by striking and at the end2 7ii7 by redesignating subparagraph 7,b7 as subparagraph 7,c72 7iii7 by inserting after subparagraph 7,a7 the following3 7,b7 entity with whom a person deals as principal or agent and that has a claim against such person on account of a digital commodity or an ancillary asset received1 acquired1 or held by such person from or for the securities account or accounts of such entity for #a or more of the purposes identified in clauses 7i7 through 7vi7 of subparagraph 7,a7 of this paragraph2 and 2 and 7iv7 in subparagraph 7,c71 as so redesignated-- 7,i7 in clause 7i7-- 7aa7 by inserting 1 ancillary asset1 or digital commodity after security2 and 7bb7 by inserting or 7,b7 after subparagraph 7,a72 and 7,,ii7 in clause 7ii71 by inserting an ancillary asset1 a digital commodity1 after a security12 7,e7 in paragraph 7#e71 as so redesignated1 in the matter preceding subparagraph 7,a71 by inserting ancillary asset1 digital commodity1 after cash1 security1 each place it appears2 7,f7 by inserting after paragraph 7#e71 as so redesignated1 the following3 7#f7 digital commodity has the meaning given that term in section #b of the ,digital ,asset ,market ,clarity ,act2 2 and 7,g7 in paragraph 7#h71 as so redesignated1 in subparagraph 7,a77i71 by inserting 1 ancillary asset positions1 and digital commodities positions after securities positions4 7b7 ,extent of customer claims ,section #gdf7;b7 of title #aa1 ,united ,states ,code1 is amended1 in the matter preceding paragraph 7#a71 by striking cash or a security and inserting cash1 a security1 an ancillary asset1 or a digital commodity4 7c7 ,technical and conforming amendments 7#a7 ,section #edf7;e7 of title #aa1 ,united ,states ,code1 is amended-- 7,a7 by striking section #gda7g7 and inserting section #gda2 and 7,b7 by striking section #gfa7d7 and inserting section #gfa4 7#b7 ,section #efa7;a7 of title #aa1 ,united ,states ,code1 is amended-- 7,a7 in paragraph 7#a71 by striking section #gda7g7 and inserting section #gda2 and 7,b7 in paragraph 7#b71 by striking section #gfa7d7 and inserting section #gfa4 7#c7 ,section #geb7;c7 of title #aa1 ,united ,states ,code1 is amended by striking section #gda7d77;,b7 and inserting section #gda7e77;,b74 7d7 ,clarifications ,for the avoidance of doubt-- 7#a7 nothing in this section or an amendment made by this section may be construed to apply to securities or cash held by a broker-dealer and such assets and related claims shall be governed exclusively by the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #gh;aaa et seq472 7#b7 nothing in this section or an amendment made by this section may be construed to apply to deposits held by a bank or commodity contracts1 which shall be governed by the relevant applicable law2 and 7#c7 in any liquidation proceeding under subchapter ,,iii or ,,iv of chapter #g of title #aa1 ,united ,states ,code1 those provisions shall be construed to treat ancillary assets and digital commodities held for customers as customer property governed by title #aa1 ,united ,states ,code1 and required to be distributed according to such title4 #gjb4 ,insolvency safe harbor 7a7 ,definitions ,in this section3 7#a7 ,commodity broker2 financial institution2 financial participant2 securities clearing agency2 stockbroker ,the terms commodity broker1 financial institution1 financial participant1 securities clearing agency1 and stockbroker have the meanings given those terms in section #aja of title #aa1 ,united ,states ,code4 7#b7 ,commodity contract ,the term commodity contract means a commodity contract described in paragraph 7#d77;,a7 of section #gfa of title #aa1 ,united ,states ,code4 7b7 ,safe harbor ,a purchase1 sale1 or loan of1 a margin loan or other extension of credit on1 or a repurchase1 reverse repurchase1 or other transaction involving1 a unit of a digital commodity occurring with a commodity broker1 stockbroker1 financial institution1 financial participant1 or securities clearing agency shall be deemed to be-- 7#a7 a commodity contract for purposes of-- 7,a7 sections #cfb7;b77#f71 #cfb7o71 #edf7;e71 #eec1 #eef1 #efa1 and #efb of title #aa1 ,united ,states ,code2 7,b7 section #aa of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahba72 7,c7 section #baj of the ,dodd-,frank ,wall ,street ,reform and ,consumer ,protection ,act 7#ab ,u4,s4,c4 #ecij72 and 7,d7 section #e7;b77#b77;,c7 of the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #gh;eee7b77#b77;,c772 and 7#b7 a margin payment for purposes of section #edh7;d77#b77;,b7 of title #aa1 ,united ,states ,code4 ,,viii ,customer protection #hja4 ,educational materials ,the ,commission and the ,commodity ,futures ,trading ,commission shall require digital asset intermediaries to provide clear and accessible educational materials to the public1 including-- 7#a7 an overview of how distributed ledger systems function2 7#b7 a description of common risks associated with digital assets2 7#c7 a description of the differences between digital asset markets and traditional financial markets2 7#d7 information on reporting and disclosure requirements related to digital asset transactions and securities which may be accompanied by network tokens or ancillary assets2 and 7#e7 guidance on recognizing fraudulent schemes and instructions for reporting suspected fraud4 #hjb4 ,savings clauses 7a7 ,definitions ,in this section3 7#a7 ,digital consumer token ,the term digital consumer token means a digital asset that is primarily acquired for a consumptive purpose1 including redemption for a specified good or service at the time of sale or within a reasonable time after sale1 as defined by the ,federal ,trade ,commission pursuant to rule4 7#b7 ,nonfungible token ,the term nonfungible token means a digital asset recorded on a distributed ledger that-- 7,a7 is individually identifiable and distinguishable from any other digital asset2 7,b7 represents ownership of1 or rights in1 a work of authorship1 art1 a collectible1 a membership1 an access credential1 a certificate of authenticity1 an in-game or in-application item1 or another similar specific item or discrete digital or physical good1 service1 or benefit2 7,c7 is not interchangeable on a #a-to-#a basis with any other token or digital asset2 and 7,d7 may be bought1 sold1 or transferred for consideration4 7b7 ,federal ,trade ,commission ,nothing in this ,act1 or any amendment made by this ,act1 may be construed as limiting or abridging the jurisdiction of the ,federal ,trade ,commission with respect to-- 7#a7 investigations or enforcement actions under the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #da et seq47 relating to unfair or deceptive acts or practices by persons relating to commerce in nonfungible tokens or digital consumer tokens1 including deceptive acts with respect to advertising and endorsements relating to nonfungible tokens and digital consumer tokens2 7#b7 highlighting best practices relating to commerce in nonfungible tokens or digital consumer tokens2 7#c7 promoting responsible innovation2 7#d7 consumer education relating to fraudulent digital asset activity2 or 7#e7 investigating unlawful restraints of trade in the digital asset industry4 7c7 ,rule of construction ,nothing in this ,act1 or any amendment made by this ,act1 may be construed to expand1 contract1 or otherwise affect the jurisdiction or authority with respect to the ,federal consumer financial laws under the ,consumer ,financial ,protection ,act of #bjaj 7#ab ,u4,s4,c4 #edha et seq471 as in effect on the day before the date of enactment of this ,act1 including with respect to subsection 7i7 or 7j7 of section #ajbg of the ,consumer ,financial ,protection ,act of #bjaj 7#ab ,u4,s4,c4 #eeag74 #hjc4 ,study on expanding financial literacy 7a7 ,study ,the ,commission and the ,commodity ,futures ,trading ,commission shall jointly conduct a study to identify-- 7#a7 the existing 7as of the day before the date of enactment of this ,act7 level of financial literacy among retail digital asset customers2 7#b7 methods to improve the timing1 content1 and format of financial literacy materials regarding digital assets provided by the respective commissions2 7#c7 methods to improve coordination between the ,commission and the ,commodity ,futures ,trading ,commission with other agencies1 including the ,financial ,literacy and ,education ,commission1 nonprofit organizations1 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 asset customers need to make informed financial decisions before engaging with or purchasing a digital asset2 7#f7 the most effective public-private partnerships in providing financial literacy regarding digital assets2 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 7including1 to the extent practicable1 measurable goals and objectives7 to increase financial literacy of investors regarding digital assets4 7b7 ,report ,not later than #a year after the date of enactment of this ,act1 the ,commission and the ,commodity ,futures ,trading ,commission shall jointly submit to the ,committee on ,banking1 ,housing1 and ,urban ,affairs and the ,committee on ,agriculture1 ,nutrition1 and ,forestry of the ,senate and the ,committee on ,financial ,services and the ,committee on ,agriculture of the ,house of ,representatives a written report on the study required under subsection 7a74 #hjd4 ,consultation with ,,sipc regarding mandatory broker-dealer disclosures to investors concerning the status of payment stablecoins and digital commodities 7a7 ,definition ,in this section1 the term payment stablecoin has the meaning given the term in section #b of the ,,genius ,act 7#ab ,u4,s4,c4 #eija74 7b7 ,rules ,not later than #bgj days after the date of enactment of this ,act1 the ,commission1 after consultation with the ,commodity ,futures ,trading ,commission and the ,securities ,investor ,protection ,corporation1 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-- 7#a7 before a digital commodity1 a payment stablecoin1 or a security involving a unit of a digital commodity is received1 acquired1 or held by the broker or dealer for the account of the investor2 and 7#b7 after the provision of the disclosures under paragraph 7#a71 at such frequency as the ,commission may prescribe4 7c7 ,contents ,the rules issued under subsection 7b7 shall include1 as necessary or appropriate for the protection of investors-- 7#a7 a description of the manner in which any digital commodity1 payment stablecoin1 or security involving a unit of a digital commodity received1 acquired1 or held by a broker or dealer for the account of an 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 #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 the applicable investor in the event of an insolvency1 resolution1 or liquidation proceeding with respect to the broker or dealer under each provision of law described in subparagraph 7,a71 7,b71 and 7,c7 of paragraph 7#a74 ,,ix ,other matters #ija4 ,joint ,advisory ,committee on ,digital ,assets 7a7 ,establishment ,the ,commodity ,futures ,trading ,commission and the ,commission 7referred to collectively in this section as the ,commissions7 shall jointly establish the ,joint ,advisory ,committee on ,digital ,assets 7referred to in this section as the ,committee74 7b7 ,purpose 7#a7 ,in general ,the ,committee shall-- 7,a7 provide the ,commissions with official findings and nonbinding recommendations on-- 7i7 the rules1 regulations1 oversight1 and other matters of the ,commissions relating to digital assets1 including with respect to regulatory harmonization between the ,commissions2 7ii7 how to further the regulatory harmonization of digital asset policy between the ,commissions or areas in which that harmonization should occur2 and 7iii7 the implementation by the ,commissions of this ,act1 and the amendments made by this ,act1 including with respect to regulatory harmonization between the ,commissions1 memoranda of understanding1 and the ,,cftc-,,sec ,micro-,innovation ,sandbox established pursuant to section #eja2 7,b7 develop and share objective methods and best practices for evaluating digital asset networks and activities1 including1 as appropriate1 technical features1 economic design1 and implications for market integrity1 investor protection1 and operational resilience2 and 7,c7 issue nonbinding recommendations to assist in resolving disputes between the ,commissions4 7c7 ,review by the commissions ,each of the ,commissions shall-- 7#a7 review the findings and nonbinding recommendations provided under subsection 7b77#a77;,a72 7#b7 promptly publish a public statement each time the ,committee submits a finding or nonbinding recommendation to the applicable ,commission under subsection 7b77#a77;,a7 that-- 7,a7 assesses the finding or recommendation2 and 7,b7 if applicable1 discloses the action or decision not to take action2 and 7#c7 provide the ,committee with a formal written response not later than #ij days after the date of submission of a finding or nonbinding recommendation under subsection 7b77#a77;,a74 7d7 ,membership and leadership 7#a7 ,non-federal members2 size and composition 7,a7 ,in general ,the ,commissions shall appoint to the ,committee not more than #ad nongovernmental voting members who-- 7i7 represent a broad spectrum of interests1 equally divided between the ,commissions2 and 7ii7 serve at the pleasure of the appointing ,commission4 7,b7 ,specific members ,for each of the ,commissions1 the appointees under subparagraph 7,a7 of this paragraph shall include-- 7i7 #b individuals described in paragraph 7#b77;,a72 7ii7 #b individuals described in paragraph 7#b77;,b72 7iii7 #a individual described in paragraph 7#b77;,c72 7iv7 #b individuals described in paragraph 7#b77;,d72 and 7v7 #a individual described in paragraph 7#b77;,e74 7#b7 ,members described ,a member described in this paragraph is-- 7,a7 an individual who is employed by1 or is a related person with respect to1 a digital asset market participant2 7,b7 a person registered with either of the ,commissions and that is engaged in activities relating to digital assets2 7,c7 an individual engaged in academic research relating to digital assets2 7,d7 a retail user of digital assets2 and 7,e7 a ,state securities regulator4 7#c7 ,,nist ,the ,director of the ,national ,institute of ,standards and ,technology1 or the designee of the ,director1 shall serve in an advisory capacity as a nonvoting1 ex officio member of the ,committee1 and shall not be excluded from any proceedings1 meetings1 discussions1 or deliberations of the ,committee1 except that the chair of the ,committee1 upon an affirmative vote of the ,committee1 may exclude the ,director or the designee from any proceedings1 meetings1 discussions1 or deliberations of the ,committee when necessary to safeguard and promote the free exchange of confidential information4 7#d7 ,co-designated ,federal officers2 commissioner support 7,a7 ,co-designated ,federal officers 7i7 ,in general ,each ,commission shall designate #a ,federal officer to serve as a co-designated ,federal officer of the ,committee4 7ii7 ,shared duties ,the duties required by section #ajji7;e7 of title #e1 ,united ,states ,code1 to be carried out by a designated officer or employee of the ,federal ,government with respect to the ,committee shall be shared by the ,federal officers of the ,committee who are co-designated under clause 7i74 7,b7 ,commissioner support 7i7 ,in general ,commissioners of the ,commissions may be supported by officers or employees of the respective ,commission who may prepare or transmit materials1 coordinate with agency staff1 liaise with ,committee leadership1 propose agenda items1 gather information1 and otherwise support the participation of that commissioner in ,committee business1 in an ex officio1 nonvoting capacity4 7ii7 ,rule of construction ,an officer or employee described in clause 7i7 shall not be considered to be a member of the ,committee for purposes of chapter #aj of title #e1 ,united ,states ,code4 7,c7 ,information sharing ,the co-designated ,federal officers under subparagraph 7,a7 and the officers or employees of the respective ,commissions providing support under subparagraph 7,b7 shall share information about digital asset activities under this ,act1 in accordance with section #ijb1 including with regard to preventing insider trading4 7#e7 ,committee leadership ,the members of the ,committee shall elect1 from among the membership of the ,committee1 a secretary and an assistant secretary4 7#f7 ,rotating chair ,the chair and vice chair of the ,committee shall rotate annually between the ,commissions1 with the ,commission designating the chair in even-numbered calendar years1 the ,commodity ,futures ,trading ,commission designating the chair in odd-numbered calendar years1 the ,commission designating the vice chair in odd-numbered calendar years1 and the ,commodity ,futures ,trading ,commission designating the vice chair in even-numbered calendar years4 7#g7 ,terms2 vacancies2 holdover 7,a7 ,in general ,each non-,federal member of the ,committee shall be appointed for a term of #d years4 7,b7 ,service until new appointment ,a member of the ,committee may continue to serve after the expiration of the term of the member until a successor is appointed4 7,c7 ,vacancies ,a vacancy with respect to membership in the ,committee shall be filled only for the remainder of the applicable term4 7,d7 ,reappointment ,a member of the ,committee may be reappointed4 7#h7 ,status of members ,a member of the ,committee appointed under paragraph 7#a7 shall not be deemed to be an employee or agent of either of the ,commissions solely by reason of membership on the ,committee4 7e7 ,no compensation for committee members 7#a7 ,non-federal members ,all ,committee members appointed under subsection 7d77#a7 shall-- 7,a7 serve without compensation2 and 7,b7 while away from the home or regular place of business of the member in the performance of services for the ,committee1 be allowed travel expenses1 including per diem in lieu of subsistence1 in the same manner as persons employed intermittently in ,government service are allowed expenses under section #egjc of title #e1 ,united ,states ,code4 7#b7 ,no compensation for co-designated federal officers ,the ,federal officers co-designated under subsection 7d77#d77;,a7 shall serve without compensation in addition to that received for their services as officers or employees of the ,united ,states4 7f7 ,frequency of meetings ,the ,committee shall meet-- 7#a7 not less frequently than twice annually2 and 7#b7 at such other times as either of the ,commissions may request4 7g7 ,procedures2 advisory nature 7#a7 ,in general ,the ,committee shall operate pursuant to chapter #aj of title #e1 ,united ,states ,code1 except as otherwise expressly provided by this section4 7#b7 ,advisory nature of recommendations ,the recommendations of the ,committee are advisory in nature1 shall not create any legal rights or obligations1 and shall not limit or delay the independent authority of either of the ,commissions4 7h7 ,time limits ,the ,commissions shall-- 7#a7 not later than #ij days after the date of enactment of this ,act1 adopt a joint charter for the ,committee2 7#b7 not later than #abj days after the date of enactment of this ,act1 make the appointments required under subsection 7d77#a72 and 7#c7 not later than #ahj days after the date of enactment of this ,act1 hold the initial meeting of the ,committee4 7i7 ,funding ,subject to the availability of funds1 the ,commissions shall jointly fund the ,committee4 7j7 ,duration and renewal 7#a7 ,initial period ,the ,committee shall remain in effect for #aj years beginning on the date of enactment of this ,act4 7#b7 ,renewal thereafter ,at the conclusion of the #aj-year period described in paragraph 7#a7-- 7,a7 the ,committee shall be subject to subsections 7a7 and 7b7 of section #ajac of title #e1 ,united ,states ,code2 and 7,b7 the ,commissions may renew the ,committee for successive #b-year periods by publishing a notice in the ,federal ,register1 consistent with chapter #aj of title #e1 ,united ,states ,code4 #ijb4 ,memorandum of understanding 7a7 ,memorandum of understanding ,the ,commission shall enter into a memorandum of understanding with the ,commodity ,futures ,trading ,commission to ensure-- 7#a7 coordinated supervision and enforcement with respect to registrants of the ,commission and the ,commodity ,futures ,trading ,commission1 including with regard to-- 7,a7 the anti-fraud and anti-manipulation authorities of the ,commission1 such as with regard to insider trading2 and 7,b7 the market integrity authorities of the ,commodity ,futures ,trading ,commission2 and 7#b7 appropriate information sharing between the ,commission and the ,commodity ,futures ,trading ,commission to further the purposes of and compliance with this ,act1 the amendments made by this ,act1 the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;a et seq47 7as amended by this ,act71 the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 7as amended by this ,act71 and the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq474 7b7 ,rule of construction ,nothing in this section may 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 7c7 ,rule of construction ,nothing in this ,act1 or any amendment made by this ,act1 may be construed to limit or prevent the continued application of applicable law regarding the insider trading of securities1 including digital asset securities1 including section #ba;,a of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghu-#a74 #ijc4 ,fin,c,e,n appropriations 7a7 ,authorization of appropriations ,for the purposes of developing policy relating to digital assets1 acquiring information technology resources1 funding the operations described in sections #bjb and #bjc of this ,act1 and enforcement of the laws within its jurisdiction relating to digital assets1 there is authorized to be appropriated to the ,financial ,crimes ,enforcement ,network of the ,department of the ,treasury the following3 7#a7 #cj1jjj1jjj for fiscal year #bjbf1 to remain available until ,september #cj1 #bjbg4 7#b7 #cj1jjj1jjj for fiscal year #bjbg1 to remain available until ,september #cj1 #bjbh4 7#c7 #cj1jjj1jjj for fiscal year #bjbh1 to remain available until ,september #cj1 #bjbi4 7#d7 #cj1jjj1jjj for fiscal year #bjbi1 to remain available until ,september #cj1 #bjcj4 7#e7 #cj1jjj1jjj for fiscal year #bjcj1 to remain available until ,september #cj1 #bjca4 7b7 ,incentive premium for highly qualified individuals ,notwithstanding any other provision of law or regulation1 the ,director of the ,financial ,crimes ,enforcement ,network of the ,department of the ,treasury may pay an annual incentive premium of not more than #bj percent of the annual rate of basic pay for a position if necessary to attract highly qualified individuals for positions that the ,director has certified to the ,director of the ,office of ,personnel ,management reflect the needs of the ,financial ,crimes ,enforcement ,network4 #ijd4 ,build ,now ,act 7a7 ,definitions ,in this section3 7#a7 ,covered recipient ,the term covered recipient means a metropolitan city or urban county1 as those terms are defined in section #ajb of the ,housing and ,community ,development ,act of #aigd 7#db ,u4,s4,c4 #ecjb71 that receives funds under section #ajf4 7#b7 ,current annual growth rate ,the term current annual growth rate1 with respect to an eligible recipient and a fiscal year1 means the average annual percentage increase in the number of housing units in the jurisdiction of the eligible recipient1 as calculated by the ,secretary1 during the period-- 7,a7 beginning with the third quarter of the sixth preceding fiscal year2 and 7,b7 ending with the third quarter of the preceding fiscal year4 7#c7 ,eligible recipient ,the term eligible recipient means any covered recipient unless-- 7,a7 7i7 the median ,small ,area ,fair ,market ,rent in the jurisdiction of the covered recipient is at or below the #fjth percentile of median ,small ,area ,fair ,market ,rents in the jurisdictions of all covered recipients2 and 7ii7 the median home value in the jurisdiction of the covered recipient is below the median home value for the ,united ,states2 7,b7 the annual rental vacancy rate in the jurisdiction of the covered recipient is greater than the national annual rental vacancy rate for the most recent year available1 as published by the ,bureau of the ,census2 7,c7 during the #a-year period preceding the date on which the ,secretary allocates funds under section #ajf1 the jurisdiction of the covered recipient has been the subject of a major disaster or emergency declaration under section #dja or #eja1 respectively1 of the ,robert ,t4 ,stafford ,disaster ,relief and ,emergency ,assistance ,act 7#db ,u4,s4,c4 #eagj1 #eaia72 or 7,d7 the covered recipient lacks the legal authority to enact or update zoning and permitting ordinances4 7#d7 ,extremely high-growth recipient ,the term extremely high-growth recipient means an eligible recipient for which the current annual growth rate is at or above #d percent4 7#e7 ,housing growth improvement rate ,the term housing growth improvement rate1 with respect to an eligible recipient and a fiscal year1 means the quotient of-- 7,a7 7i7 the current annual growth rate of the eligible recipient1 minus 7ii7 the prior annual growth rate of the eligible recipient2 and 7,b7 the sum obtained by adding the absolute values of the current annual growth rate and the prior annual growth rate of the eligible recipient4 7#f7 ,prior annual growth rate ,the term prior annual growth rate1 with respect to an eligible recipient and a fiscal year1 means the average annual percentage increase in the number of housing units in the jurisdiction of the eligible recipient1 as calculated by the ,secretary1 during the period-- 7,a7 beginning with the third quarter of the #aath preceding fiscal year2 and 7,b7 ending with the third quarter of the sixth preceding fiscal year4 7#g7 ,secretary ,the term ,secretary means the ,secretary of ,housing and ,urban ,development4 7#h7 ,section #ajf ,the term section #ajf means section #ajf of the ,housing and ,community ,development ,act of #aigd 7#db ,u4,s4,c4 #ecjf74 7b7 ,adjustments to community development block grant allocations 7#a7 ,in general ,in allocating amounts to an eligible recipient under section #ajf for a fiscal year1 the ,secretary shall adjust the allocation based on the housing growth improvement rate of the eligible recipient1 in accordance with paragraph 7#b7 of this subsection4 7#b7 ,adjustments 7,a7 ,housing growth improvement rate at or above median2 extremely high-growth recipients 7i7 ,in general ,if1 with respect to a fiscal year for which the allocation under section #ajf is being determined1 the housing growth improvement rate for an eligible recipient is at or above the median housing growth improvement rate for all eligible recipients other than extremely high-growth recipients1 or if an eligible recipient is an extremely high-growth recipient1 the ,secretary shall allocate to the eligible recipient for that fiscal year1 in addition to the amount that would otherwise be allocated to the eligible recipient under section #ajf1 a bonus amount1 as determined under clause 7ii7 of this subparagraph4 7ii7 ,bonus amount ,for purposes of clause 7i71 the bonus amount for an eligible recipient for a fiscal year shall be equal to the product of-- 7,i7 the aggregate amount by which allocations to eligible recipients are decreased under subparagraph 7,b7 for that fiscal year2 and 7,,ii7 the quotient of-- 7aa7 the number of housing units1 as of the third quarter of the preceding fiscal year1 in the jurisdiction of the eligible recipient1 as calculated by the ,secretary2 and 7bb7 the number of housing units1 as of the third quarter of the preceding fiscal year1 in the jurisdictions of all eligible recipients that receive a bonus amount under this paragraph1 as calculated by the ,secretary4 7,b7 ,housing growth improvement rate below median ,if1 with respect to a fiscal year for which the allocation under section #ajf is being determined1 the housing growth improvement rate for an eligible recipient is below the median housing growth improvement rate for all eligible recipients other than extremely high-growth recipients1 the ,secretary shall decrease the amount that would otherwise be allocated to the eligible recipient under section #ajf for that fiscal year by #aj percent4 7c7 ,calculation of housing units 7#a7 ,housing and ,urban ,development requirements ,in calculating the number of housing units in the jurisdiction of an eligible recipient under any provision of this section1 the ,secretary shall-- 7,a7 use the ,current ,address ,count ,listing ,files and other data products1 as needed1 of the ,bureau of the ,census tabulated from the ,master ,address ,file2 and 7,b7 make calculations at the block level1 using boundaries that reflect the most current boundaries4 7#b7 ,census ,bureau and ,postal ,service requirements ,the ,bureau of the ,census and the ,united ,states ,postal ,service shall provide any relevant data to the ,secretary upon request to assist the ,secretary in making a calculation described in paragraph 7#a74 7#c7 ,adjustment of calculation periods ,the ,secretary may adjust the calculation periods under subparagraphs 7,a7 and 7,b7 of subsection 7a77#b71 subparagraphs 7,a7 and 7,b7 of subsection 7a77#f71 and items 7aa7 and 7bb7 of subsection 7b77#b77;,a77ii77,,ii7 by not more than #b months to achieve alignment with the data provided by the ,bureau of the ,census4 7d7 ,annual report on housing growth improvement rate ,before allocating funds under section #ajf for a fiscal year1 the ,secretary shall publish a report that-- 7#a7 includes the housing growth improvement rate for each eligible recipient2 and 7#b7 lists1 for the most recent fiscal year for which allocations were made under section #ajf-- 7,a7 the eligible recipients that received a bonus amount under subsection 7b77#b77;,a7 of this section2 and 7,b7 the eligible recipients for which the allocation under section #ajf was decreased under subsection 7b77#b77;,b7 of this section4 7e7 ,notification2 implementation dates 7#a7 ,notification 7,a7 ,in general ,not later than #fj days after the date of enactment of this ,act1 the ,secretary shall notify each eligible recipient of the recipient's housing growth improvement rate and whether that housing growth improvement rate is above1 at1 or below the median housing growth improvement rate for all eligible recipients other than extremely high-growth recipients4 7,b7 ,guidance ,as part of the notification under subparagraph 7,a71 the ,secretary shall share guidance1 including resources developed by the ,department of ,housing and ,urban ,development1 on best practices and recommendations for policies to reduce regulatory barriers to housing and increase housing supply4 7#b7 ,implementation dates ,subsection 7b7 shall take effect beginning with the third full fiscal year after the date of enactment of this ,act and remain in effect through fiscal year #bjdc4 7#c7 ,no effect on previous appropriations ,this section shall not apply to amounts appropriated before the date of enactment of this ,act4 #ije4 ,rulemakings ,except as otherwise provided1 not later than #a year after the date of enactment of this ,act1 each applicable regulator shall adopt rules to carry out this ,act1 and the amendments made by this ,act1 through appropriate notice and comment rulemaking4 #ijf4 ,effective date ,this ,act1 and the amendments made by this ,act1 shall take effect on the date that is #cfj days after the date of enactment of this ,act1 except that1 if a provision of this ,act1 or an amendment made by this ,act1 requires a rulemaking1 that provision shall take effect on the later of-- 7#a7 the date that is #cfj days after the date of enactment of this ,act2 or 7#b7 the date that is #fj days after the publication in the ,federal ,register of the final rule implementing the provision4 ,june #a1 #bjbf,reported with an amendment