(a) Short titles

This Act may be cited as the Digital Asset Market Clarity Act of 2025 or the CLARITY Act of 2025 and the Anti-CBDC Surveillance State Act.

(b) Table of contents

The table of contents for this Act is as follows:

Sec. 101. Definitions under the Securities Act of 1933

Section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)) is amended by adding at the end the following:

(20) Blockchain

The term blockchain means—

(A)

any technology—

(i)

where data is—

(I)

shared across a network to create a distributed ledger of independently verifiable transactions or information among network participants;

(II)

linked using cryptography to maintain the integrity of the distributed ledger and to execute other functions; and

(III)

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

(ii)

composed of source code that is publicly available; and

(B)

any similar technology to the technology described in subparagraph (A).

(21) Blockchain application

The term blockchain application means any executable software that is deployed to a blockchain and composed of source code that is publicly available, including a smart contract or any network of smart contracts, or other similar technology.

(22) 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 functioning, or other similar technology.

(23) Blockchain system

The term blockchain system means any blockchain, together with its blockchain protocol or any blockchain application or network of blockchain applications.

(24) Decentralized governance system

(A) In general

The term decentralized governance system means, with respect to a blockchain system, any transparent, rules-based system permitting persons to form consensus or reach agreement in the development, provision, publication, maintenance, or administration of such blockchain system, where participation is not limited to, or under the effective control of, any person or group of persons under common control.

(B) Relationship of persons to decentralized governance systems

With respect to a decentralized governance system, 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 concert.

(C) 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 (A), provided that the legal entity does not operate pursuant to centralized management. For the purposes of this subparagraph, the delegation of ministerial or administrative authority at the direction of the participants in a decentralized governance system shall not be construed to be centralized management.

(25) Digital asset

The term digital asset means any digital representation of value which is recorded on a cryptographically-secured distributed ledger or other similar technology.

(26) Digital commodity

The term digital commodity has the meaning given that term under section 1a of the Commodity Exchange Act (7 U.S.C. 1a).

(27) Digital commodity affiliated person

The term digital commodity affiliated person—

(A)

means a person (including a digital commodity related person) that, with respect to any digital commodity—

(i)

acquires or has any right to acquire 5 percent or more of the total outstanding units of such digital commodity from a digital commodity issuer or an agent or underwriter thereof;

(ii)

is a founder of the digital commodity issuer; or

(iii)

is an executive officer, director, trustee, general partner, or person serving in a similar capacity of the digital commodity issuer or held such role at any point in the previous 12-month period; and

(B)

does not include a decentralized governance system.

(28) Digital commodity issuer

(A) In general

With respect to a digital commodity, the term digital commodity issuer means any person that—

(i)

issues or causes to be issued, or proposes to issue or cause to be issued, a unit of such digital commodity to a person; or

(ii)

offers or sells a right to a future issuance of a unit of such digital commodity to a person.

(B) 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 offer, sale, distribution, or other issuance of a digital commodity, including via any arrangement involving the transfer of intellectual property associated with the blockchain system to which the digital commodity relates.

(29) Digital commodity related person

(A) In general

With respect to a digital commodity issuer, the term digital commodity related person—

(i)

means a person—

(I)

that is or was in the previous 6-month period a promoter, senior employee, advisory board member, consultant, advisor, or person serving in a similar capacity; or

(II)

that acquires or has any right to acquire 1 percent or more of the total outstanding units of such digital commodity from a digital commodity issuer or an agent or underwriter thereof; and

(ii)

does not include a decentralized governance system.

(B) Senior employee defined

In this paragraph and with respect to a digital commodity issuer, the term senior employee means any employee materially involved in the management of the digital commodity issuer, including management of the development of the blockchain system to which the digital commodity relates.

(30) End user distribution

(A) In general

The term end user distribution means a distribution of a unit of a digital commodity that—

(i)

does not involve an exchange of more than a nominal value of cash, property, or other assets; and

(ii)

is distributed in a broad and equitable manner based on conditions capable of being satisfied by any participant in the blockchain system, including, as incentive-based rewards—

(I)

to users of the digital commodity or any blockchain system to which the digital commodity relates;

(II)

for activities directly related to the operation of the blockchain system, such as mining, validating, staking, or other activity directly tied to the operation of the blockchain system; or

(III)

to the existing holders of another digital commodity, in proportion to the total units of such other digital commodity as are held by each person.

(B) Protocol consensus participation

The term end user distribution includes the following:

(i) 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 mechanism, 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 entity.

(ii) 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 mechanism, including the staking of a digital commodity and the operation of a node or validator for such activity where—

(I)

the owner of the staked digital commodity and operator of the node or validator for such activity are different persons or entities; and

(II)

the operator of the node or validator does not maintain custody or control of the staked digital commodity.

(iii) Custodial and ancillary staking services

Subject to the rules issued pursuant to subparagraph (C), 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 commodity, provided that such custodial or ancillary services are exclusively administrative or ministerial in nature.

(C) Rulemaking to define the custodial and ancillary staking services

Not later than 270 days after the date of the enactment of this paragraph, the Commission shall issue rules defining the custodial and ancillary staking services described in subparagraph (B)(iii) that are exclusively administrative or ministerial in nature, consistent with what is necessary or appropriate for the public interest or for the protection of investors.

(31) Mature blockchain system

The term ‘mature blockchain system’ means a blockchain system, together with its related digital commodity, that is not controlled by any person or group of persons under common control.

(32) Permitted payment stablecoin

The term permitted payment stablecoin means a payment stablecoin (as defined in section 2 of the GENIUS Act) issued by a permitted payment stablecoin issuer.

(33) Permitted payment stablecoin issuer

The term permitted payment stablecoin issuer has the meaning given that term in section 2 of the GENIUS Act.

Sec. 102. Definitions under the Securities Exchange Act of 1934

Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended—

Sec. 103. Definitions under the Commodity Exchange Act

Sec. 104. Definitions under this Act

In this Act:

Sec. 105. Rulemakings

Sec. 106. Expedited registration for digital commodity exchanges, brokers, and dealers; provisional status

Sec. 107. Commodity Exchange Act and securities laws savings provisions

Sec. 108. Administrative requirements

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

Sec. 109. Treatment of certain non-controlling blockchain developers

Sec. 110. Application of the Bank Secrecy Act

Sec. 111. Rule of construction

Nothing in this Act, or the amendments made by this Act, shall be construed to limit or prevent the continued application of applicable ethics statutes and regulations administered by the Office of Government Ethics, or the ethics rules of the Senate and the House of Representatives, including section 208 of title 18, United States Code, and sections 2635.702 and 2635.802 of title 5, Code of Federal Regulations. For the avoidance of doubt, 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 service. For the purposes of this section, an employee described in section 202 of title 18, United States Code, shall be deemed an executive branch employee for purposes of complying with section 208 of that title.

Sec. 112. Implementation

Sec. 201. Treatment of investment contract assets

Sec. 202. Exempted primary transactions in digital commodities

Sec. 203. Treatment of secondary transactions in digital commodities that originally involved investment contracts

Sec. 204. Requirements for offers and sales of digital commodities by digital commodity related persons and digital commodity affiliated persons

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

4C. Requirements for offers and sales of digital commodities by digital commodity related persons and digital commodity affiliated persons

(a) 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 issuer, or an agent or underwriter thereof, pursuant to an investment contract in reliance on section 4(a)(8) or another exemption under this Act, other than as provided in this section.

(b) Commission jurisdiction

(1)

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

(2)

For the purposes of this section, the Commission shall have jurisdiction and enforcement authority with respect to an offer or sale of a digital commodity described in subsection (a).

(c) Restrictions on digital commodity related persons and digital commodity affiliated persons

(1) Prior to being a mature blockchain system

Prior to the blockchain system to which a digital commodity relates being certified as a mature blockchain system under section 42 of the Securities Exchange Act of 1934, units of the digital commodity acquired by a digital commodity related person or digital commodity affiliated person directly from its issuer (or an agent or underwriter thereof) pursuant to an investment contract in reliance on section 4(a)(8), or another exemption under this Act, may be offered or sold by such digital commodity related person or digital commodity affiliated person if—

(A)

reports with respect to such digital commodity, where required under section 4B(b)(3) (or, with respect to a digital commodity not issued in reliance on section 4(a)(8), a comparable set of reports where required by the Commission) have been filed with the Commission;

(B)

the digital commodity related person or digital commodity affiliated person has held the units for not less than 12 months; and

(C)

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—

(i)

in any 12-month period, or shorter period as the Commission may prescribe, not less than 5 percent or greater than 20 percent of the total units of the digital commodity acquired directly from its issuer (or an agent or underwriter thereof) by the digital commodity related person or digital commodity affiliated person, as determined by the Commission pursuant to paragraph (3); and

(ii)

an amount, as determined by the Commission pursuant to paragraph (3), not less than 30 percent or greater than 50 percent of the total units of the digital commodity acquired directly from its issuer (or an agent or underwriter thereof) by the digital commodity related person or digital commodity affiliated person.

(2) 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 42 of the Securities Exchange Act of 1934, units of the digital commodity acquired by a digital commodity related person or digital commodity affiliated person directly from its issuer (or an agent or underwriter thereof) pursuant to an investment contract in reliance on section 4(a)(8) or another exemption under this Act, may be—

(A)

offered or sold by a digital commodity related person; or

(B)

offered or sold by a digital commodity affiliated person if—

(i)

information described in section 4B(b)(5)(C), where required (or, with respect to a digital commodity not issued in reliance on section 4(a)(8), a comparable set of information, where required) is publicly available;

(ii)

the digital commodity affiliated person has held the units for not less than the earlier of—

(I)

12 months; or

(II)

3 months following the date on which the blockchain system is certified as a mature blockchain system under section 42 of the Securities Exchange Act of 1934; and

(iii)

the aggregate amount of the units of the digital commodity offered or sold by the digital commodity affiliated person in any 12-month period is an amount, as determined by the Commission pursuant to paragraph (3), not less than 5 percent or greater than 10 percent of the total outstanding amount of the digital commodity.

(3) Rulemakings required

Not later than 270 days after the date of the enactment of this section, consistent with protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation, and to foster the development of mature blockchain systems, the Commission, by rule, after notice and comment—

(A)

shall set the percentage amounts described in paragraphs (1)(C)(i), (1)(C)(ii), and (2)(B)(iii); and

(B)

may provide an exemption from the limitation described in paragraph (1)(C)(ii), 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 under, as applicable, section 4B(e)(1)(A) or section 202(c)(2)(B)(iii)(II) of the CLARITY Act of 2025.

(d) Rules of construction

For purposes of this section, the use of a digital commodity in the programmatic functioning of the blockchain system to which it relates is not an offer or sale of a digital commodity.

(e) Manipulative and deceptive devices; reporting

(1) In general

It shall be unlawful for any digital commodity issuer, digital commodity related person, or digital commodity affiliated person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, to use or employ, in connection with the purchase or sale of any digital commodity, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

(2) Affirmative defense

Not later than 270 days after the date of the enactment of this section, the Commission shall issue rules to implement paragraph (1), 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 investors.

(3) Reporting

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

(4) Differentiation between persons

In issuing rules required under paragraphs (2) and (3), the Commission shall differentiate between digital commodity related persons and digital commodity affiliated persons, as necessary or appropriate in the public interest or for the protection of investors.

(f) 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 Act, including as provided under section 3, 4(a), or 19, may be offered or sold by a digital commodity related person or digital commodity affiliated person, if—

(1)

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

(2)

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

(g) Rulemaking on further usage of digital commodities

The Commission, consistent with protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation, as well as fostering the development of mature blockchain systems, may, by rule, exempt unconditionally or on stated terms or conditions, a digital commodity related person or a digital commodity affiliated person, or any class thereof, from the requirements of this section for the offer or sale of a digital commodity, including for the purposes of promoting market liquidity.

Sec. 205. Mature blockchain system requirements

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

42. Mature blockchain systems

(a) Certification of blockchain systems

(1) Certification

A digital commodity issuer, digital commodity related person, digital commodity affiliated person, decentralized governance system of the blockchain system, or a registered digital commodity exchange, or any other appropriate person as designated by the Commission, may certify to the Commission that the blockchain system to which a digital commodity relates is a mature blockchain system.

(2) Filing requirements

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

(A)

the operation of the blockchain system;

(B)

the functionality of the related digital commodity;

(C)

how the market value of the digital commodity is substantially derived from the programmatic functioning of such blockchain system;

(D)

any decentralized governance system which relates to the blockchain system; and

(E)

the current roles, if any, of the digital commodity issuer, digital commodity affiliated persons, 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 system.

(3) Rebuttable presumption

The Commission may rebut a certification described under paragraph (1) with respect to a blockchain system if the Commission, within 60 days of receiving such certification, determines that the blockchain system is not a mature blockchain system.

(4) Certification review

(A) In general

Any blockchain system that relates to a digital commodity for which a certification has been made under paragraph (1) shall be considered a mature blockchain system 60 days after the date on which the Commission receives a certification under paragraph (1), unless the Commission notifies the person who made the certification within such time that the Commission is staying the certification due to—

(i)

an inadequate explanation by the person making the certification; or

(ii)

any novel or complex issues which require additional time to consider.

(B) Public notice

The Commission shall make the following available to the public and provide a copy to the Commodity Futures Trading Commission:

(i)

Each certification received under paragraph (1).

(ii)

Each stay of the Commission under this subsection, and the reasons therefor.

(iii)

Any response from a person making a certification under paragraph (1) to a stay of the certification by the Commission.

(C) Consolidation

The Commission may consolidate and treat as one submission multiple certifications made under paragraph (1) for the same blockchain system which relates to a digital commodity which are received during the review period provided under this paragraph.

(5) Stay of certification

(A) In general

A notification by the Commission pursuant to paragraph (4)(A) shall stay the certification once for up to an additional 120 days from the date of the notification.

(B) Public comment period

Before the end of the 60-day period described under paragraph (4)(A), the Commission may begin a public comment period of at least 30 days in conjunction with a stay under this subsection.

(6) Disposition of certification

A certification made under paragraph (1) shall—

(A)

become effective—

(i)

upon the publication of a notification from the Commission to the person who made the certification that the Commission does not object to the certification; or

(ii)

at the expiration of the certification review period; and

(B)

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 certification.

(7) Recertification

With respect to a blockchain system for which a certification has been rebutted under this subsection, no person may make a certification under paragraph (1) with respect to such blockchain system during the 90-day period beginning on the date of such rebuttal.

(8) Appeal of rebuttal

(A) In general

If a certification is rebutted under this section, the person making such certification may appeal the decision to the United States Court of Appeals for the District of Columbia, not later than 60 days after the notice of rebuttal is made.

(B) Review

In an appeal under subparagraph (A), the court shall have de novo review of the determination to rebut the certification.

(b) Maturity criteria

(1) Sense of Congress

It is the sense of the Congress that protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation necessitates establishing clear criteria for blockchain systems to be deemed mature, as well as enabling the Commission to develop, without prejudice to any such criteria codified in statute, 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 technology.

(2) In general

The Commission may issue rules identifying conditions by which a blockchain system, together with its related digital commodity, shall be considered a mature blockchain system, consistent with the protection of investors, maintenance of fair, orderly, and efficient markets, and the facilitation of capital formation.

(3) Rules of construction

(A)

Nothing in this subsection may be construed to permit the Commission to impose additional criteria to the criteria in subsection (c) for certifying that a blockchain system is a mature blockchain system pursuant to subsection (c).

(B)

Nothing in this subsection or subsection (c) 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 system.

(c) Deemed mature

(1) In general

Notwithstanding subsection (b), for the purposes of subsection (a), a digital commodity issuer, digital commodity related person, digital commodity affiliated person, or decentralized governance system of the blockchain system may establish that a blockchain system, together with its related digital commodity, is not controlled by any person or group of persons under common control, if the blockchain system, together with its related digital asset, meets the requirements described in paragraph (2) or (3).

(2) Criteria for any blockchain system

The requirements described in this paragraph are the following:

(A) System value

(i) Market value

The digital commodity has a value that is substantially derived from the use and functioning of the blockchain system.

(ii) 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 system, the development of such mechanisms has been substantially completed.

(B) Functional system

The blockchain system allows network participants to engage in the activities the blockchain system is intended to provide, including—

(i)

using, transmitting, or storing value, or otherwise executing transactions, on the blockchain system;

(ii)

deploying, executing, or accessing software or services, or otherwise offering or participating in services, deployed on or integrated with the blockchain system;

(iii)

participating in the consensus mechanism, transaction validation process, or decentralized governance system of the blockchain system; or

(iv)

operating any client, node, validator, or other form of computational infrastructure with respect to the blockchain system.

(C) Open and interoperable system

The blockchain system—

(i)

is composed of source code that is open source; and

(ii)

does not restrict or prohibit based on the exercise of unilateral authority any person, other than a digital commodity issuer, digital commodity related person, or digital commodity affiliated person from engaging in the activities the blockchain system is intended to provide, including the activities described in subparagraph (B).

(D) Programmatic system

The blockchain system operates, executes, and enforces its operations and transactions based solely on pre-established, transparent rules encoded directly within the source code of the blockchain system.

(E) System governance

No person or group of persons under common control—

(i)

has the unilateral authority, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, to control or materially alter the functionality, operation, or rules of consensus or agreement of the blockchain system or its related digital commodity; or

(ii)

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

(F) Impartial system

No person or group of persons under common control possesses a unique permission or privilege with respect to functionality, operation, or rules of consensus or agreement of the blockchain system or its related digital commodity, unless such alteration—

(i)

addresses errors, regular maintenance, or cybersecurity risks of the blockchain system that affect the programmatic functioning of the blockchain system; and

(ii)

is adopted through the consensus or agreement of a decentralized governance system.

(G) Distributed ownership

No digital commodity issuer, digital commodity related person, or digital commodity affiliated person beneficially owns, in the aggregate, 20 percent or more of the total amount of units of the digital commodity.

(3) Optional criteria for preexisting blockchain systems

The requirements described in this paragraph are that the blockchain system—

(A)

was created prior to the date of enactment of this section;

(B)

met the requirements of subparagraphs (A) through (F) of paragraph (2) prior to the date of enactment of this section; and

(C)

at least 50 percent of the units of the digital commodity related to the blockchain system are held by persons other than the digital commodity issuer, a digital commodity related person, or a digital commodity affiliated person.

(d) Decentralized governance system

(1)

For the purposes of this section, a decentralized governance system is not a person or a group of persons under common control.

(2)

A blockchain system, together with its digital commodity, shall not be precluded from being considered a mature blockchain system solely based on a functional, administrative, clerical, or ministerial action of a decentralized governance system, including any such action taken by a person acting on behalf of and at the direction of the decentralized governance system, as determined by the Commission and consistent with the protection of investors, maintenance of fair, orderly, and efficient markets, and the facilitation of capital formation.

(e) Rulemaking

Not more than 270 days after the date of enactment of this section, the Commission shall issue rules to carry out this section.

Sec. 206. Effective date

Unless otherwise provided in this title, this title and the amendments made by this title shall take effect 360 days after the date of enactment of this Act, except that, to the extent a provision of this title requires a rulemaking, the provision shall take effect on the later of—

Sec. 301. Treatment of digital commodities and permitted payment stablecoins

Sec. 302. Anti-fraud authority over permitted payment stablecoins and certain digital commodity transactions

Sec. 303. Eligibility of alternative trading systems

Sec. 304. Rulemaking for dual-registered entities

Sec. 305. Modernization of recordkeeping requirements

Sec. 306. Exemptive authority

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

Sec. 307. Additional registrations with the Commodity Futures Trading Commission

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

(p) Additional registrations with the Commodity Futures Trading Commission

(1) 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 dealer.

(2) 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 exchange.

(3) Alternative trading systems

An alternative trading system, and the operator thereof, shall be permitted to maintain a registration with the Commodity Futures Trading Commission as a digital commodity exchange.

(4) Notice of application

Any person or entity described in paragraph (1) through (3) shall provide to the Securities and Exchange Commission, at such time and in such form and manner as the Securities and Exchange Commission shall prescribe, notice of any application to register with the Commodity Futures Trading Commission as a digital commodity broker, digital commodity dealer, or digital commodity exchange.

Sec. 308. Exempting digital commodities from State securities laws

Sec. 309. Exclusion for decentralized finance activities

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

15H. Decentralized finance activities not subject to this Act

(a) In general

Notwithstanding any other provision of this Act, a person shall not be subject to this Act and the regulations promulgated under this Act based on the person directly or indirectly engaging in any of the following activities, whether singly or in combination, in relation to the operation of a blockchain system or in relation to a decentralized finance trading protocol:

(1)

Compiling network transactions or relaying, searching, sequencing, validating, or acting in a similar capacity.

(2)

Providing computational work, operating a node or oracle service, or procuring, offering, or utilizing network bandwidth, or providing other similar incidental services.

(3)

Providing a user-interface that enables a user to read and access data about a blockchain system.

(4)

Developing, publishing, constituting, administering, maintaining, or otherwise distributing a blockchain system or a decentralized finance trading protocol.

(5)

Developing, publishing, constituting, administering, maintaining, or otherwise distributing a decentralized finance messaging system, or operating or participating in a liquidity pool, for the purpose of executing a spot contract for the purchase or sale of a digital commodity in relation to a decentralized finance trading protocol.

(6)

Developing, publishing, constituting, administering, maintaining, or otherwise distributing software or systems that create or deploy hardware or software, including wallets or other systems, facilitating an individual user’s own personal ability to keep, safeguard, or custody the user’s digital assets or related private keys.

(b) Exceptions

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

Sec. 310. Treatment of custody activities by banking institutions

Sec. 311. Broker and dealer disclosures regarding the treatment of assets

Sec. 312. Digital commodity activities that are financial in nature

Sec. 313. Effective date; administration

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

Sec. 314. Educational material requirements

The Securities and Exchange Commission, in consultation with the Commodity Futures Trading Commission, 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 public, including—

Sec. 315. Discretionary Surplus Fund

Sec. 401. Commission jurisdiction over digital commodity transactions

Sec. 402. Requiring futures commission merchants to use qualified digital asset custodians

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

Sec. 403. Trading certification and approval for digital commodities

Section 5c of the Commodity Exchange Act (7 U.S.C. 7a–2) is amended—

Sec. 404. Registration of digital commodity exchanges

The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by inserting after section 5h the following:

5i. Registration of digital commodity exchanges

(a) In general

(1) Registration

(A) In general

A trading facility that offers or seeks to offer a cash or spot market in at least 1 digital commodity shall register with the Commission as a digital commodity exchange.

(B) 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 approval.

(C) Exemptions

A trading facility that offers or seeks to offer a cash or spot market in at least 1 digital commodity shall not be required to register under this section if the trading facility—

(i)

permits no more than a de minimis amount of trading activity, as the Commission may determine by rule or regulation, in a digital commodity; or

(ii)

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

(2) Additional registrations

(A) With the Commission

In order to foster the development of fair and orderly markets, protect customers, and promote responsible innovation, the Commission—

(i)

shall prescribe rules to exempt an entity registered with the Commission under more than 1 section of this Act from duplicative, conflicting, or unduly burdensome provisions of this Act and the rules under this Act;

(ii)

shall prescribe rules to address conflicts of interests and activities of the entity; and

(iii)

may, after an analysis of the risks and benefits, prescribe rules to provide for portfolio margining.

(B) With a registered futures association

(i) 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 activity, if the registered digital commodity exchange accepts customer funds required to be segregated under subsection (d).

(ii) 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 (d), protect customers, and promote the public interest.

(C) 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 regulator.

(b) Trading

(1) Prohibition on certain trading practices

(A)

Section 4b shall apply to any agreement, contract, or transaction in a digital commodity as if the agreement, contract, or transaction were a contract of sale of a commodity for future delivery.

(B)

Section 4c shall apply to any agreement, contract, or transaction in a digital commodity as if the agreement, contract, or transaction were a transaction involving the purchase or sale of a commodity for future delivery.

(C)

Section 4b–1 shall apply to any agreement, contract, or transaction in a digital commodity as if the agreement, contract, or transaction were a contract of sale of a commodity for future delivery.

(2) Prohibition on acting as a counterparty

(A) 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 account.

(B) Exceptions

Subject to any conditions, requirements, or limitations imposed by the Commission pursuant to subparagraph (C), 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 exchange, including the following:

(i) Customer direction

A transaction for, or entered into at the direction of, or for the benefit of, an unaffiliated customer.

(ii) Risk management

A transaction to manage the credit, market, and liquidity risks associated with the digital commodity business of the exchange.

(iii) Operational needs

A transaction related to the operational needs of the business of the digital commodity exchange or its affiliate.

(iv) Functional use

A transaction related to the functional operation of a blockchain system.

(C) Rulemaking

The Commission may, by rule, establish conditions, requirements, or other limitations on the activities of a digital commodity exchange and its affiliate permitted pursuant to subparagraph (B) that are necessary for the protection of customers, the promotion of innovation, or the maintenance of fair, orderly, and efficient markets.

(D) 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 (B), notice must be given to the Commission that shall enumerate how any proposed activity is consistent with the exceptions in subsection (B) and the purposes of this Act.

(c) Core principles for digital commodity exchanges

(1) Compliance with core principles

(A) In general

To be registered, and maintain registration, as a digital commodity exchange, a digital commodity exchange shall comply with—

(i)

the core principles described in this subsection; and

(ii)

any requirement that the Commission may impose by rule or regulation pursuant to section 8a(5).

(B) Reasonable discretion of a digital commodity exchange

Unless otherwise determined by the Commission by rule or regulation, a digital commodity exchange described in subparagraph (A) shall have reasonable discretion in establishing the manner in which the digital commodity exchange complies with the core principles described in this subsection.

(2) Compliance with rules

A digital commodity exchange shall—

(A)

establish and enforce compliance with any rule of the digital commodity exchange, including—

(i)

the terms and conditions of the trades traded or processed on or through the digital commodity exchange; and

(ii)

any limitation on access to the digital commodity exchange;

(B)

establish and enforce trading, trade processing, and participation rules that will deter abuses and have the capacity to detect, investigate, and enforce those rules, including means—

(i)

to provide market participants with impartial access to the market; and

(ii)

to capture information that may be used in establishing whether rule violations have occurred; and

(C)

establish rules governing the operation of the exchange, including rules specifying trading procedures to be used in entering and executing orders traded or posted on the facility.

(3) Listing standards for digital commodities

(A) In general

A digital commodity exchange shall establish policies and procedures to permit trading in a digital commodity only if—

(i)

reports with respect to the digital commodity required under, as applicable, section 4B(b)(3) or 4B(b)(5)(C) of the Securities Act of 1933 (or, with respect to a digital commodity not issued in reliance on section 4(a)(8) of the Securities Act of 1933, a comparable set of reports, where required by the Securities and Exchange Commission) have been filed with the Securities and Exchange Commission; or

(ii)

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

(B) Public information requirements

(i) In general

A digital commodity exchange shall—

(I)

permit trading in a digital commodity only if the digital commodity exchange reasonably determines that the information required by clause (ii) is correct, current, and available to the public; and

(II)

establish policies and procedures to determine that the information provided pursuant to clause (ii) is correct, current, and available to the public.

(ii) 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 exchange, the following information:

(I) Source code

The source code for any blockchain system to which the digital commodity relates.

(II) Transaction history

A description of the steps necessary to independently access, search, and verify the transaction history of any blockchain system to which the digital commodity relates, to the extent any such independent access, search, and verification activities are technically feasible with respect to the blockchain system.

(III) 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 system, including—

(aa)

information explaining the launch and supply process, including the number of digital assets to be issued in an initial allocation, the total number of digital commodities to be created, the release schedule for the digital commodities, and the total number of digital commodities then outstanding;

(bb)

information detailing any applicable consensus mechanism or process for validating transactions, method of generating or mining digital commodities, and any process for burning or destroying digital commodities on the blockchain system;

(cc)

an explanation of governance mechanisms for implementing changes to the blockchain system or forming consensus among holders of the digital commodities; and

(dd)

sufficient information for a third party to create a tool for verifying the transaction history of the digital asset.

(IV) Trading volume and volatility

The trading volume and volatility of the digital commodity on the exchange.

(V) 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 commodity, and to be practically feasible to provide.

(iii) Format

The Commission shall prescribe rules and regulations for the standardization and simplification of disclosures under clause (ii), including requiring that disclosures—

(I)

be conspicuous;

(II)

use plain language comprehensible to customers;

(III)

are not drafted in a way that presumes the customer already has a base knowledge, familiarity, or understanding of the basic terminology, operation, and function of blockchain systems; and

(IV)

succinctly explain the information that is required to be communicated to the customer.

(iv) Reliance on previous disclosures

In complying with this subparagraph, a digital commodity exchange may rely on and make available to the public relevant information publicly disclosed to the Commission, the Securities and Exchange Commission, or an appropriate Federal banking agency.

(C) 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 person, only in accordance with the requirements of section 4C of the Securities Act of 1933.

(4) Treatment of customer assets

A digital commodity exchange shall establish policies and procedures that are designed to protect and ensure the safety of customer money, assets, and property.

(5) Monitoring of trading and trade processing

(A) In general

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

(B) Protection of markets and market participants

A digital commodity exchange shall establish and enforce rules—

(i)

to protect markets and market participants from abusive practices committed by any party, including abusive practices committed by a party acting as an agent for a participant; and

(ii)

to promote fair and equitable trading on the exchange.

(C) Trading procedures

A digital commodity exchange shall—

(i)

establish and enforce rules or terms and conditions defining, or specifications detailing—

(I)

trading procedures to be used in entering and executing orders traded on or through the facilities of the digital commodity exchange; and

(II)

procedures for trade processing of digital commodities on or through the facilities of the digital commodity exchange; and

(ii)

monitor trading in digital commodities to prevent manipulation, price distortion, and disruptions, through surveillance, compliance, and disciplinary practices and procedures, including methods for conducting real-time monitoring of trading and comprehensive and accurate trade reconstructions.

(6) Ability to obtain information

A digital commodity exchange shall—

(A)

establish and enforce rules that will allow the facility to obtain any necessary information to perform any of the functions described in this section;

(B)

provide the information to the Commission on request; and

(C)

have the capacity to carry out such international information-sharing agreements as the Commission may require.

(7) Emergency authority

A digital commodity exchange shall adopt rules to provide for the exercise of emergency authority, in consultation or cooperation with the Commission or a registered entity, as is necessary and appropriate, 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 commodity.

(8) Timely publication of trading information

(A) In general

A digital commodity exchange shall make public timely information on price, trading volume, and other trading data on digital commodities to the extent prescribed by the Commission.

(B) Capacity of digital commodity exchange

A digital commodity exchange shall have the capacity to electronically capture and transmit trade information with respect to transactions executed on the exchange.

(9) Recordkeeping and reporting

(A) In general

A digital commodity exchange shall—

(i)

maintain records relating to the business of the exchange, including a complete audit trail, in a form and manner acceptable to the Commission for a period of 5 years;

(ii)

report to the Commission, in a form and manner acceptable to the Commission, such information as the Commission determines to be necessary or appropriate for the Commission to perform the duties of the Commission under this Act; and

(iii)

keep any such records of digital commodities which relate to a security open to inspection and examination by the Securities and Exchange Commission.

(B) Information-sharing

Subject to section 8, and on request, the Commission shall share information collected under subparagraph (A) with—

(i)

the Board;

(ii)

the Securities and Exchange Commission;

(iii)

each appropriate Federal banking agency;

(iv)

each appropriate State bank supervisor (within the meaning of section 3 of the Federal Deposit Insurance Act);

(v)

the Financial Stability Oversight Council;

(vi)

the Department of Justice; and

(vii)

any other person that the Commission determines to be appropriate, including—

(I)

foreign financial supervisors (including foreign futures authorities);

(II)

foreign central banks; and

(III)

foreign ministries.

(C) Confidentiality agreement

Before the Commission may share information with any entity described in subparagraph (B), the Commission shall receive a written agreement from the entity stating that the entity shall abide by the confidentiality requirements described in section 8 relating to the information on digital commodities that is provided.

(D) Providing information

A digital commodity exchange shall provide to the Commission (including any designee of the Commission) information under subparagraph (A) in such form and at such frequency as is required by the Commission.

(10) Antitrust considerations

Unless necessary or appropriate to achieve the purposes of this Act, a digital commodity exchange shall not—

(A)

adopt any rules or take any actions that result in any unreasonable restraint of trade; or

(B)

impose any material anticompetitive burden on trading.

(11) Conflicts of interest

The digital commodity exchange shall establish and enforce rules—

(A)

to minimize conflicts of interest in the decision making processes of the contract market; and

(B)

to establish a process for resolving conflicts of interest referred to in subparagraph (A).

(12) Financial resources

(A) In general

A digital commodity exchange shall have adequate financial, operational, and managerial resources, as determined by the Commission, to discharge each responsibility of the digital commodity exchange.

(B) Minimum amount of financial resources

A digital commodity exchange shall possess financial resources that, at a minimum, exceed the sum of—

(i)

the total amount that would enable the digital commodity exchange to cover the operating costs of the digital commodity exchange for a 1-year period, as calculated on a rolling basis; and

(ii)

the total amount necessary to meet the financial obligations of the digital commodity exchange to all customers of the digital commodity exchange.

(13) Disciplinary procedures

A digital commodity exchange shall establish and enforce disciplinary procedures that authorize the digital commodity exchange to discipline, suspend, or expel members or market participants that violate the rules of the digital commodity exchange, or similar methods for performing the same functions, including delegation of the functions to third parties.

(14) Governance fitness standards

(A) Governance arrangements

A digital commodity exchange shall establish governance arrangements that are transparent and designed to permit consideration of the views of market participants.

(B) Fitness standards

A digital commodity exchange shall establish and enforce appropriate fitness standards for—

(i)

officers and directors; and

(ii)

any individual or entity with direct access to, or control of, customer assets.

(15) System safeguards

A digital commodity exchange shall—

(A)

establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational and security risks, through the development of appropriate controls and procedures, and automated systems in accordance with industry standards, that—

(i)

are reliable and secure; and

(ii)

have adequate scalable capacity;

(B)

establish and maintain emergency procedures, backup resources, and a plan for disaster recovery that allow for—

(i)

the timely recovery and resumption of operations; and

(ii)

the fulfillment of the responsibilities and obligations of the digital commodity exchange; and

(C)

periodically conduct tests to verify that the backup resources of the digital commodity exchange are sufficient to ensure continued—

(i)

order processing and trade matching;

(ii)

price reporting;

(iii)

market surveillance; and

(iv)

maintenance of a comprehensive and accurate audit trail.

(d) Holding of customer assets

(1) In general

A digital commodity exchange shall hold customer money, assets, and property in a manner to minimize the risk of loss to the customer or unreasonable delay in customer access to the money, assets, and property of the customer.

(2) Segregation of funds

(A) In general

A digital commodity exchange shall treat and deal with all money, assets, and property that is received by the digital commodity exchange, or accrues to a customer as the result of trading in digital commodities, as belonging to the customer.

(B) Commingling prohibited

Money, assets, and property described in subparagraph (A) shall be separately accounted for and shall not be commingled with the funds of the digital commodity exchange or be used to margin, secure, or guarantee any trades or accounts of any customer or person other than the person for whom the same are held.

(C) Exceptions

(i) Use of funds

(I) In general

Notwithstanding subparagraph (A), money, assets, and property described in subparagraph (A) may, for convenience, be commingled and deposited in the same account or accounts with any bank, trust company, derivatives clearing organization, or qualified digital asset custodian.

(II) Withdrawal

Notwithstanding subparagraph (A), such share of the money, assets, and property described in subparagraph (A) as in the normal course of business shall be necessary to margin, guarantee, secure, transfer, adjust, or settle a contract of sale of a digital commodity with a registered entity may be withdrawn and applied to such purposes, including the payment of commissions, brokerage, interest, taxes, storage, and other charges, lawfully accruing in connection with the contract.

(ii) Commission action

Notwithstanding subparagraph (A), in accordance with such terms and conditions as the Commission may prescribe by rule, regulation, or order, any money, assets, or property of the customers of a digital commodity exchange may be commingled and deposited in customer accounts with any other money, assets, 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 exchange.

(3) Permitted investments

Money described in paragraph (2) may be invested in obligations of the United States, in general obligations of any State or of any political subdivision of a State, and in obligations fully guaranteed as to principal and interest by the United States, or in any other investment that the Commission may by rule or regulation prescribe, and such investments shall be made in accordance with such rules and regulations and subject to such conditions as the Commission may prescribe.

(4) Customer protection during bankruptcy

(A) Customer property

All assets held on behalf of a customer by a digital commodity exchange, and all money, assets, and property of any customer received by a digital commodity exchange for trading or custody, or to facilitate, margin, guarantee, or secure contracts of sale of a digital commodity (including money, assets, or property accruing to the customer as the result of the transactions), shall be considered customer property for purposes of section 761 of title 11, United States Code.

(B) 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 delivery, on or subject to the rules of, a contract market or board of trade for purposes of the definition of commodity contract in section 761 of title 11, United States Code.

(C) Exchanges

A digital commodity exchange shall be considered a futures commission merchant for purposes of section 761 of title 11, United States Code.

(D) Assets removed from segregation

Assets removed from segregation due to a customer election under paragraph (6) shall not be considered customer property for purposes of section 761 of title 11, United States Code.

(5) Misuse of customer property

(A) In general

It shall be unlawful—

(i)

for any digital commodity exchange that has received any customer money, assets, or property for custody to dispose of, or use any such money, assets, or property as belonging to the digital commodity exchange or any person other than a customer of the digital commodity exchange; or

(ii)

for any other person, including any depository, other digital commodity exchange, or digital asset custodian that has received any customer money, assets, or property for deposit, to hold, dispose of, or use any such money, assets, or property, or property, as belonging to the depositing digital commodity exchange or any person other than the customers of the digital commodity exchange.

(B) Use further defined

For purposes of this section, use of a digital commodity includes utilizing any unit of a digital asset to participate in a blockchain service defined in paragraph (6) 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 received.

(6) Participation in blockchain services

(A) Use of funds

A digital commodity exchange (or a designee of a digital commodity exchange) 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—

(i)

the customer expressly permits the use, in writing to the digital commodity exchange; and

(ii)

the digital commodity exchange complies with subparagraph (B).

(B) Limitations

(i) In general

The Commission shall, by rule, establish notice and disclosure requirements, and may, by rule, establish any other limitations and rules related to a permission provided under subparagraph (A) that are reasonably necessary to protect customers, including eligible contract participants, non-eligible contract participants, or any other class of customers.

(ii) Customer choice

A digital commodity exchange may not require a customer to provide the permission referred to in subparagraph (A) as a condition of doing business on the exchange.

(C) Requirements

The Commission may, by rule, waive or modify the requirements of paragraph (2) or subsection (h), to facilitate the use of a unit of a digital commodity belonging to a customer to provide a blockchain service.

(D) Blockchain service defined

In this paragraph, the term blockchain service means any activity relating to validating transactions on a blockchain system, providing security for a blockchain system, or other similar activity, including protocol consensus participation activities described in section 2(a)(30)(B) of the Securities Act of 1933, required for the ongoing operation of a blockchain system.

(e) Market access requirements

The Commission may, by rule, 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 participants, promote fair and equitable trading on the digital commodity exchange, and promote responsible innovation.

(f) Designation of chief compliance officer

(1) In general

A digital commodity exchange shall designate an individual to serve as a chief compliance officer.

(2) Duties

The chief compliance officer shall—

(A)

report directly to the board or to the senior officer of the exchange;

(B)

review compliance with the core principles in this subsection;

(C)

in consultation with the board of the exchange, a body performing a function similar to that of a board, or the senior officer of the exchange, resolve any conflicts of interest that may arise;

(D)

establish and administer the policies and procedures required to be established pursuant to this section;

(E)

ensure compliance with this Act and the rules and regulations issued under this Act, including rules prescribed by the Commission pursuant to this section; and

(F)

establish procedures for the remediation of noncompliance issues found during compliance office reviews, look backs, internal or external audit findings, self-reported errors, or through validated complaints.

(3) Requirements for procedures

In establishing procedures under paragraph (2)(F), the chief compliance officer shall design the procedures to establish the handling, management response, remediation, retesting, and closing of noncompliance issues.

(4) Annual reports

(A) In general

In accordance with rules prescribed by the Commission, the chief compliance officer shall annually prepare and sign a report that contains a description of—

(i)

the compliance of the digital commodity exchange with this Act; and

(ii)

the policies and procedures, including the code of ethics and conflicts of interest policies, of the digital commodity exchange.

(B) Requirements

The chief compliance officer shall—

(i)

submit each report described in subparagraph (A) with the appropriate financial report of the digital commodity exchange that is required to be submitted to the Commission pursuant to this section; and

(ii)

include in the report a certification that, under penalty of law, the report is accurate and complete.

(g) Appointment of trustee

(1) In general

If a proceeding under section 5e results in the suspension or revocation of the registration of a digital commodity exchange, or if a digital commodity exchange withdraws from registration, the Commission, on notice to the digital commodity exchange, may apply to the appropriate United States district court where the digital commodity exchange is located for the appointment of a trustee.

(2) Assumption of jurisdiction

If the Commission applies for appointment of a trustee under paragraph (1)—

(A)

the court may take exclusive jurisdiction over the digital commodity exchange and the records and assets of the digital commodity exchange, wherever located; and

(B)

if the court takes jurisdiction under subparagraph (A), the court shall appoint the Commission, or a person designated by the Commission, 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 prescribe.

(h) Qualified digital asset custodian

A digital commodity exchange shall hold in a qualified digital asset custodian each unit of a digital asset that is—

(1)

the property of a customer of the digital commodity exchange;

(2)

required to be held by the digital commodity exchange under subsection (c)(12) of this section; or

(3)

otherwise so required by the Commission to reasonably protect customers.

(i) Exemptions

(1) In general

In order to promote responsible innovation and fair competition, or protect customers, the Commission may (on its own initiative or on application of the digital commodity exchange) exempt, either unconditionally or on stated terms or conditions or for stated periods and either retroactively or prospectively, or both, a digital commodity exchange from the requirements of this Act, if the Commission determines that—

(A)

the exemption would be consistent with the public interest and the purposes of this Act; and

(B)

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 Act.

(2) Foreign exchanges

The Commission may exempt, conditionally or unconditionally, a digital commodity exchange from registration under this section if the Commission finds that the digital commodity exchange is subject to comparable, comprehensive supervision and regulation on a consolidated basis by the appropriate governmental authorities in the home country of the facility.

(j) Customer defined

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

(k) Federal preemption

Notwithstanding any other provision of law, the Commission shall have exclusive jurisdiction over any digital commodity exchange registered under this section with respect to activities and transactions subject to this Act.

Sec. 405. Qualified digital asset custodians

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

5j. Qualified digital asset custodians

(a) In general

A person is a qualified digital asset custodian for purposes of this Act if the person—

(1)

holds digital assets on behalf of a person registered under this Act or a customer of a person registered under this Act; and

(2)

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

(b) Supervision requirement

A person is in compliance with this subsection if the person is subject to—

(1)

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

(2)

adequate supervision and appropriate regulation for custody and safekeeping of digital assets by—

(A)

a State bank supervisor (within the meaning of section 3 of the Federal Deposit Insurance Act);

(B)

a State officer, agency, or other entity which has primary regulatory authority over nondepository State trust companies;

(C)

a State credit union supervisor, as defined under section 6003 of the Anti-Money Laundering Act of 2020; or

(D)

an appropriate foreign governmental authority in the home country of such person.

(c) Other requirements

A person shall be in compliance with this subsection if:

(1) 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 assets.

(2) Information sharing

(A) 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 provisions, or to accomplish any of the purposes, of this Act.

(B) Provision of information

If the person is subject to regulation and examination by an appropriate Federal banking agency, the person may satisfy any information request described in subparagraph (A) by providing the Commission with a detailed listing, in writing, of the digital assets of a customer in the custody of, or use by, the person.

(3) Rulemaking for CFTC entities

(A) 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 section.

(B) Content

In prescribing the rules under subparagraph (A), the Commission shall require a person registered with the Commission to—

(i)

implement requirement consistent with the requirements in subsection (d)(1);

(ii)

establish sufficient system safeguards;

(iii)

prevent or mitigate conflicts of interest, as appropriate; and

(iv)

establish separate governance arrangements for the custodial function of the entity.

(d) Adequate supervision and appropriate regulation

(1) In general

For purposes of subsection (b), 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 Act, including standards relating to the licensing, examination, and supervisory processes that require the person to, at a minimum—

(A)

receive a review and evaluation of ownership, character and fitness, conflicts of interest, business model, financial statements, funding resources, and policies and procedures of the person;

(B)

hold capital sufficient for the financial integrity of the person;

(C)

protect customer assets;

(D)

establish and maintain books and records regarding the business of the person;

(E)

submit financial statements and audited financial statements to the applicable supervisor described in subsection (b);

(F)

provide disclosures to the applicable supervisor described in subsection (b) regarding actions, proceedings, and other items as determined by the supervisor;

(G)

maintain and enforce policies and procedures for compliance with applicable State and Federal laws, including those related to anti-money laundering and cybersecurity;

(H)

establish a business continuity plan to ensure functionality in cases of disruption; and

(I)

establish policies and procedures to resolve complaints.

(2) Rulemaking with respect to definitions

(A) In general

For purposes of this section, the Commission may, by rule, further define the terms adequate supervision and appropriate regulation as necessary and appropriate for the protection of customers, and consistent with the purposes of this Act.

(B) Existing digital asset custodians

A trust company operating as a digital asset custodian before the effective date of a rulemaking under subparagraph (A) is deemed subject to adequate supervision and appropriate regulation if—

(i)

the trust company is expressly permitted by a State bank supervisor to engage in the custody and safekeeping of digital assets;

(ii)

the State bank supervisor has established licensing, examination, and supervisory processes that require the trust company to, at a minimum, meet the conditions described in subparagraphs (A) through (I) of paragraph (1); and

(iii)

the trust company is in good standing with its State bank supervisor.

(C) Transition period for certain custodians

In implementing the rulemaking under subparagraph (A), the Commission shall provide a transition period of not less than 2 years for any trust company that is deemed subject to adequate supervision and appropriate regulation under subparagraph (B) on the effective date of the rulemaking.

(e) Authority to temporarily suspend standards

The Commission may, by rule or order, temporarily suspend, in whole or in part, any requirement imposed under, or any standard referred to in, this section, or any requirement to utilize a qualified digital asset custodian, if the Commission determines that the suspension would be consistent with the public interest and the purposes of this Act.

Sec. 406. Registration and regulation of digital commodity brokers and dealers

The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by inserting after section 4t the following:

4u. Registration and regulation of digital commodity brokers and dealers

(a) Registration

(1) 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 Commission.

(2) Additional registration

(A) Rules

In order to foster the development of fair and orderly markets, protect customers, and promote responsible innovation, the Commission—

(i)

shall prescribe rules to exempt an entity registered with the Commission under more than 1 section of this Act from duplicative, conflicting, or unduly burdensome provisions of this Act and the rules under this Act;

(ii)

shall prescribe rules to address conflicts of interests and the activities of the entity; and

(iii)

may after an analysis of the risks and benefits, prescribe rules to provide for portfolio margining.

(B) 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 association.

(b) Requirements

(1) In general

A person shall register as a digital commodity broker or digital commodity dealer by filing a registration application with the Commission.

(2) Contents

(A) In general

The application shall be made in such form and manner as is prescribed by the Commission, and shall contain such information as the Commission considers necessary concerning the business in which the applicant is or will be engaged.

(B) Continual reporting

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

(3) Statutory disqualification

Except to the extent otherwise specifically provided by rule, regulation, or order, it shall be unlawful for a digital commodity broker or digital commodity dealer to permit any person who is associated with a digital commodity broker or a digital commodity dealer and who is subject to a statutory disqualification to 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 dealer, respectively, if the digital commodity broker or digital commodity dealer, respectively, knew, or in the exercise of reasonable care should have known, of the statutory disqualification.

(c) Rulemaking

(1) 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 section, including rules in the public interest that limit the activities of digital commodity brokers and digital commodity dealers.

(2) Financing agreements

(A) In general

The Commission shall prescribe rules and regulations applicable to digital commodity brokers or digital commodity dealers which shall set forth minimum requirements related to disclosure, recordkeeping, margin financing arrangements, rehypothecation, capital, reporting, business conduct, documentation, and supervision of employees and agents, in connection with—

(i)

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

(ii)

any other margined, leveraged, or financing arrangement for the purchase or sale of a digital commodity with an eligible contract participant.

(B) Specific authority

Except as prohibited in section 2(c)(2)(G)(iii), the Commission may also make, promulgate, and enforce such rules and regulations as, in the judgment of the Commission, are reasonably necessary to effectuate any of the provisions of, or to accomplish any of the purposes of, this Act in connection with an agreement referred to in subparagraph (A) of this paragraph.

(d) Capital requirements

(1) 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 dealer, respectively, is able, at all times, to—

(A)

meet, and continue to meet the obligations of such a registrant; and

(B)

fulfill obligations to customers or counterparties for any margined, leveraged, or financed transactions.

(2) Futures commission merchants and other dealers

Each futures commission merchant, introducing broker, digital commodity broker, digital commodity dealer, broker, and dealer shall maintain sufficient capital to comply with the stricter of any applicable capital requirements to which the futures commission merchant, introducing broker, digital commodity broker, digital commodity dealer, broker, or dealer, respectively, is subject under this Act or the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).

(e) Reporting and recordkeeping

Each digital commodity broker and digital commodity dealer—

(1)

shall make such reports as are required by the Commission by rule or regulation regarding the transactions, positions, and financial condition of the digital commodity broker or digital commodity dealer, respectively;

(2)

shall keep books and records in such form and manner and for such period as may be prescribed by the Commission by rule or regulation; and

(3)

shall keep the books and records open to inspection and examination by any representative of the Commission.

(f) Daily trading records

(1) In general

Each digital commodity broker and digital commodity dealer shall maintain daily trading records of the transactions of the digital commodity broker or digital commodity dealer, respectively, and all related records (including related forward or derivatives transactions) and recorded communications, including electronic mail, instant messages, and recordings of telephone calls, for such period as the Commission may require by rule or regulation.

(2) Information requirements

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

(3) Counterparty records

Each digital commodity broker and digital commodity dealer shall maintain daily trading records for each customer or counterparty in a manner and form that is identifiable with each digital commodity transaction.

(4) Audit trail

Each digital commodity broker and digital commodity dealer shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions.

(g) Business conduct standards

(1) In general

Each digital commodity broker and digital commodity dealer shall conform with such business conduct standards as the Commission, by rule or regulation, prescribes related to—

(A)

fraud, manipulation, and other abusive practices involving spot or margined, leveraged, or financed digital commodity transactions (including transactions that are offered but not entered into);

(B)

diligent supervision of the business of the registered digital commodity broker or digital commodity dealer, respectively; and

(C)

such other matters as the Commission deems appropriate.

(2) Business conduct requirements

The Commission shall, by rule, prescribe business conduct requirements which—

(A)

require disclosure by a registered digital commodity broker and registered digital commodity dealer to any counterparty to the transaction (other than an eligible contract participant) of—

(i)

information about the material risks and characteristics of the digital commodity; and

(ii)

information about the material risks and characteristics of the transaction;

(B)

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 faith;

(C)

establish standards governing digital commodity broker and digital commodity dealer marketing and advertising, including testimonials and endorsements; and

(D)

establish such other standards and requirements as the Commission may determine are appropriate for the protection of customers.

(3) Prohibition on fraudulent practices

It shall be unlawful for a digital commodity broker or digital commodity dealer to—

(A)

employ any device, scheme, or artifice to defraud any customer or counterparty;

(B)

engage in any transaction, practice, or course of business that operates as a fraud or deceit on any customer or counterparty; or

(C)

engage in any act, practice, or course of business that is fraudulent, deceptive, or manipulative.

(h) Duties

(1) 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 dealer, respectively.

(2) Disclosure of general information

Each digital commodity broker and digital commodity dealer shall disclose to the Commission information concerning—

(A)

the terms and conditions of the transactions of the digital commodity broker or digital commodity dealer, respectively;

(B)

the trading operations, mechanisms, and practices of the digital commodity broker or digital commodity dealer, respectively;

(C)

financial integrity protections relating to the activities of the digital commodity broker or digital commodity dealer, respectively; and

(D)

other information relevant to trading in digital commodities by the digital commodity broker or digital commodity dealer, respectively.

(3) Ability to obtain information

Each digital commodity broker and digital commodity dealer shall—

(A)

establish and enforce internal systems and procedures to obtain any necessary information to perform any of the functions described in this section; and

(B)

provide the information to the Commission, on request.

(4) Conflicts of interest

Each digital commodity broker and digital commodity dealer shall establish, maintain, and enforce written policies and procedures reasonably designed, taking into consideration the nature of the business of the person, to mitigate any conflicts of interest in transactions or arrangements with affiliates.

(5) Antitrust considerations

Unless necessary or appropriate to achieve the purposes of this Act, a digital commodity broker or digital commodity dealer shall not—

(A)

adopt any process or take any action that results in any unreasonable restraint of trade; or

(B)

impose any material anticompetitive burden on trading or clearing.

(i) Designation of chief compliance officer

(1) In general

Each digital commodity broker and digital commodity dealer shall designate an individual to serve as a chief compliance officer.

(2) Duties

The chief compliance officer shall—

(A)

report directly to the board or to the senior officer of the registered digital commodity broker or registered digital commodity dealer;

(B)

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 section;

(C)

in consultation with the board of directors, a body performing a function similar to the board, or the senior officer of the organization, resolve any conflicts of interest that may arise;

(D)

be responsible for administering each policy and procedure that is required to be established pursuant to this section;

(E)

ensure compliance with this Act (including regulations), including each rule prescribed by the Commission under this section;

(F)

establish procedures for the remediation of noncompliance issues identified by the chief compliance officer through any—

(i)

compliance office review;

(ii)

look-back;

(iii)

internal or external audit finding;

(iv)

self-reported error; or

(v)

validated complaint; and

(G)

establish and follow appropriate procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues.

(3) Annual reports

(A) In general

In accordance with rules prescribed by the Commission, the chief compliance officer shall annually prepare and sign a report that contains a description of—

(i)

the compliance of the registered digital commodity broker or registered digital commodity dealer with this Act (including regulations); and

(ii)

each policy and procedure of the registered digital commodity broker or registered digital commodity dealer followed by the chief compliance officer (including the code of ethics and conflict of interest policies).

(B) Requirements

The chief compliance officer shall ensure that a compliance report under subparagraph (A)—

(i)

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 section; and

(ii)

includes a certification that, under penalty of law, the compliance report is accurate and complete.

(j) Segregation of digital commodities

(1) Holding of customer assets

(A) In general

Each digital commodity broker and digital commodity dealer shall hold customer money, assets, and property in a manner to minimize the risk of loss to the customer or unreasonable delay in customer access to the money, assets, and property of the customer.

(B) 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—

(i)

the property of a customer or counterparty of the digital commodity broker or digital commodity dealer, respectively;

(ii)

required to be held by the digital commodity broker or digital commodity dealer under subsection (e); or

(iii)

otherwise so required by the Commission to reasonably protect customers or promote the public interest.

(2) Segregation of funds

(A) In general

Each digital commodity broker and digital commodity dealer shall treat and deal with all money, assets, and property that is received by the digital commodity broker or digital commodity dealer, or accrues to a customer as the result of trading in digital commodities, as belonging to the customer.

(B) Commingling prohibited

(i) In general

Except as provided in clause (ii), each digital commodity broker and digital commodity dealer shall separately account for money, assets, and property of a digital commodity customer, and shall not commingle any such money, assets, or property with the funds of the digital commodity broker or digital commodity dealer, respectively, or use any such money, assets, or property to margin, secure, or guarantee any trades or accounts of any customer or person other than the person for whom the money, assets, or property are held.

(ii) Exceptions

(I) Use of funds

(aa) In general

A digital commodity broker or digital commodity dealer may, for convenience, commingle and deposit in the same account or accounts with any bank, trust company, derivatives clearing organization, or qualified digital asset custodian money, assets, and property of customers.

(bb) Withdrawal

The share of the money, assets, and property described in item (aa) as in the normal course of business shall be necessary to margin, guarantee, secure, transfer, adjust, or settle a contract of sale of a digital commodity with a registered entity may be withdrawn and applied to such purposes, including the payment of commissions, brokerage, interest, taxes, storage, and other charges, lawfully accruing in connection with the contract.

(II) Commission action

In accordance with such terms and conditions as the Commission may prescribe by rule, regulation, or order, any money, assets, 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 money, assets, or property received by the digital commodity broker or digital commodity dealer, respectively, 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 dealer, respectively.

(3) Permitted investments

Money described in paragraph (2) may be invested in obligations of the United States, in general obligations of any State or of any political subdivision of a State, in obligations fully guaranteed as to principal and interest by the United States, or in any other investment that the Commission may by rule or regulation allow.

(4) Customer protection during bankruptcy

(A) Customer property

All money, assets, or property described in paragraph (2) shall be considered customer property for purposes of section 761 of title 11, United States Code.

(B) 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 delivery, on or subject to the rules of, a contract market or board of trade for purposes of the definition of a commodity contract in section 761 of title 11, United States Code.

(C) Brokers and dealers

A digital commodity broker and a digital commodity dealer shall be considered a futures commission merchant for purposes of section 761 of title 11, United States Code.

(D) Assets removed from segregation

Assets removed from segregation due to a customer election under paragraph (6) shall not be considered customer property for purposes of section 761 of title 11, United States Code.

(5) Misuse of customer property

(A) In general

It shall be unlawful—

(i)

for any digital commodity broker or digital commodity dealer that has received any customer money, assets, or property for custody to dispose of, or use any such money, assets, or property as belonging to the digital commodity broker or digital commodity dealer, respectively, or any person other than a customer of the digital commodity broker or digital commodity dealer, respectively; or

(ii)

for any other person, including any depository, digital commodity exchange, other digital commodity broker, other digital commodity dealer, or digital commodity custodian that has received any customer money, assets, or property for deposit, to hold, dispose of, or use any such money, assets, or property, 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 dealer, respectively.

(B) Use further defined

For purposes of this section, use of a digital commodity includes utilizing any unit of a digital asset to participate in a blockchain service defined in paragraph (6) 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 received.

(6) Participation in blockchain services

(A) Use of funds

A digital commodity broker or digital commodity dealer (or a designee of a digital commodity broker or a digital commodity dealer) 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—

(i)

the customer expressly permits the use, in writing to the digital commodity broker or digital commodity dealer, as the case may be; and

(ii)

the digital commodity broker or the digital commodity dealer, as the case may be, complies with subparagraph (B).

(B) Limitations

(i) In general

The Commission shall, by rule, establish notice and disclosure requirements, and may, by rule, establish any other limitations and rules related to a permission provided under subparagraph (A) that are reasonably necessary to protect customers, including eligible contract participants, non-eligible contract participants, or any other class of customers.

(ii) Customer choice

A digital commodity broker or digital commodity dealer may not require a customer to provide the permission referred to in subparagraph (A) as a condition of doing business with the broker or dealer.

(C) Requirements

The Commission may, by rule, waive or modify the requirements of paragraph (2) or subsection (h), to facilitate the use of a unit of a digital commodity belonging to a customer to provide a blockchain service.

(D) Blockchain service defined

In this paragraph, the term blockchain service means any activity relating to validating transactions on a blockchain system, providing security for a blockchain system, or other similar activity, including protocol consensus participation activities described in section 2(a)(30)(B) of the Securities Act of 1933, required for the ongoing operation of a blockchain system.

(k) Federal preemption

Notwithstanding any other provision of law, the Commission shall have exclusive jurisdiction over any digital commodity broker or digital commodity dealer registered under this section with respect to activities subject to this Act.

(l) Exemptions

In order to promote responsible innovation and fair competition, or protect customers, the Commission may (on its own initiative or on application of the digital commodity broker or digital commodity dealer) exempt, unconditionally or on stated terms or conditions, or for stated periods, and retroactively or prospectively, or both, a digital commodity broker or digital commodity dealer from the requirements of this Act, if the Commission determines that—

(1)

(A)

the exemption would be consistent with the public interest and the purposes of this Act; and

(B)

the exemption will not have a material adverse effect on the ability of the Commission to discharge regulatory duties under this Act; or

(2)

the digital commodity broker or digital commodity dealer is subject to comparable, comprehensive supervision and regulation by the appropriate government authorities in the home country of the digital commodity broker or digital commodity dealer, respectively.

Sec. 407. Registration of associated persons

Sec. 408. Registration of commodity pool operators and commodity trading advisors

Sec. 409. Exclusion for decentralized finance activities

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

4v. Decentralized finance activities not subject to this Act

(a) In general

Notwithstanding any other provision of this Act, a person shall not be subject to this Act and the regulations promulgated under this Act based on the person directly or indirectly engaging in any of the following activities, whether singly or in combination, in relation to the operation of a blockchain system or in relation to decentralized finance trading protocol:

(1)

Compiling network transactions or relaying, searching, sequencing, validating, or acting in a similar capacity.

(2)

Providing computational work, operating a node or oracle service, or procuring, offering, or utilizing network bandwidth, or other similar incidental services.

(3)

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

(4)

Developing, publishing, or otherwise distributing a blockchain system or a decentralized finance messaging system.

(5)

Constituting, administering, or maintaining a decentralized finance messaging system or decentralized finance trading protocol, or operating or participating in a liquidity pool with respect thereto, for the purpose of executing a spot transaction for the purchase or sale of a digital commodity.

(6)

Developing, publishing, constituting, administering, maintaining, or otherwise distributing software or systems that create or deploy hardware or software, including wallets or other systems, facilitating an individual user’s own personal ability to keep, safeguard, or custody the user’s digital assets or related private keys.

(b) Exceptions

Subsection (a) shall not be interpreted to apply to the anti-fraud, anti-manipulation, or false reporting enforcement authorities of the Commission.

Sec. 410. Resources for implementation and enforcement

Sec. 411. Requirements related to control persons

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

4w. Limitation on transactions by blockchain control persons

(a) 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 42 of the Securities Exchange Act of 1934 to sell a unit of a digital commodity related to the blockchain system unless the person files notice with the Commission, in a form and manner determined by the Commission, that the person has or intends to obtain an authority described in subsection (b)(1) with respect to the blockchain system, and complies with rules adopted by the Commission that require—

(1)

disclosure of information to the Commission and the public about the material activities, as determined by the Commission, of the blockchain control person; and

(2)

(A)

the use of a digital commodity broker to effect the sale; or

(B)

such other sales restrictions applicable to the blockchain control person, or any affiliated blockchain control person, 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 relates.

(b) Definitions

In this section:

(1) Blockchain control person

The term blockchain control person means, with respect to a blockchain system, any person or group of persons under common control, other than a decentralized governance system, who—

(A)

has the unilateral authority, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, to control or materially alter the functionality, operation, or rules of consensus or agreement of the blockchain system or its related digital commodity; or

(B)

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

(2) Affiliated blockchain control person

The term affiliated blockchain control person means any person directly or indirectly controlling, controlled by, or under common control with a blockchain control person, as the Commission by rule or regulation, may determine will effectuate the purposes of this section.

Sec. 412. Other tradable assets

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

Sec. 413. Conflict of interest rulemaking

Not later than 360 days after the date of the enactment of this Act, the Commodity Futures Trading Commission shall issue rules establishing requirements for the identification, mitigation, and resolution of conflicts of interest among and across registered entities (within the meaning of the Commodity Exchange Act) and persons required to be registered with the Commission, including conflicts of interest related to vertically integrated market structures and their varying responsibilities.

Sec. 414. Effective date

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

Sec. 415. Sense of Congress

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

Sec. 501. Findings; sense of Congress

Sec. 502. Strategic Hub for Innovation and Financial Technology

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

(k) Strategic Hub for Innovation and Financial Technology

(1) Establishment

Not later than 180 days after the date of the enactment of this subsection, the Securities and Exchange Commission shall establish a committee to be known as the Strategic Hub for Innovation and Financial Technology (referred to in this subsection as the FinHub) to support engagement on emerging technologies in the financial sector.

(2) Members

The composition of FinHub shall be determined by the Commission, drawing from relevant divisions as appropriate, including the Division of Trading and Markets, Division of Corporate Finance, and Division of Investment Management.

(3) Responsibilities

FinHub shall—

(A)

serve as a resource for the Commission on emerging financial technology advancements;

(B)

engage with market participants working on emerging financial technologies; and

(C)

facilitate communication between the Commission and businesses working in emerging financial technology fields with information on the Commission, its rules, and regulations.

(4) Report to the Commission

(A) In general

Not later than October 31 of each year after 2025, FinHub shall provide an annual summary of its engagement activities to the Commission, which shall be included in the Commission’s annual report to Congress.

(B) Confidentiality

Each report submitted under this paragraph shall not contain confidential information.

Sec. 503. Codification of LabCFTC

Sec. 504. Study on decentralized finance

Sec. 505. Study on non-fungible tokens

Sec. 506. Study on expanding financial literacy amongst digital commodity holders

Sec. 507. Study on financial market infrastructure improvements

Sec. 508. Study on blockchain in payments

Sec. 509. Study on illicit use of digital assets

Sec. 510. GAO study on certain centralized intermediaries that are primarily located in foreign jurisdictions

Sec. 511. Studies on foreign adversary participation

Sec. 512. Conforming amendments

The GENIUS Act is amended—

Sec. 601. Short title

This title may be cited as the Anti-CBDC Surveillance State Act.

Sec. 602. Prohibition on Federal reserve banks relating to certain products or services for individuals and prohibition on directly issuing a central bank digital currency

Section 16 of the Federal Reserve Act (12 U.S.C. 411 et seq.) is amended by adding at the end the following new paragraph:

(18)

(A)

A Federal reserve bank may not—

(i)

offer financial products or services directly to an individual;

(ii)

maintain an account on behalf of an individual; or

(iii)

issue a central bank digital currency, or any digital asset that is substantially similar under any other name or label.

(B)

In this paragraph, the term central bank digital currency has the meaning given that term under section 10(11)(D).

Sec. 603. Prohibition on Federal reserve banks indirectly issuing a central bank digital currency

Section 16 of the Federal Reserve Act (12 U.S.C. 411 et seq.), as amended by section 2, is further amended by adding at the end the following paragraph:

(19)

(A)

A Federal reserve bank may not offer a central bank digital currency, or any digital asset that is substantially similar under any other name or label, indirectly to an individual through a financial institution or other intermediary.

(B)

In this paragraph, the term central bank digital currency has the meaning given that term under section 10(11)(D).

Sec. 604. Prohibition with respect to central bank digital currency

Section 10 of the Federal Reserve Act (12 U.S.C. 241 et seq.) is amended by inserting before paragraph (12) the following:

(11) Prohibition with respect to central bank digital currency

(A) In general

The Board of Governors of the Federal Reserve System may not test, study, develop, create, or implement a central bank digital currency, or any digital asset that is substantially similar under any other name or label.

(B) 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 policy, or any digital asset that is substantially similar under any other name or label.

(C) Exception

Subparagraph (A) and sections 16(18)(A)(iii) and 16(19)(A) may not be construed to prohibit any dollar-denominated currency that is open, permissionless, and private, and fully preserves the privacy protections of United States coins and physical currency.

(D) Central bank digital currency defined

In this paragraph, the term central bank digital currency means a form of digital money or monetary value that is—

(i)

denominated in the national unit of account;

(ii)

a direct liability of the Federal Reserve System; and

(iii)

widely available to the general public.

Sec. 605. Sense of Congress