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Digital Commodity Intermediaries Act
Introduced Feb 2, 2026 · Last action Feb 2, 2026 — Placed on Senate Legislative Calendar under General Orders. Calendar No. 312.
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Summary
This legislation is called the Digital Commodity Intermediaries Act. Placed on Senate Legislative Calendar under General Orders. Calendar No. 312.
Full bill text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3755 Reported in Senate (RS)]
<DOC>
Calendar No. 312
119th CONGRESS
2d Session
S. 3755
To provide for a system of regulation of the offer and sale of digital
commodities by the Commodity Futures Trading Commission, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 2, 2026
Mr. Boozman, from the Committee on Agriculture, Nutrition, and
Forestry, reported the following original bill; which was read twice
and placed on the calendar
_______________________________________________________________________
A BILL
To provide for a system of regulation of the offer and sale of digital
commodities by the Commodity Futures Trading Commission, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Digital Commodity
Intermediaries Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--DEFINITIONS; RULEMAKING
Sec. 101. Definitions under the Commodity Exchange Act.
Sec. 102. Definitions under this Act.
Sec. 103. Rulemakings.
Sec. 104. Expeditied registration for digital commodity exchanges,
brokers, and dealers; provisional status.
Sec. 105. Commodity Exchange Act savings provisions.
Sec. 106. Administrative requirements.
Sec. 107. International cooperation.
Sec. 108. Implementation.
Sec. 109. Effective date.
Sec. 110. Sense of Congress.
TITLE II--REGISTRATION FOR DIGITAL COMMODITY INTERMEDIARIES AT THE
COMMODITY FUTURES TRADING COMMISSION
Sec. 201. Commission jurisdiction over digital commodity transactions.
Sec. 202. Requiring Futures Commission merchants to use qualified
digital asset custodians.
Sec. 203. Trading certification and approval for digital commodities.
Sec. 204. Registration of digital commodity exchanges.
Sec. 205. Registration and regulation of digital commodity brokers and
dealers.
Sec. 206. Registration of associated persons.
Sec. 207. Software developer protections.
Sec. 208. Portfolio margining.
Sec. 209. Clarification on customer property.
Sec. 210. Resources for implementation.
Sec. 211. Digital commodity retail advocate.
Sec. 212. Report.
TITLE I--DEFINITIONS; RULEMAKING
SEC. 101. DEFINITIONS UNDER THE COMMODITY EXCHANGE ACT.
(a) In General.--Section 1a of the Commodity Exchange Act (7 U.S.C.
1a) is amended--
(1) by redesignating paragraphs (3), (4), (5) through (14),
(15), (16) through (34), (35) through (39), and (40) through
(51) as paragraphs (5), (6), (11) through (20), (24), (31)
through (49), (51) through (55), and (57) through (68),
respectively;
(2) by inserting after paragraph (2) the following:
``(3) Associated person of a digital commodity broker.--
``(A) In general.--Except as provided in
subparagraph (B), the term `associated person of a
digital commodity broker' means a person who is
associated with a digital commodity broker as a
partner, officer, employee, or agent (or any person
occupying a similar status or performing similar
functions) in any capacity that involves--
``(i) the solicitation or acceptance of an
order for the purchase or sale of a digital
commodity; or
``(ii) the supervision of any person
engaged in the solicitation or acceptance of an
order for the purchase or sale of a digital
commodity.
``(B) Exclusion.--The term `associated person of a
digital commodity broker' does not include any person
associated with a digital commodity broker the
functions of which are solely clerical or ministerial.
``(4) Associated person of a digital commodity dealer.--
``(A) In general.--Except as provided in
subparagraph (B), the term `associated person of a
digital commodity dealer' means a person who is
associated with a digital commodity dealer as a
partner, officer, employee, or agent (or any person
occupying a similar status or performing similar
functions) in any capacity that involves--
``(i) the solicitation or acceptance of a
contract for the purchase or sale of a digital
commodity; or
``(ii) the supervision of any person
engaged in the solicitation or acceptance of a
contract for the purchase or sale of a digital
commodity.
``(B) Exclusion.--The term `associated person of a
digital commodity dealer' does not include any person
associated with a digital commodity dealer the
functions of which are solely clerical or
ministerial.'';
(3) by inserting after paragraph (6) (as so redesignated)
the following:
``(7) Blockchain.--The term `blockchain' means technology--
``(A) through which data is shared across a network
that creates a public blockchain of verified
transactions or information among network participants;
and
``(B) in which cryptography is used to link the
data described in subparagraph (A)--
``(i) to maintain the integrity of the
blockchain described in that subparagraph; and
``(ii) to execute other functions.
``(8) Blockchain application.--The term `blockchain
application' means any executable software that is deployed to
and maintained on a blockchain and composed of a blockchain
protocol, including a smart contract or any network of smart
contracts, or other similar technology.
``(9) Blockchain protocol.--The term `blockchain protocol'
means publicly available source code of a blockchain or
blockchain application that is executed by the network
participants of a blockchain to facilitate its functioning, or
other similar technology.
``(10) Blockchain system.--The term `blockchain system'
means any blockchain, blockchain application, or network of
blockchain applications, together with its blockchain
protocol.'';
(4) by inserting after paragraph (20) (as so redesignated)
the following:
``(21) Decentralized finance messaging system.--
``(A) In general.--The term `decentralized finance
messaging system' means a software application that
provides a user with the ability to create or submit an
instruction, communication, or message to a
decentralized finance trading protocol.
``(B) Additional requirements.--The term
`decentralized finance messaging system' does not
include any system that provides any person other than
the user with--
``(i) control over the funds of the user;
or
``(ii) the authority to execute any of the
transactions of the user.
``(22) Decentralized finance trading protocol.--
``(A) In general.--The term `decentralized finance
trading protocol' means a blockchain system through
which multiple participants can execute a financial
transaction--
``(i) in accordance with an automated rule
or algorithm that is predetermined and
nondiscretionary; and
``(ii) without reliance on a person other
than the user to maintain custody or control of
any digital assets subject to the financial
transaction.
``(B) Exclusions.--
``(i) In general.--The term `decentralized
finance trading protocol' does not include a
blockchain system if--
``(I) a person or group of persons
under common control or acting pursuant
to an agreement to act in concert has
the 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;
``(II) the blockchain system does
not operate, execute, and enforce its
operations and transactions based
solely on pre-established, transparent
rules encoded directly within the
source code of the blockchain system;
or
``(III) a person or group of
persons under common control has the
unilateral authority, via operation of
the blockchain system, to restrict,
censor, or prohibit the use of the
blockchain system, including any
applicable system-based user activity.
``(ii) Special rule.--For purposes of
clause (i), a decentralized governance system
shall not be considered to be a person or a
group of persons under common control or acting
pursuant to an agreement to act in concert.
``(23) 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, in which
participation is not limited to, or under the effective
control of, any person or group of persons under common
control (within the meaning of section 104(b) of the
Digital Asset Market Clarity Act of 2026).
``(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.--
``(i) In general.--The term `decentralized
governance system' shall include a legal
entity, including a decentralized
unincorporated nonprofit association or other
entity created pursuant to State law, used to
implement the rules-based system described in
subparagraph (A), provided that the legal
entity does not operate pursuant to centralized
management.
``(ii) Effect of certain delegations.--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.'';
(5) by inserting after paragraph (24) (as so redesignated)
the following:
``(25) Digital asset.--The term `digital asset' means any
digital representation of value which is recorded on a
cryptographically secured blockchain.
``(26) Digital asset custodian.--The term `digital asset
custodian' means a person who, as a regular business, holds,
maintains, or safeguards digital assets for others.
``(27) Digital commodity.--
``(A) In general.--The term `digital commodity'
means any fungible digital asset that can be
exclusively possessed and transferred, person to
person, without necessary reliance on an intermediary,
and is recorded on a blockchain.
``(B) Network tokens.--The term `digital commodity'
includes a network token (as defined in section 4B(a)
of the Securities Act of 1933) unless the network token
is excluded from the definition under clauses (iii)
through (vii) of subparagraph (D).
``(C) Meme coins.--
``(i) In general.--The term `digital
commodity' includes a meme coin unless the meme
coin is excluded from the definition under
subparagraph (D).
``(ii) Definition.--For the purposes of
this paragraph, the term `meme coin' means a
digital asset inspired by an internet meme,
character, current event, or trend for which
the promoter seeks to attract an enthusiastic
online community to purchase and engage in
trading of the digital asset primarily for
speculative purposes.
``(iii) Exclusions.--The Commission, by
rule or regulation, may exclude from the term
`meme coin' any digital asset or class of
digital assets if the Commission determines
that the rule or regulation will effectuate the
purposes of this Act.
``(D) Exclusions.--The term `digital commodity'
does not include any of the following:
``(i) Security.--Any security.
``(ii) Security derivative.--A digital
asset that, based on its terms and other
characteristics, is, represents, or is
functionally equivalent to an agreement,
contract, or transaction that is--
``(I) a security future (as defined
in section 2(a) of the Securities Act
of 1933 (15 U.S.C. 77b(a)));
``(II) a security-based swap; or
``(III) a put, call, straddle,
option, or privilege on any security,
certificate of deposit, or group or
index of securities (including any
interest therein or based on the value
thereof) (within the meaning of section
2(a)(1) of the Securities Act of 1933
(15 U.S.C. 77b(a)(1))).
``(iii) Permitted payment stablecoin.--A
payment stablecoin (as defined in section 2 of
the GENIUS Act (Public Law 119-27; 139 Stat.
419)) that is issued by a permitted payment
stablecoin issuer (as defined in that section).
``(iv) Banking deposit.--
``(I) A deposit (as defined in
section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813)),
regardless of the technology used to
record the deposit.
``(II) An account (as defined in
section 101 of the Federal Credit Union
Act (12 U.S.C. 1752)), regardless of
the technology used to record the
account.
``(v) Commodity.--A digital asset that
references, represents an interest in, or is
functionally equivalent to--
``(I) an agricultural commodity;
``(II) an excluded commodity, other
than a security; or
``(III) an exempt commodity, other
than the digital commodity itself, as
shall be further defined by the
Commission.
``(vi) Commodity derivative.--A digital
asset that, based on its terms and other
characteristics, is, represents, or is
functionally equivalent to an agreement,
contract, or transaction that is--
``(I) a contract of sale of a
commodity for future delivery or an
option thereon;
``(II) a security futures product;
``(III) a swap;
``(IV) an agreement, contract, or
transaction described in subparagraph
(C)(i) or (D)(i) of section 2(c)(2);
``(V) a commodity option authorized
under section 4c; or
``(VI) a leverage transaction
authorized under section 19.
``(vii) Pooled investment vehicle.--
``(I) In general.--A digital asset
not described in clause (i) that, based
on its terms and other characteristics,
is, represents, or is functionally
equivalent to an interest in--
``(aa) a commodity pool; or
``(bb) a pooled investment
vehicle.
``(II) Pooled investment vehicle
defined.--In this clause, the term
`pooled investment vehicle' means--
``(aa) any investment
company (as defined in section
3(a) of the Investment Company
Act of 1940 (15 U.S.C. 80a-
3(a)));
``(bb) any company (as
defined in section 2 of such
Act (15 U.S.C. 80a-2)) that
would be an investment company
under section 3(a) of such Act
(15 U.S.C. 80a-3(a)), but for
the exclusions provided from
that definition by section 3(c)
of such Act (15 U.S.C. 80a-
3(c)), if for purposes of this
subclause the company were
assumed to be an issuer (as
defined in section 2 of such
Act (15 U.S.C. 80a-2)); or
``(cc) any entity or person
that is not an investment
company but holds or will hold
assets other than securities.
``(viii) Good, collectible, and other
noncommodity digital asset.--
``(I) In general.--A digital asset
that has value, utility, or
significance beyond its mere existence
as a digital asset, including the
digital equivalent of a tangible or
intangible good or a nonfungible token
(as defined in section 602(a) of the
Digital Asset Market Clarity Act of
2026), such as--
``(aa) a work of art, a
musical composition, a literary
work, or other intellectual
property;
``(bb) collectibles,
merchandise, virtual land, and
in-game or in-application
assets;
``(cc) affinity, rewards,
or loyalty points, including
airline miles or credit card
points; or
``(dd) rights, licenses,
and tickets.
``(II) Exception.--The Commission
may determine, by rule or regulation or
order, that a good, collectible, or
other noncommodity digital asset or
class of goods, collectibles, or other
noncommodity digital assets is traded
in such a manner or form that the asset
or class of assets should be considered
a digital commodity, such as a mass-
minted series of items with
substantially similar or nearly
identical traits that are marketed or
sold interchangeably and are primarily
speculative in nature.
``(28) Digital commodity broker.--
``(A) In general.--The term `digital commodity
broker' means any person who--
``(i) as a regular business, in a digital
commodity cash or spot market--
``(I)(aa) solicits or accepts an
order from a person who is not an
eligible contract participant for the
purchase or sale of a unit of a digital
commodity; and
``(bb) in conjunction with the
activity described in item (aa),
accepts or maintains control over the
funds or other property or assets of
the person or the execution of the
transaction;
``(II) solicits or accepts an order
from a person who is not an eligible
contract participant on behalf of a
digital commodity dealer for the
purchase or sale of a unit of a digital
commodity; or
``(III) solicits or accepts an
order from a person who is not an
eligible contract participant for the
purchase or sale of a unit of a digital
commodity on or subject to the rules of
a registered digital commodity
exchange; or
``(ii) is registered with the Commission as
a digital commodity broker.
``(B) Exceptions.--The term `digital commodity
broker' does not include a person solely because the
person--
``(i) enters into 1 or more digital
commodity transactions that are attributable or
solely incidental to making, sending,
receiving, or facilitating payments, whether
involving a payment service provider or on a
peer-to-peer basis; or
``(ii) is a bank (as defined in section
3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a))) engaging in certain banking
activities with respect to a digital commodity
in the same or a similar manner as a bank is
excluded from the definition of a broker under
section 3(a)(4) of that Act (15 U.S.C.
78c(a)(4)), as determined by the Commission.
``(C) Further definition.--The Commission, by rule
or regulation, may exclude from the term `digital
commodity broker' any person or class of persons if the
Commission determines that the rule or regulation is in
the public interest and will effectuate the purposes of
this Act.
``(29) Digital commodity dealer.--
``(A) In general.--The term `digital commodity
dealer' means any person who--
``(i) as a regular business, in a spot or
cash digital commodity market, enters into, or
offers to enter into, a purchase or sale of a
unit of a digital commodity--
``(I) with a counterparty that is
not an eligible contract participant;
and
``(II) not on or through a
registered digital commodity exchange
or decentralized finance trading
protocol; or
``(ii) is registered with the Commission as
a digital commodity dealer.
``(B) Exception.--The term `digital commodity
dealer' does not include a person solely because the
person--
``(i) enters into 1 or more digital
commodity transactions that are attributable or
solely incidental to making, sending,
receiving, or facilitating payments, whether
involving a payment service provider or on a
peer-to-peer basis; or
``(ii) is a bank (as defined in section
3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a))) engaging in certain banking
activities with respect to a digital commodity
in the same or a similar manner as a bank is
excluded from the definition of a dealer under
section 3(a)(5) of that Act (15 U.S.C.
78c(a)(5)), as determined by the Commission.
``(C) Further definition.--The Commission, by rule
or regulation, may exclude from the term `digital
commodity dealer' any person or class of persons if the
Commission determines that the rule or regulation is in
the public interest and will effectuate the purposes of
this Act.
``(30) Digital commodity exchange.--The term `digital
commodity exchange' means a trading facility that offers or
seeks to offer a cash or spot market in at least 1 digital
commodity.'';
(6) by inserting after paragraph (49) (as so redesignated)
the following:
``(50) Mixed digital asset transaction.--The term `mixed
digital asset transaction' means a transaction in which a
digital commodity is traded for a security.'';
(7) by inserting after paragraph (55) (as so redesignated)
the following:
``(56) Qualified digital asset custodian.--
``(A) In general.--The term `qualified digital
asset custodian' means a digital asset custodian that--
``(i) holds digital assets on behalf of a
person registered under this Act or a customer
of a person registered under this Act; and
``(ii) is in compliance with subparagraphs
(B) though (D).
``(B) Supervision requirement.--A digital asset
custodian is in compliance with this subparagraph if
the digital asset custodian is subject to--
``(i) 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
``(ii) adequate supervision and appropriate
regulation for custody and safekeeping of
digital assets by--
``(I) a State bank supervisor (as
defined in section 3 of the Federal
Deposit Insurance Act (12 U.S.C.
1813));
``(II) a State officer, agency, or
other entity that has primary
regulatory authority over nondepository
State trust companies;
``(III) a State credit union
supervisor (as defined in section 6003
of the Anti-Money Laundering Act of
2020 (31 U.S.C. 5311 note; division F
of Public Law 116-283)); or
``(IV) an appropriate foreign
governmental authority in the home
country of the digital asset custodian.
``(C) Other requirements.--A digital asset
custodian is in compliance with this subparagraph if
the following requirements are met:
``(i) Not otherwise prohibited.--The
digital asset custodian has not been prohibited
by the applicable supervisor described in
subparagraph (B) from engaging in an activity
with respect to the custody and safekeeping of
digital assets.
``(ii) Information sharing.--
``(I) In general.--The digital
asset custodian shares information with
the Commission on request and complies
with such requirements for periodic
sharing of information regarding
customer accounts that the digital
asset custodian 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.
``(II) Provision of information.--
If the digital asset custodian is
subject to regulation and examination
by an appropriate Federal banking
agency, the digital asset custodian may
satisfy any information request
described in subclause (I) 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 digital asset custodian.
``(D) Rulemaking.--
``(i) In general.--The Commission shall
prescribe rules to permit a person registered
with the Commission to be a qualified digital
asset custodian.
``(ii) Content.--In prescribing the rules
under clause (i), to be a qualified digital
asset custodian, the Commission shall require a
person registered with the Commission--
``(I) to implement requirements
consistent with the requirements
described in subparagraph (E)(i);
``(II) to establish sufficient
system safeguards;
``(III) to prevent or mitigate
conflicts of interest, as appropriate;
and
``(IV) to establish separate
governance arrangements for the
custodial function of the entity.
``(E) Adequate supervision and appropriate
regulation.--
``(i) In general.--For purposes of
subparagraph (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--
``(I) 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 digital asset
custodian;
``(II) hold capital sufficient to
conduct an orderly wind-down and
resolution of the digital asset
custodian;
``(III) protect customer assets;
``(IV) establish and maintain books
and records regarding the business of
the digital asset custodian;
``(V) submit financial statements
and audited financial statements to the
applicable supervisor described in
subparagraph (B);
``(VI) provide disclosures to the
applicable supervisor described in
subparagraph (B) regarding actions,
proceedings, and other items as
determined by the supervisor;
``(VII) maintain and enforce
policies and procedures for compliance
with applicable State and Federal laws,
including those related to anti-money
laundering and cybersecurity;
``(VIII) establish a business
continuity plan to ensure functionality
in cases of disruption; and
``(IX) establish policies and
procedures to resolve complaints.
``(ii) Rulemaking with respect to
definitions.--
``(I) In general.--For purposes of
this paragraph, the Commission shall,
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.
``(II) Existing digital asset
custodians.--A State depository
institution or a trust company
operating as a digital asset custodian
before the effective date of a
rulemaking under subclause (I) is
deemed subject to adequate supervision
and appropriate regulation if--
``(aa) the State depository
institution or trust company is
expressly permitted by a State
bank supervisor to engage in
the custody and safekeeping of
digital assets;
``(bb) the State bank
supervisor has established
licensing, examination, and
supervisory processes that
require the State depository
institution or trust company
to, at a minimum, meet the
conditions described in
subclauses (I) through (IX) of
clause (i); and
``(cc) the State depository
institution or trust company is
in good standing with its State
bank supervisor.
``(III) Transition period for
certain custodians.--In implementing
the rulemaking under subclause (I), the
Commission shall provide a transition
period of not less than 2 years for any
State depository institution or trust
company that is deemed subject to
adequate supervision and appropriate
regulation under subclause (II) on the
effective date of the rulemaking.
``(F) 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.''; and
(8) in paragraph (57) (as so redesignated)--
(A) in subparagraph (E), by striking ``and'' at the
end;
(B) in subparagraph (F), by striking the period at
the end and inserting ``; and''; and
(C) by adding at the end the following:
``(G) a digital commodity exchange registered under
section 5i.''.
(b) Conforming Amendments.--
(1) Section 1a of the Commodity Exchange Act (7 U.S.C. 1a)
is amended--
(A) in paragraph (32)(A) (as redesignated by
subsection (a)(1)), in the matter preceding clause (i),
by striking ``(18)(A)'' and inserting ``(33)(A)''; and
(B) in paragraph (33)(A)(vii)(III)(aa) (as
redesignated by subsection (a)(1)), by striking
``(17)(A)'' and inserting ``(32)(A)''.
(2) Section 4(c)(1)(A)(i)(I) of the Commodity Exchange Act
(7 U.S.C. 6(c)(1)(A)(i)(I)) is amended by striking ``paragraphs
(2), (3), (4), (5), and (7), paragraph (18)(A)(vii)(III),
paragraphs (23), (24), (31), (32), (38), (39), (41), (42),
(46), (47), (48), and (49) of section 1a'' and inserting
``paragraphs (2), (5), (6), (11), (13), (33)(A)(vii)(III),
(38), (39), (46), (47), (54), (55), (58), (59), (63), (64),
(65), and (66) of section 1a''.
(3) Section 4q(a)(1) of the Commodity Exchange Act (7
U.S.C. 6q(a)(1)) is amended by striking ``1a(9)'' and inserting
``1a(15)''.
(4) Section 4s of the Commodity Exchange Act (7 U.S.C. 6s)
is amended--
(A) in subsection (f)(1)(D), by striking
``1a(47)(A)(v)'' and inserting ``1a(64)(A)(v)''; and
(B) in subsection (h)(5)(A)(i), in the matter
preceding subclause (I), by striking ``1a(18) of this
Act'' and inserting ``1a(33)''.
(5) Section 4t(b)(1)(C) of the Commodity Exchange Act (7
U.S.C. 6t(b)(1)(C)) is amended by striking ``1a(47)(A)(v)),''
and inserting ``1a(64)(A)(v)),''.
(6) Section 5 of the Commodity Exchange Act (7 U.S.C. 7) is
amended--
(A) in subsection (d)(23), by striking
``1a(47)(A)(v)'' and inserting ``1a(64)(A)(v)''; and
(B) in subsection (e)(1), by striking ``1a(9)'' and
inserting ``1a(15)''.
(7) Section 5b(k)(3)(A) of the Commodity Exchange Act (7
U.S.C. 7a-1(k)(3)(A)) is amended by striking ``1a(47)(A)(v))''
and inserting ``1a(64)(A)(v))''.
(8) Section 5h(f)(10)(A)(iii) of the Commodity Exchange Act
(7 U.S.C. 7b-3(f)(10)(A)(iii)) is amended by striking
``1a(47)(A)(v)'' and inserting ``1a(64)(A)(v)''.
(9) Section 21(f)(4)(C) of the Commodity Exchange Act (7
U.S.C. 24a(f)(4)(C)) is amended by striking ``1a(48)'' and
inserting ``1a(65)''.
(10) Section 5(e) of the Securities Act of 1933 (15 U.S.C.
77e(e)) is amended by striking ``section 1a(18) of the
Commodity Exchange Act (7 U.S.C. 1a(18))'' and inserting
``section 1a of the Commodity Exchange Act (7 U.S.C. 1a)''.
(11) Section 3C(g)(3)(A)(v) of the Securities Exchange Act
of 1934 (15 U.S.C. 78c-3(g)(3)(A)(v)) is amended by striking
``section 1a(10) of the Commodity Exchange Act;'' and inserting
``section 1a of the Commodity Exchange Act (7 U.S.C. 1a);''.
(12) Section 6(g)(5)(B)(i) of the Securities Exchange Act
of 1934 (15 U.S.C. 78f(g)(5)(B)(i)) is amended--
(A) in subclause (I), by striking ``section
1a(18)(B)(ii) of the Commodity Exchange Act'' and
inserting ``subparagraph (B)(ii) of section 1a(33) of
the Commodity Exchange Act (7 U.S.C. 1a(33))''; and
(B) in subclause (II), by striking ``such section
1a(18))'' and inserting ``that section)''.
(13) Section 15F(h)(5)(A)(i) of the Securities Exchange Act
of 1934 (15 U.S.C. 78o-10(h)(5)(A)(i)) is amended, in the
matter preceding subclause (I), by striking ``1a(18)'' and
inserting ``1a(33)''.
(14) Section 712 of the Wall Street Transparency and
Accountability Act of 2010 (15 U.S.C. 8302) is amended--
(A) in subsection (a)(8), by striking ``1a(47)(D)''
each place it appears and inserting ``1a(64)(D)''; and
(B) in subsection (d)(1), by striking
``1a(47)(A)(v)'' each place it appears and inserting
``1a(64)(A)(v)''.
(15) Section 752(a) of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (15 U.S.C. 8325(a)) is amended by
striking ``section 1a(39) of the Commodity Exchange Act),'' and
inserting ``section 1a of the Commodity Exchange Act (7 U.S.C.
1a)),''.
(16) Section 403 of the Legal Certainty for Bank Products
Act of 2000 (7 U.S.C. 27a) is amended--
(A) in subsection (a)(2), by striking
``1a(47)(A)(v)'' and inserting ``1a(64)(A)(v)''; and
(B) in each of subsections (b)(1) and (c)(2), by
striking ``1a(47)'' and inserting ``1a(64)''.
SEC. 102. DEFINITIONS UNDER THIS ACT.
In this Act, the terms ``blockchain'', ``decentralized finance
messaging system'', ``decentralized finance trading protocol'',
``decentralized governance system'', ``digital asset'', ``digital
commodity'', ``digital commodity broker'', ``digital commodity
dealer'', ``digital commodity exchange'', and ``mixed digital asset
transaction'' have the meanings given those terms, respectively, in
section 1a of the Commodity Exchange Act (7 U.S.C. 1a).
SEC. 103. RULEMAKINGS.
(a) Definitions.--The Commodity Futures Trading Commission shall
issue rules to further define the terms ``associated person of a
digital commodity broker'', ``associated person of a digital commodity
dealer'', ``blockchain'', ``blockchain application'', ``blockchain
protocol'', ``blockchain system'', ``decentralized finance messaging
system'', ``decentralized finance trading protocol'', ``decentralized
governance system'', and ``digital commodity''(as defined in section 1a
of the Commodity Exchange Act (7 U.S.C. 1a)).
(b) Joint Rulemaking for Exchanges and Intermediaries.--The
Commodity Futures Trading Commission and the Securities and Exchange
Commission shall jointly issue rules to exempt persons dually
registered with the Commodity Futures Trading Commission and the
Securities and Exchange Commission from duplicative, conflicting, or
unduly burdensome provisions of this Act, the securities laws (as
defined in section 3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a))), and the Commodity Exchange Act (7 U.S.C. 1 et seq.),
and the rules under those Acts, to the extent that the exemption
would--
(1) foster the development of fair and orderly markets in
digital assets;
(2) be necessary or appropriate for the protection of
customers; and
(3) be consistent with the protection of investors.
(c) Joint Rulemaking for Mixed Digital Asset Transactions.--The
Commodity Futures Trading Commission and the Securities and Exchange
Commission shall jointly issue rules applicable to mixed digital asset
transactions under this Act and the amendments made by this Act,
including by further defining such term.
(d) Joint Rulemaking, Procedures, or Guidance for Delisting.--Not
later than 180 days after the date of enactment of this Act, the
Commodity Futures Trading Commission and the Securities and Exchange
Commission (referred to in this subsection as the ``Commissions'')
shall jointly issue rules, procedures, or guidance (as determined
appropriate by the Commissions) regarding the process to delist an
asset for trading under section 104 if the Commissions determine that
the listing is inconsistent with the Commodity Exchange Act (7 U.S.C. 1
et seq.), the securities laws (as defined in section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a))) (including
regulations under those laws), or this Act.
(e) Joint Rules for Portfolio Margining Determinations.--
(1) In general.--Not later than 360 days after the date of
enactment of this Act, the Commodity Futures Trading Commission
and the Securities and Exchange Commission shall jointly issue
rules with respect to margin, customer protection, segregation,
or other requirements as necessary to facilitate portfolio
margining of securities (including related extensions of
credit), security-based swaps, contracts for future delivery,
options on a contract for future delivery, swaps, and digital
commodities, or any subset thereof, in--
(A) a securities account carried by a registered
broker or dealer or a security-based swap account
carried by a registered security-based swap dealer;
(B) a futures or cleared swap account carried by a
registered futures commission merchant (as defined in
section 1a of the Commodity Exchange Act (7 U.S.C.
1a));
(C) a swap account carried by a swap dealer; or
(D) a digital commodity account carried by a
registered digital commodity broker or digital
commodity dealer that is also registered in such other
capacity as is necessary to also carry the other
customer or counterparty positions being held in the
account.
(2) Requirements.--With respect to a joint rulemaking
described in paragraph (1)--
(A) the joint rule shall be in the public interest
and provide for the appropriate protection of
customers;
(B) the Commodity Futures Trading Commission and
the Securities and Exchange Commission shall consider
the public interest of the joint rule through the
solicitation of public comments; and
(C) the Commodity Futures Trading Commission and
the Securities and Exchange Commission shall consult
with other relevant foreign or domestic regulators,
including the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation, and
the Office of the Comptroller of the Currency, as
appropriate.
(f) Conflicts of Interest Rulemaking.--
(1) Rulemaking.--Not later than 18 months after the date of
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 (as defined in
section 1a of the Commodity Exchange Act (7 U.S.C. 1a)) and
persons required to be registered with the Commodity Futures
Trading Commission, including conflicts of interest related to
vertically integrated market structures.
(2) Minimum standards.--The rules issued under paragraph
(1) shall, at a minimum--
(A) establish governance, personnel, and financial
resource separation among affiliated entities that
perform distinct regulated functions;
(B) prohibit trading facilities or intermediaries
from acting as counterparties to customer transactions
or otherwise engaging in self-dealing, except as
provided in section 5i(b)(2)(B) of the Commodity
Exchange Act;
(C) require appropriate safeguards for custody and
use of customer assets to prevent conflicts arising
from commingling or misuse;
(D) mandate disclosure and management of material
conflicts, including those involving affiliated
entities or proprietary trading; and
(E) ensure independent oversight and decision-
making in market operations and compliance.
SEC. 104. EXPEDITIED REGISTRATION FOR DIGITAL COMMODITY EXCHANGES,
BROKERS, AND DEALERS; PROVISIONAL STATUS.
(a) Registration.--
(1) In general.--Unless exempted from registration, a
person shall not act as a digital commodity exchange, digital
commodity broker, or digital commodity dealer after the end of
the 90-day period beginning on the date the process described
in paragraph (2) is adopted by the Commodity Futures Trading
Commission, unless, as the case may be, the person is
registered as a--
(A) digital commodity exchange pursuant to section
5i of the Commodity Exchange Act;
(B) digital commodity broker pursuant to section 4u
of the Commodity Exchange Act; or
(C) digital commodity dealer pursuant to section 4u
of the Commodity Exchange Act.
(2) Expedited process.--Not later than 180 days after the
date of enactment of this Act, the Commodity Futures Trading
Commission shall adopt, by rule, regulation, or order, a
process for expedited registration of persons required to be
registered pursuant to paragraph (1).
(b) Provisional Status.--
(1) In general.--A person who is registered in accordance
with subsection (a) shall be in provisional status until--
(A) in the case of a digital commodity broker or
digital commodity dealer, the date that is 270 days
after the final effective date of the rulemakings
required under section 4u of the Commodity Exchange
Act; or
(B) in the case of a digital commodity exchange,
the date that is 270 days after the final effective
date of the rulemakings required under section 5i of
such Act.
(2) Payment of fees.--A person in provisional status shall
pay all fees required of persons registered with the Commodity
Futures Trading Commission under section 8e of the Commodity
Exchange Act.
(c) Operations Prior to Regulations.--
(1) Requirements.--A person in provisional status pursuant
to subsection (b) shall be subject to the requirements of this
section and the Commodity Exchange Act (7 U.S.C. 1 et seq.) and
any rules or regulations promulgated under this section or that
Act, as applicable.
(2) Listings.--
(A) In general.--Except as provided in subparagraph
(B), a person in provisional status pursuant to
subsection (b) may continue to offer, solicit, trade,
facilitate, execute, clear, report, or otherwise deal
in any digital asset offered on or through the
facilities of the person before the date of
registration under this section, until such time as the
rulemaking on definitions required under section 103(a)
is effective.
(B) Delisting.--Before the effective date of the
rulemaking on definitions under section 103(a), a
person in provisional status pursuant to subsection (b)
shall cease offering, soliciting, trading,
facilitating, executing, clearing, reporting, or
otherwise dealing in any digital asset required to be
delisted pursuant to a joint delisting process
established under section 103(e).
(3) Exemptive authority.--In order to promote responsible
innovation and fair competition, or protect customers, the
Commodity Futures Trading Commission may exempt any persons or
class of persons in provisional status pursuant to subsection
(b) from any requirements of this section or the Commodity
Exchange Act (7 U.S.C. 1 et seq.) or any rules or regulations
promulgated under this section or that Act, as applicable.
(d) Customer Disclosure Before Registration.--
(1) In general.--Beginning 30 days after the date of
enactment of this Act, any person acting as a digital commodity
exchange, digital commodity broker, or digital commodity dealer
shall disclose to the customers of the person so acting, in the
disclosure documents, offering documents, and promotional
material of the person so acting, in a prominent manner, that
the person is not registered with or regulated by the Commodity
Futures Trading Commission.
(2) Exception.--Paragraph (1) shall not apply to any person
who registers pursuant to subsection (a).
SEC. 105. COMMODITY EXCHANGE ACT SAVINGS PROVISIONS.
(a) In General.--Nothing in this Act or any amendment made by this
Act shall affect or apply to, or be interpreted to affect or apply to--
(1) any agreement, contract, or transaction that is subject
to the Commodity Exchange Act (7 U.S.C. 1a et seq.) as--
(A) a contract of sale of a commodity for future
delivery or an option on such a contract (as those
terms are defined in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a));
(B) a swap (as defined in that section);
(C) a security futures product (as defined in that
section);
(D) an option authorized under section 4c of that
Act (7 U.S.C. 6c);
(E) an agreement, contract, or transaction
described in section 2(c)(2)(C)(i) of that Act (7
U.S.C. 2(c)(2)(C)(i)); or
(F) a leverage transaction authorized under section
19 of that Act (7 U.S.C. 23); or
(2) the activities of any person with respect to any
agreement, contract, or transaction described in paragraph (1).
(b) Prohibitions on Spot Digital Commodity Entities.--Nothing in
this Act authorizes, or shall be interpreted to authorize, a digital
commodity exchange, digital commodity broker, or digital commodity
dealer to engage in any activities involving any transaction, contract,
or agreement described in subsection (a)(1), solely by virtue of being
registered as a digital commodity exchange, digital commodity broker,
or digital commodity dealer.
(c) Effect.--An agreement, contract, or transaction described in
subsection (a)(1) shall not be regulated as a digital commodity
agreement, contract, or transaction solely because it is issued,
recorded, represented, or transferred on a blockchain or other similar
technology.
SEC. 106. ADMINISTRATIVE REQUIREMENTS.
Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) is
amended--
(1) in paragraph (3)--
(A) in subparagraph (B), by striking ``or'' at the
end;
(B) in subparagraph (C), by striking the period and
inserting ``; or''; and
(C) by adding at the end the following:
``(D) a contract of sale of a digital commodity.'';
and
(2) in paragraph (4)--
(A) in subparagraph (A)--
(i) in clause (ii), by striking ``or'' at
the end;
(ii) in clause (iii), by striking the
period and inserting ``; or''; and
(iii) by adding at the end the following:
``(iv) a contract of sale of a digital
commodity.'';
(B) in subparagraph (B)--
(i) in clause (ii), by striking ``or'' at
the end;
(ii) in clause (iii), by striking the
period and inserting ``; or''; and
(iii) by adding at the end the following:
``(iv) a contract of sale of a digital
commodity.''; and
(C) in subparagraph (C)--
(i) by redesignating clauses (i) through
(iii) as subclauses (I) through (III),
respectively, and indenting appropriately;
(ii) in the matter preceding subclause (I)
(as so redesignated), by striking ``It shall''
and inserting the following:
``(i) In general.--It shall'';
(iii) in clause (i) (as so designated)--
(I) in subclause (II), by striking
``or'' at the end; and
(II) in subclause (III), by
striking ``a swap, provided, however,
that nothing'' and inserting the
following: ``a swap; or
``(IV) a contract of sale of a
digital commodity.
``(ii) Effect.--Nothing''; and
(iv) in clause (ii) (as so designated), by
striking ``clauses (i), (ii), or (iii)'' and
inserting ``any of subclauses (I) through (IV)
of clause (i)''.
SEC. 107. INTERNATIONAL COOPERATION.
In order to promote greater consistency in effective and consistent
global regulation of digital commodities, the Commodity Futures Trading
Commission, as appropriate--
(1) shall consult and coordinate with foreign regulatory
authorities on the application of consistent international
standards with respect to the regulation of digital
commodities; and
(2) may enter into such information-sharing arrangements as
are determined necessary or appropriate for the protection of
investors, customers, and users of digital commodities.
SEC. 108. IMPLEMENTATION.
(a) Global Rulemaking Timeframe.--Unless otherwise provided in this
Act or an amendment made by this Act, the Commodity Futures Trading
Commission and the Securities and Exchange Commission, or both, shall
individually, and jointly where required, promulgate rules and
regulations required of each Commission under this Act or an amendment
made by this Act not later than 18 months after the date of enactment
of this Act.
(b) Rules and Registration Before Final Effective Dates.--
(1) In general.--In order to prepare for the implementation
of this Act and the amendments made by this Act, the Commodity
Futures Trading Commission and the Securities and Exchange
Commission may, before any effective date provided in this Act
or an amendment made by this Act--
(A) promulgate rules, regulations, or orders
permitted or required by this Act or the amendments
made by this Act;
(B) conduct studies and prepare reports and
recommendations required by this Act or the amendments
made by this Act;
(C) register persons under this Act or the
amendments made by this Act; and
(D) exempt persons, agreements, contracts, or
transactions from provisions of this Act or the
amendments made by this Act, in accordance with this
Act or those amendments.
(2) Limitation on effectiveness.--An action by the
Commodity Futures Trading Commission or the Securities and
Exchange Commission under paragraph (1) shall not become
effective before the effective date otherwise applicable to the
action under this Act or the amendments made by this Act.
(c) Sense of Congress.--It is the sense of Congress that prior to
implementation of this Act the Commodity Futures Trading Commission--
(1) be fully constituted as described in section 2(a)(2) of
the Commodity Exchange Act (7 U.S.C. 2(a)(2)) to carry out all
existing responsibilities and those directed by this Act, with
not fewer than 2 of the Commissioners nominated, prior to such
appointments, following consultation and coordination with the
ranking minority member of the Committee on Agriculture,
Nutrition, and Forestry of the Senate; and
(2) be appropriately staffed to ensure sufficient
regulatory capacity, expertise, and enforcement readiness
necessary to implement this Act and the amendments made by this
Act.
SEC. 109. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (b) and as
otherwise provided in this Act or an amendment made by this Act, this
Act and the amendments made by this Act shall take effect on the date
that is 18 months after the date of enactment of this Act.
(b) Rulemaking Provisions.--To the extent that a provision of this
Act or an amendment made by this Act requires a rulemaking, the
provision shall take effect on the later of--
(1) 18 months after the date of enactment of this Act; and
(2) 120 days after the publication in the Federal Register
of the final rule implementing the provision.
SEC. 110. SENSE OF CONGRESS.
It is the sense of Congress that nothing in this Act or any
amendment made by this Act should be interpreted to authorize any
entity to regulate any commodity, other than a digital commodity, on
any spot market.
TITLE II--REGISTRATION FOR DIGITAL COMMODITY INTERMEDIARIES AT THE
COMMODITY FUTURES TRADING COMMISSION
SEC. 201. COMMISSION JURISDICTION OVER DIGITAL COMMODITY TRANSACTIONS.
(a) Savings Clause.--Section 2(a)(1) of the Commodity Exchange Act
(7 U.S.C. 2(a)(1)) is amended by adding at the end the following:
``(J)(i) Except as expressly provided in this Act,
nothing in the Digital Commodity Intermediaries Act or
any amendment made by that Act shall affect or apply
to, or be interpreted to affect or apply to--
``(I) any agreement, contract, or
transaction that is subject to this Act as--
``(aa) a contract of sale of a
commodity for future delivery or an
option on such a contract;
``(bb) a swap;
``(cc) a security futures product;
``(dd) an option authorized under
section 4c;
``(ee) an agreement, contract, or
transaction described in subparagraph
(C)(i) or (D)(i) of subsection (c)(2);
or
``(ff) a leverage transaction
authorized under section 19; or
``(II) the activities of any person with
respect to any such agreement, contract, or
transaction.
``(ii) An agreement, contract, or transaction
described in clause (i)(I) shall not be regulated as a
digital commodity agreement, contract, or transaction
solely because it is issued, recorded, represented, or
transferred on a blockchain or other similar
technology.''.
(b) Limitation on Authority Over Permitted Payment Stablecoins.--
Section 2(c)(1) of the Commodity Exchange Act (7 U.S.C. 2(c)(1)) is
amended--
(1) in the matter preceding subparagraph (A), by striking
``section, 5b, or'' and inserting ``section 5b or'';
(2) in subparagraph (F), by striking ``or'' at the end;
(3) in subparagraph (G), by striking the period and
inserting ``; or''; and
(4) by adding at the end the following:
``(H) a payment stablecoin (as defined in section 2
of the GENIUS Act (Public Law 119-27; 139 Stat. 419))
that is issued by a permitted payment stablecoin issuer
(as defined in that section) (referred to in this
subsection as a `permitted payment stablecoin').''.
(c) Commission Jurisdiction Over Digital Commodity Transactions.--
Section 2(c)(2) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)) is
amended--
(1) in subparagraph (D)--
(A) in clause (ii)--
(i) in subclause (I), by inserting after
``paragraph (1)'' the following: ``(other than
an agreement, contract, or transaction in a
permitted payment stablecoin)'';
(ii) by striking subclause (IV); and
(iii) by redesignating subclause (V) as
subclause (IV);
(B) by redesignating clause (iv) as clause (v);
(C) by inserting after clause (iii) the following:
``(iv) Digital commodities; permitted
payment stablecoins.--This subparagraph shall
not apply to a contract of sale of a digital
commodity or a permitted payment stablecoin
that results in actual delivery within 2 days
or such other period as the Commission may
determine by rule or regulation based upon the
typical commercial practice in cash or spot
markets for the digital commodity or permitted
payment stablecoin involved.''; and
(D) by inserting after clause (v) (as so
redesignated) the following:
``(vi) Retail commodity transaction
rulemaking.--The Commission shall, by rule or
regulation, establish appropriate conditions,
requirements, or limitations with respect to
the extension of leverage, margin, or financing
in connection with any cash or spot digital
commodity agreement, contract, or transaction
subject to this subparagraph.
``(vii) Further rulemaking authority.--In
order to promote responsible innovation and
fair competition, or protect customers, the
Commission may by rule or regulation exempt,
either unconditionally or on stated terms or
conditions or for stated periods, and either
retroactively or prospectively, or both, a
digital commodity exchange or a digital
commodity broker from the requirements of this
subparagraph, if the Commission determines that
the exemption would be consistent with the
public interest and the purposes of this
Act.''; and
(2) by adding at the end the following:
``(F) Commission jurisdiction with respect to
digital commodity transactions.--
``(i) In general.--Subject to sections 6d
and 12(e), the Commission shall have exclusive
jurisdiction with respect to any account,
agreement, contract, or transaction involving a
contract of sale of a digital commodity in
interstate commerce, including in a digital
commodity cash or spot market, that is offered,
solicited, traded, facilitated, executed,
cleared, reported, or otherwise dealt in--
``(I) on or subject to the rules of
a registered entity or an entity that
is required to be registered as a
registered entity; or
``(II) by any other entity
registered, or required to be
registered, with the Commission.
``(ii) Limitations.--Clause (i) shall not
apply with respect to--
``(I) custodial or depository
activities for a digital commodity of
an entity regulated by--
``(aa) an appropriate
Federal banking agency; or
``(bb) a State bank
supervisor (as defined in
section 3 of the Federal
Deposit Insurance Act (12
U.S.C. 1813));
``(II) an offer or sale of an
investment contract involving a digital
commodity or a securities offer or sale
involving a digital commodity; or
``(III) a mixed digital asset
transaction.
``(G) Agreements, contracts, and transactions in
stablecoins.--
``(i) Treatment of permitted payment
stablecoins on commission-registered
entities.--Subject to clauses (ii) and (iii),
the Commission shall have jurisdiction over a
cash or spot agreement, contract, or
transaction in a permitted payment stablecoin
that is offered, offered to enter into, entered
into, executed, solicited, or accepted, or for
which the execution of is confirmed--
``(I) on or subject to the rules of
a registered entity; or
``(II) by any other entity
registered with the Commission.
``(ii) Permitted payment stablecoin
transaction rules.--This Act shall apply to a
transaction described in clause (i) only for
the purpose of regulating the offer, execution,
solicitation, or acceptance of a cash or spot
permitted payment stablecoin transaction on a
registered entity or by any other entity
registered with the Commission, as if the
permitted payment stablecoin were a digital
commodity.
``(iii) No authority over permitted payment
stablecoins.--Notwithstanding clauses (i) and
(ii), the Commission shall not make a rule or
regulation, impose a requirement or obligation
on a registered entity or other entity
registered with the Commission, or impose a
requirement or obligation on a permitted
payment stablecoin issuer regarding the
operation of a permitted payment stablecoin
issuer or a permitted payment stablecoin.''.
(d) Network Tokens and Ancillary Assets.--Section 2 of the
Commodity Exchange Act (7 U.S.C. 2) is amended by adding at the end the
following:
``(k) Treatment of Secondary Market Network Tokens and Certified
Ancillary Assets.--The secondary market offer or sale of a network
token (as defined in section 4B(a) of the Securities Act of 1933) other
than the offer or sale of an investment contract pursuant to which an
ancillary asset is offered or sold by an ancillary asset originator, or
an underwriter with respect to an investment contract pursuant to which
such ancillary asset was originally sold, shall be considered an offer
or sale of a digital commodity.''.
(e) Conforming Amendments.--
(1) Paragraph (15) of section 1a of the Commodity Exchange
Act (7 U.S.C. 1a) (as amended by section 17(f) of the GENIUS
Act (Public Law 119-27; 139 Stat. 463) and as redesignated by
section 101(a)(1)) is amended by striking the second sentence.
(2) Section 2(a)(1)(A) of the Commodity Exchange Act (7
U.S.C. 2(a)(1)(A)) is amended, in the first sentence, by
striking ``section 19 of this Act'' and inserting
``subparagraph (F) or (G) of subsection (c)(2) or section 19''.
(3) Section 4(c)(1) of the Commodity Exchange Act (7 U.S.C
6(c)(1)) is amended by adding after subparagraph (B) the
following:
``For purposes of this paragraph, an agreement, contract, or
transaction that is subject to the jurisdiction of the Commission under
any of the amendments made to this Act by the Digital Commodity
Intermediaries Act shall be subject to subsection (a).''.
SEC. 202. REQUIRING FUTURES COMMISSION MERCHANTS TO USE QUALIFIED
DIGITAL ASSET CUSTODIANS.
Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is amended--
(1) in subsection (a)(2)--
(A) in the first proviso, by striking ``any bank or
trust company'' and inserting ``any bank, trust
company, or qualified digital asset custodian, as
applicable,''; and
(B) by inserting ``: Provided further, That any
such property that is a digital asset shall be held in
a qualified digital asset custodian'' before the period
at the end; and
(2) in subsection (f)(3)(A)(i), by striking ``any bank or
trust company or with a'' and inserting ``any bank, trust
company, qualified digital asset custodian, or''.
SEC. 203. TRADING CERTIFICATION AND APPROVAL FOR DIGITAL COMMODITIES.
Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-2) is
amended--
(1) in subsection (a)(1), by striking ``5(d) and 5b(c)(2)''
and inserting ``5(d), 5b(c)(2), and 5i(c)'';
(2) in subsection (b)--
(A) in each of paragraphs (1) and (2), by inserting
``digital commodity exchange,'' before ``derivatives'';
and
(B) in paragraph (3), by inserting ``digital
commodity exchange,'' before ``derivatives'' each place
it appears;
(3) in subsection (c)--
(A) in paragraph (2), by inserting ``or
participants'' before ``(in'';
(B) in paragraph (4)(B), by striking ``1a(10)'' and
inserting ``1a(16)''; and
(C) in paragraph (5), by adding at the end the
following:
``(D) Special rules for digital commodity
contracts.--In certifying any new rule or rule
amendment, or listing any new contract or instrument,
in connection with a contract of sale of a commodity
for future delivery, option, swap, or other agreement,
contract, or transaction, that is based on or
references a digital commodity, a registered entity may
make or rely on a certification under subsection (d)
for the digital commodity.''; and
(4) by inserting after subsection (c) the following:
``(d) Certifications for Digital Commodity Trading.--
``(1) In general.--Notwithstanding subsection (c), for the
purposes of listing or offering a digital commodity for trading
in a digital commodity cash or spot market, an eligible entity
shall submit a written certification to the Commission that the
digital commodity meets the requirements of this Act (including
the regulations prescribed under this Act).
``(2) Contents of the certification.--In making a written
certification under this subsection, an eligible entity shall
furnish to the Commission an analysis of how the digital
commodity meets the requirements of section 5i(c)(3).
``(3) Modifications.--
``(A) In general.--An eligible entity shall modify
a certification made under paragraph (1) to account for
material changes in any information provided in
connection with the requirements of section 5i(c)(3).
``(B) Recertification.--Modifications required by
this subsection shall be subject to the same
disapproval and review process as a new certification
under paragraphs (4) and (5).
``(4) Disapproval.--
``(A) In general.--The written certification
described in paragraph (1) shall become effective
unless the Commission finds that the listing of the
digital commodity is inconsistent with the requirements
of this Act or the rules and regulations prescribed
under this Act.
``(B) Analysis required.--The Commission shall
include, with any findings referred to in subparagraph
(A), a detailed analysis of the factors on which the
decision was based.
``(C) Public findings.--The Commission shall make
public any disapproval decision, and any related
findings and analysis, made under this paragraph.
``(5) Review.--
``(A) In general.--Unless the Commission makes a
disapproval decision under paragraph (4), the written
certification described in paragraph (1) shall become
effective, pursuant to the certification by the
eligible entity and notice of the certification to the
public (in a manner determined by the Commission) on
the date that is--
``(i) 20 business days after the date the
Commission receives the certification (or such
shorter period as determined by the Commission
by rule or regulation), in the case of a
digital commodity that has not been certified
under this section or for which a certification
is being modified under paragraph (3); or
``(ii) 1 business day after the date the
Commission receives the certification (or such
shorter period as determined by the Commission
by rule or regulation) for any digital
commodity that has been certified under this
section.
``(B) Extensions.--The time for consideration under
subparagraph (A) may be extended--
``(i) once, for 30 business days, through
written notice to the eligible entity by the
Commission--
``(I) that there are novel or
complex issues that require additional
time to analyze;
``(II) that the explanation by the
submitting eligible entity is
inadequate; or
``(III) of a potential
inconsistency with this Act; and
``(ii) once, for an additional 30 business
days, through written notice to the eligible
entity from the Commission that includes a
description of any issues with the
certification, including any--
``(I) novel or complex issues that
require additional time to analyze;
``(II) missing information or
inadequate explanations; or
``(III) potential inconsistencies
with this Act.
``(6) Prior approval before registration.--
``(A) In general.--A person applying for
registration with the Commission for the purposes of
listing or offering a digital commodity for trading in
a digital commodity cash or spot market may request
that the Commission grant prior approval for the person
to list or offer the digital commodity on being
registered with the Commission.
``(B) Request for prior approval.--A person seeking
prior approval under subparagraph (A) shall furnish the
Commission with a written certification that the
digital commodity meets the requirements of this Act
(including the regulations prescribed under this Act)
and the information described in paragraph (2).
``(C) Deadline.--The Commission shall take final
action on a request for prior approval not later than
90 business days after submission of the request,
unless the person submitting the request agrees to an
extension of the time limitation established under this
subparagraph.
``(D) Disapproval.--
``(i) In general.--The Commission shall
approve the listing of the digital commodity
requested under subparagraph (A) unless the
Commission finds that the listing is
inconsistent with this Act or the rules and
regulations prescribed under this Act.
``(ii) Analysis required.--The Commission
shall include, with any findings made under
clause (i), a detailed analysis of the factors
on which the decision is based.
``(iii) Public findings.--The Commission
shall make public any disapproval decision, and
any related findings and analysis, made under
this subparagraph.
``(7) Eligible entity defined.--In this subsection, the
term `eligible entity' means a registered entity or group of
registered entities acting jointly.''.
SEC. 204. REGISTRATION OF DIGITAL COMMODITY EXCHANGES.
(a) In General.--The Commodity Exchange Act is amended by inserting
after section 5h (7 U.S.C. 7b-3) the following:
``SEC. 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.--
``(i) In general.--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 shall require for the purpose of
making the determinations required for
approval.
``(ii) Rulemaking required.--The Commission
shall, by rule, prescribe the contents of an
application under clause (i), including
governance, resources, systems safeguards,
surveillance, and conflict management.
``(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) serves only customers in a single
State, territory, or possession of the United
States;
``(ii) 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
``(iii) is already registered as a
designated contract market, provided that the
trading facility shall--
``(I) provide reasonable notice to
the Commission of its intention to
engage in offering a cash or spot
market in at least 1 digital commodity;
and
``(II) comply with all other
provisions of this Act and the rules
promulgated thereunder as they apply to
a digital commodity exchange.
``(2) Additional registrations.--
``(A) Rules.--In order to foster the development of
fair and orderly markets, protect customers, and
promote responsible innovation, the Commission shall--
``(i) 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) prescribe rules establishing
requirements for the identification,
mitigation, and resolution of conflicts of
interest among and across affiliated entities
or entities with multiple registrations under
this Act, including conflicts of interest
related to vertically integrated market
structures and their varying responsibilities
and activities; and
``(iii) after an analysis of the risks and
benefits, prescribe rules to provide for
portfolio margining in accordance with section
103(e) of the Digital Commodity Intermediaries
Act.
``(B) 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) Contracts designed to defraud or mislead.--
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) Prohibited transactions.--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) Enforcement authority.--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 a digital commodity exchange shall not
trade on or subject to the rules of the digital
commodity exchange for its own account.
``(B) Exceptions.--Subject to the limitations
described in subparagraph (C), a digital commodity
exchange or any affiliate of a digital commodity
exchange may trade on the digital commodity exchange
for its own account so long as the trading is not
solely for the purpose of the profit of the digital
commodity exchange, including the following
transactions:
``(i) Customer direction.--A transaction
for, or entered into at the direction of, or
for the benefit of, an unaffiliated customer.
``(ii) Liquidity provision.--A transaction
in connection with the provision of liquidity
on the digital commodity exchange if conducted
pursuant to policies and procedures reasonably
designed to limit such activity to the
reasonably expected customer demand for
liquidity on the digital commodity exchange.
``(iii) Risk-mitigating hedging.--A
transaction in connection with risk-mitigating
hedging activities that are designed to reduce
specific risks to the digital commodity
exchange or its affiliate in connection with
and related to its digital commodity
activities.
``(C) Rulemaking.--The Commission shall adopt rules
establishing appropriate conditions, requirements, or
other limitations on the use of the exceptions
described in subparagraph (B) that are necessary for
the protection of customers, the promotion of
innovation, or the maintenance of fair, orderly, and
efficient markets, which shall require that the digital
commodity exchange has put in place adequate
protections against conflicts of interest, such as
timely and effective disclosure to clients, customers,
and counterparties of any material conflict of interest
or information barriers reasonably designed to protect
against such conflicts of interest.
``(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 digital commodity exchange pursuant to
subparagraph (B), the digital commodity exchange or
affiliate shall provide to the Commission notice that
shall enumerate how any proposed activity is consistent
with the exceptions described in subparagraph (B) and
the purposes of this Act.
``(E) Commission visibility into liquidity
provision.--A digital commodity exchange shall report
to the Commission such quantitative metrics as the
Commission determines, by rule, to be appropriate to
provide the Commission with sufficient visibility into
the activities of the digital commodity exchange or its
affiliates in reliance on subparagraph (B)(ii).
``(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 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 exchange.
``(3) Listing standards for digital commodities.--
``(A) Not readily susceptible to manipulation.--A
digital commodity exchange shall permit trading only in
a digital commodity that is not readily susceptible to
manipulation.
``(B) Disclosures to the securities and exchange
commission.--A digital commodity exchange shall
establish policies and procedures to permit trading in
a digital commodity only if--
``(i) disclosures with respect to the
digital commodity required under, as
applicable, section 4B of the Securities Act of
1933 have been filed with the Securities and
Exchange Commission; or
``(ii) such other similar information that
is related to the ongoing development plan of
the blockchain system and is able to be
publicly ascertained, as the Commission may, by
rule or regulation, require, has been provided
to the public.
``(C) 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;
``(II) establish policies and
procedures to determine that the
information provided pursuant to clause
(ii) is correct, current, and available
to the public; and
``(III) communicate in a fair and
balanced manner based on principles of
fair dealing and good faith.
``(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 information required by this clause is the
following:
``(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 such
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 commodity.
``(IV) Trading volume and
volatility.--The trading volume and
volatility of the digital commodity on
the exchange.
``(V) Customer protections.--
``(aa) Information about
the material risks and
characteristics of the digital
commodity.
``(bb) Any material
incentives or conflicts of
interest that the digital
commodity exchange may have in
connection with the listing of
the digital commodity.
``(cc) Information required
by the Commission by rule or
regulation pertaining to
marketing and advertising,
including testimonials and
endorsements.
``(VI) Additional information.--
Such additional information as the
Commission shall determine by rule or
regulation to be necessary for a
customer to understand the financial
and operational risks of a digital
commodity, and to be practically
feasible to provide.
``(4) 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.
``(5) Ability to obtain information.--A digital commodity
exchange shall--
``(A) establish and enforce rules that will allow
the exchange 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.
``(6) 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.
``(7) Timely publication of trading information.--
``(A) In general.--A digital commodity exchange
shall make public on its website timely information on
price, trading volume, and other trading data on
digital commodities to the extent prescribed by the
Commission by rule or regulation.
``(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.
``(8) Recordkeeping and reporting.--
``(A) In general.--A digital commodity exchange
shall--
``(i) maintain records relating to the
business of the digital commodity 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;
``(iii) keep any such records of digital
commodities that relate to a security open to
inspection and examination by the Securities
and Exchange Commission; and
``(iv) provide to the Commission an annual
financial statement certified by an independent
public accountant.
``(B) 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.
``(9) 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.
``(10) Conflicts of interest.--A digital commodity exchange
shall establish and enforce rules--
``(A) to minimize conflicts of interest in the
decision-making processes of the digital commodity
exchange, including conflicts of interest that might
potentially bias the judgement or supervision of the
digital commodity exchange and contravene the
principles of fair and equitable trading;
``(B) to minimize conflicts of interest that might
arise--
``(i) out of transactions or arrangements
with affiliates (including affiliates engaging
in digital commodity activities); or
``(ii) as a result of multiple
registrations under this Act;
``(C) to establish a process for resolving
conflicts of interest referred to in subparagraphs (A)
and (B);
``(D) to require disclosure by the digital
commodity exchange of any material incentives or
conflicts of interest that the digital commodity
exchange is unable to resolve, or prohibit the
conditions giving rise to such conflicts of interest
not able to be resolved, as the Commission may
determine to be appropriate; and
``(E) relating to such additional matters as the
Commission shall determine by rule or regulation to be
necessary in the public interest.
``(F) Affiliates.--A digital commodity exchange may
permit an affiliated digital commodity broker or
digital commodity dealer to facilitate impartial access
to the digital commodity exchange, subject to the rules
prescribed by the Commission with respect to conflicts
of interest regarding transactions or arrangements with
affiliates.
``(11) Financial resources.--
``(A) In general.--A digital commodity exchange
shall have adequate financial, operational, and
managerial resources, as shall be determined by the
Commission by rule or regulation, 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.
``(C) Prohibition.--The resources used to meet the
requirements under subparagraph (B) shall not include
digital commodities originated by the digital commodity
exchange or affiliates of the digital commodity
exchange.
``(12) 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.
``(13) Governance fitness standards.--
``(A) Governance arrangements.--A digital commodity
exchange shall establish governance arrangements that
are transparent to fulfill public interest
requirements.
``(B) Fitness standards.--A digital commodity
exchange shall establish and enforce appropriate
fitness standards for--
``(i) officers and directors;
``(ii) any individual or entity with direct
access to, or control of, customer assets; and
``(iii) other persons, as determined by the
Commission by rule or regulation.
``(C) Board of directors.--Except as otherwise
provided by the Commission by rule, regulation, or
order, a digital commodity exchange shall be governed
by a board of directors, subject to the following
requirements:
``(i) The composition of the board of
directors shall be sufficient to maintain
appropriate independence, as determined by the
Commission.
``(ii) A digital commodity exchange shall
endeavor to recruit individuals to serve on the
board of directors from among, and to have the
composition of the board reflect, a broad and
culturally diverse pool of qualified
candidates.
``(14) 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 (including
cybersecurity risks), through the development of
appropriate controls and procedures, and automated
systems 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;
``(ii) the fulfillment of the
responsibilities and obligations of the digital
commodity exchange; and
``(iii) the appropriate safeguarding and
ability to access the private keys or other
credentials necessary to transmit digital
commodities in the possession, custody, or
control 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;
``(iv) maintenance of a comprehensive and
accurate audit trail; and
``(v) access and ability to transfer
digital commodities in the possession, custody,
or control of the digital commodity exchange.
``(15) Risk management procedures.--A digital commodity
exchange shall establish robust and professional risk
management systems adequate for managing the day-to-day
business of the digital commodity exchange.
``(d) Consumer Protection.--The Commission shall adopt rules or
regulations imposing customer protection requirements that--
``(1) require disclosure by a digital commodity exchange to
a customer (other than another digital commodity exchange
registered under this section), which shall be updated in a
timely manner to reflect material changes, and in accordance
with paragraph (5), of--
``(A) the underlying technology of any digital
commodity that is listed on the digital commodity
exchange;
``(B) the functionality and utility of any digital
commodity that is listed on the digital commodity
exchange;
``(C) the governance structure of any digital
commodity that is listed on the digital commodity
exchange;
``(D) the trading volume and volatility of any
digital commodity that is listed on the digital
commodity exchange;
``(E) information about the material risks and
characteristics of any applicable digital commodities;
and
``(F) any material incentives or conflicts of
interest that the digital commodity exchange may have
in connection with the listing of any applicable
digital commodities;
``(2) establish a duty for a digital commodity exchange to
communicate in a fair and balanced manner based on principles
of fair dealing and good faith;
``(3) establish standards governing digital commodity
exchange marketing and advertising, including testimonials and
endorsements;
``(4) establish such other standards and requirements as
the Commission may determine are--
``(A) appropriate for the protection of customers;
or
``(B) otherwise in furtherance of the purposes of
this Act; and
``(5) standardize and simplify disclosures under paragraph
(1), including requiring that disclosures--
``(A) be conspicuous;
``(B) use plain language comprehensible to
customers; and
``(C) succinctly explain the information that is
required to be communicated to the customer.
``(e) Information-sharing.--
``(1) In general.--Subject to section 8, and on request,
the Commission shall share information collected under
subsection (c)(8)(A) with--
``(A) the Board of Governors of the Federal Reserve
System;
``(B) the Securities and Exchange Commission;
``(C) each appropriate Federal banking agency;
``(D) each appropriate State bank supervisor (as
defined in section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813));
``(E) the Financial Stability Oversight Council;
``(F) the Department of Justice;
``(G) State securities regulators; and
``(H) 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.
``(2) Confidentiality agreement.--Before the Commission may
share information with any entity described in paragraph (1),
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.
``(f) 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) Qualified digital asset custodian.--Each digital
commodity exchange shall hold in a qualified digital asset
custodian each unit of a digital asset that is--
``(A) the property of a customer of the digital
commodity exchange;
``(B) required to be held by the digital commodity
exchange under subsection (c)(11); or
``(C) otherwise so required by the Commission to
reasonably protect customers and customer assets or
promote the public interest.
``(3) 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 of sale.
``(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.
``(4) Permitted investments.--Money described in paragraph
(3) 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 high-
quality liquid asset 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 shall prescribe.
``(5) 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 (7) shall not be considered customer
property for purposes of section 761 of title 11,
United States Code.
``(6) 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
asset 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 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
paragraph, the term `use' with respect to a digital
commodity, includes utilizing any unit of a digital
asset to participate in a blockchain service (as
defined in paragraph (7)(D)) 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.
``(7) 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
for each use--
``(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 written disclosure
requirements and any other limitations and
rules related to a permission provided under
subparagraph (A) or the treatment of customer
assets in the event of an insolvency,
resolution, or liquidation proceeding,
including a description of the manner in which
any digital commodity would be treated in an
insolvency, resolution, or liquidation
proceeding, and how the treatment of digital
commodities differs from the treatment of any
other assets in the event of an insolvency,
resolution, or liquidation proceeding, that are
reasonably necessary to protect customers,
including eligible contract participants, non-
eligible contract participants, and any other
class of customers.
``(ii) Customer choice.--A digital
commodity exchange may not--
``(I) require a customer to provide
the permission referred to in
subparagraph (A) as a condition of
doing business on the exchange; or
``(II) penalize a customer for not
providing the permission referred to in
subparagraph (A).
``(C) Requirements.--The Commission may, by rule,
modify the requirements of paragraph (2) or (3) 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 required for the
ongoing operation of a blockchain system.
``(g) Market Access Requirements.--
``(1) Affiliated commodity brokers.--A registered digital
commodity exchange may permit an affiliated digital commodity
broker to facilitate impartial access to the digital commodity
exchange.
``(2) Additional requirements.--The Commission shall, 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, provide market participants with
impartial access to the market, protect customer funds, and
promote responsible innovation.
``(h) Designation of Chief Compliance Officer.--
``(1) In general.--A digital commodity exchange shall
designate an individual to serve as a chief compliance officer,
who shall be solely responsible to the digital commodity
exchange and not to any other affiliated entity or other entity
regulated under this Act.
``(2) Duties.--The chief compliance officer of a digital
commodity exchange shall--
``(A) report directly to the board or to the senior
officer of the exchange;
``(B) review compliance with the core principles in
this section;
``(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 that
shall be prescribed by the Commission, the chief
compliance officer of a digital commodity exchange
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.
``(i) 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 for the judicial district in which 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.
``(j) 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.--
``(A) In general.--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
digital commodity exchange.
``(B) Transition period.--The Commission may exempt
a foreign digital commodity exchange from registration
under this section for the 2-year period following the
date of enactment of this section if--
``(i) the foreign digital commodity
exchange--
``(I) keeps the books and records
of the foreign digital commodity
exchange open to inspection and
examination by any representative of
the Commission upon reasonable request;
and
``(II) reports to the Commission,
in a form and manner acceptable to the
Commission, such information as the
Commission determines to be reasonably
necessary or appropriate for the
Commission to perform the duties of the
Commission under this Act; and
``(ii) the appropriate government
authorities in the home country of the foreign
digital commodity exchange--
``(I) certify that the foreign
digital commodity exchange--
``(aa) is subject to--
``(AA) supervision
and regulation on a
consolidated basis by a
governmental authority
in its home country,
including requirements
relating to beneficial
ownership, control
persons, governance,
risk management,
financial reporting,
and market integrity;
and
``(BB) clear and
enforceable managerial
and supervisory
responsibility at the
consolidated level; and
``(bb) is in good standing
and not subject to unresolved,
material enforcement actions
relating to market integrity,
customer protection, or
financial crime; and
``(II) enter into a memorandum of
understanding with the Commission in
which those appropriate government
authorities agree to provide to the
Commission information regarding the
foreign digital commodity exchange that
the Commission requests during that 2-
year period.
``(C) Suspension or revocation.--The Commission may
suspend or revoke an exemption under subparagraph (B)
if the Commission determines that the foreign digital
commodity exchange or the appropriate government
authority in the home country of the foreign digital
commodity exchange fails to substantially comply with
the requirements described in subparagraph (B).
``(k) Federal Preemption.--
``(1) In general.--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.
``(2) Preservation of authority.--Nothing in this
subsection shall affect the ability of a State or local agency
to investigate and bring enforcement actions regarding fraud,
deceit, or unfair or deceptive acts or practices.
``(l) Regulations.--The Commission shall prescribe such rules and
regulations as are appropriate for the implementation of this section.
``(m) 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.''.
(b) Private Rights of Action.--Section 22 of the Commodity Exchange
Act (7 U.S.C. 25) is amended--
(1) in subsection (a)(1)--
(A) in subparagraph (B)--
(i) by striking ``commodity) or any swap;''
and inserting ``commodity), any swap, or any
digital commodity transaction;''; and
(ii) by striking ``to make such contract''
and all that follows through the semicolon at
the end and inserting ``to make such contract,
any swap, or any digital commodity
transaction;'';
(B) in subparagraph (C), by conforming the margin
of clause (iv) to the margin of clauses (i) through
(iii); and
(C) in subparagraph (D)--
(i) in the matter preceding clause (i), by
striking ``subparagraph (B) hereof or swap''
and inserting ``subparagraph (B), a swap, or a
digital commodity''; and
(ii) in clause (ii), by striking ``any such
contract or swap'' and inserting ``any such
contract, swap, or digital commodity''; and
(2) in subsection (b)(1)(A), by inserting ``5i,'' after
``5h,''.
SEC. 205. REGISTRATION AND REGULATION OF DIGITAL COMMODITY BROKERS AND
DEALERS.
The Commodity Exchange Act is amended by inserting after section 4t
(7 U.S.C. 6t) the following:
``SEC. 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) Exemptions.--A person acting as a digital commodity
broker or digital commodity dealer shall not be required to
register under this section if the person--
``(A) engages in no more than a de minimis amount
of brokering or dealing activity, as the Commission may
determine by rule or regulation, in a digital
commodity;
``(B) serves only customers in a single State or
territory; or
``(C) is already registered as a futures commission
merchant, provided that the person shall--
``(i) provide written notice to the
Commission and to any self-regulatory
organization of which it is a member of its
intention to act as a digital commodity broker;
and
``(ii) comply with all other provisions of
this Act and the rules promulgated thereunder
and any self-regulatory organization rules as
they apply to a digital commodity broker.
``(3) Additional registration.--
``(A) Rules.--In order to foster the development of
fair and orderly markets, protect customers, and
promote responsible innovation, the Commission shall--
``(i) 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) prescribe rules establishing
requirements for the identification,
mitigation, and resolution of conflicts of
interest among and across affiliated entities
or entities with multiple registrations under
this Act, including conflicts of interest
related to vertically integrated market
structures and their varying responsibilities
and activities; and
``(iii) after an analysis of the risks and
benefits, prescribe rules to provide for
portfolio margining in accordance with section
103(e) of the Digital Commodity Intermediaries
Act.
``(B) 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.
``(C) Harmonization.--In prescribing rules for
digital commodity brokers or digital commodity dealers,
the Commission shall, to the greatest extent feasible,
seek to avoid duplication, inconsistencies, or burdens
for a person registered in multiple capacities.
``(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 under paragraph
(1) 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) 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 meet and continue to
meet the obligations of such a registrant.
``(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.).
``(d) Digital Commodity Trading Not Readily Susceptible to
Manipulation.--A digital commodity broker or digital commodity dealer
may only offer trades in digital commodities that are not readily
susceptible to manipulation.
``(e) Execution.--The Commission shall prescribe rules and
regulations regarding the execution of digital commodity transactions
by a digital commodity broker or a digital commodity dealer with or on
behalf of customers, which shall address--
``(1) fair and objective pricing;
``(2) the recording, maintaining, and disclosure of
information;
``(3) the protection of the price discovery process; and
``(4) requirements specific to digital commodity
transactions with or on behalf of a customer who is not an
eligible contract participant.
``(f) Reporting and Recordkeeping.--Each digital commodity broker
and digital commodity dealer shall--
``(1) 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) keep books and records in such form and manner and
for such period as shall be prescribed by the Commission by
rule or regulation; and
``(3) keep the books and records open to inspection and
examination by any representative of the Commission.
``(g) 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 shall require by rule or regulation.
``(2) Information requirements.--The daily trading records
described in paragraph (1) 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.
``(h) 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,
shall prescribe related to--
``(A) fraud, manipulation, and other abusive
practices involving spot 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
determines appropriate.
``(2) Business conduct requirements.--The Commission shall,
by rule, prescribe business conduct requirements that--
``(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;
``(D) establish a duty for digital commodity
brokers and digital commodity dealers to provide fair,
transparent, and objective pricing; and
``(E) 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.
``(i) 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, as a result of multiple registrations under this Act--
``(A) to establish a process for resolving
conflicts of interest;
``(B) to require disclosure by a digital commodity
broker or digital commodity dealer of any material
incentives or conflicts of interest that the digital
commodity broker or digital commodity dealer is unable
to resolve, as the Commission may determine to be
appropriate; and
``(C) to address such other issues as the
Commission determines by rule or regulation to be
necessary in the public interest.
``(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.
``(j) 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, who shall be solely responsible
to the digital commodity broker or digital commodity dealer and
not to any other affiliated entity or other entity regulated
under this Act.
``(2) Duties.--The chief compliance officer of a registered
digital commodity broker or a registered digital commodity
dealer 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 that
shall be prescribed by the Commission, the chief
compliance officer of a registered digital commodity
broker or a registered digital commodity dealer 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.
``(k) 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 (c); or
``(iii) otherwise so required by the
Commission to reasonably protect customers and
customer assets 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 high-
quality liquid asset that the Commission may by rule or
regulation allow.
``(4) Customer protection during bankruptcy.--
``(A) Customer property.--All assets held on behalf
of a customer by a digital commodity broker or digital
commodity dealer, and all money, assets, and property
of any customer received by a digital commodity broker
or digital commodity dealer 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 purchase, sale, loan of,
margin loan or other extension of credit on,
repurchase, reverse repurchase, or other transaction
involving a unit of a digital commodity occurring with
a digital commodity broker or digital commodity dealer
shall be considered--
``(i) 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, section 11 of the
Federal Deposit Insurance Act (12 U.S.C. 1821),
and section 210 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (12 U.S.C.
5390); and
``(ii) a `commodity contract' for purposes
of section 5(b)(2)(C) of the Securities
Investor Protection Act of 1970 (15 U.S.C.
78eee(b)(2)(C)).
``(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, section
11 of the Federal Deposit Insurance Act (12 U.S.C.
1821), and section 210 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (12 U.S.C. 5390).
``(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 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, 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 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
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 written disclosure
requirements and any other limitations and
rules related to a permission provided under
subparagraph (A) or the treatment of customer
assets in the event of an insolvency,
resolution, or liquidation proceeding,
including a description of the manner in which
any digital commodity would be treated in an
insolvency, resolution, or liquidation
proceeding, and how the treatment of digital
commodities differs from the treatment of any
other assets in the event of an insolvency,
resolution, or liquidation proceeding, that are
reasonably necessary to protect customers,
including eligible contract participants, non-
eligible contract participants, and any other
class of customers.
``(ii) Customer choice.--A digital
commodity broker or digital commodity dealer
may not--
``(I) require a customer to provide
the permission referred to in
subparagraph (A) as a condition of
doing business with the digital
commodity broker or digital commodity
dealer; or
``(II) penalize a customer for not
providing the permission referred to in
subparagraph (A).
``(C) Requirements.--The Commission may, by rule,
modify the requirements of paragraph (2) or subsection
(g) 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 required for the
ongoing operation of a blockchain system.
``(7) Property held in portfolio margin accounts.--
``(A) In general.--Notwithstanding paragraph (2),
and the rules and regulations thereunder, and pursuant
to an exemption granted by the Commission under section
4(c) or pursuant to a rule or regulation--
``(i) a digital commodity broker or digital
commodity dealer registered under subsection
(b)(1) and also registered as a futures
commission merchant pursuant to section
4f(a)(1) may, pursuant to a portfolio margining
program approved by the Commission, hold
digital commodity customer money, assets, and
property in a portfolio margining account
carried as a futures account or cleared swaps
account; and
``(ii) a digital commodity broker or
digital commodity dealer registered under
subsection (b)(1) and also registered as a
broker or dealer pursuant to section 15(b)(1)
of the Securities Exchange Act of 1934 (15
U.S.C. 78o(b)(1)) may, pursuant to a portfolio
margining program approved by the Securities
and Exchange Commission pursuant to section
19(b) of that Act (15 U.S.C. 78s(b)), hold
digital commodity customer money, assets, and
property in a portfolio margining account
carried as a securities account subject to
section 15(c)(3) of that Act (15 U.S.C.
78o(c)(3)) and the rules and regulations
thereunder.
``(B) Consultation.--The Commission shall consult
with the Securities and Exchange Commission to adopt
rules to ensure that such transactions and accounts are
subject to comparable requirements to the extent
practical for similar products.
``(l) Federal Preemption.--
``(1) In general.--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.
``(2) Preservation of authority.--Nothing in this
subsection shall affect the ability of a State or local agency
to investigate and bring enforcement actions regarding fraud,
deceit, or unfair or deceptive acts or practices.
``(m) 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) the exemption--
``(A) would be consistent with the public interest
and the purposes of this Act; and
``(B) 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.
``(n) Regulations.--The Commission shall prescribe such rules and
regulations as are appropriate for the implementation of this
section.''.
SEC. 206. REGISTRATION OF ASSOCIATED PERSONS.
(a) In General.--Section 4k of the Commodity Exchange Act (7 U.S.C.
6k) is amended by adding at the end the following:
``(7) Associated persons of digital commodity brokers and
digital commodity dealers.--
``(A) In general.--It shall be unlawful for any
person to act as an associated person of a digital
commodity broker or an associated person of a digital
commodity dealer unless the person is registered with
the Commission under this Act and such registration
shall not have expired, been suspended (and the period
of suspension has not expired), or been revoked.
``(B) Duty of digital commodity brokers and
dealers.--It shall be unlawful for a digital commodity
broker or a digital commodity dealer to permit a person
described in subparagraph (A) to become or remain
associated with the digital commodity broker or digital
commodity dealer if the digital commodity broker or
digital commodity dealer knew or should have known that
the person was not so registered or that the
registration had expired, been suspended (and the
period of suspension has not expired), or been
revoked.''.
(b) Application.--Section 4k(4) of the Commodity Exchange Act (7
U.S.C. 6k(4)) is amended, in the first sentence, by striking ``or of a
commodity trading advisor'' and inserting ``of a commodity trading
advisor, of a digital commodity broker, or of a digital commodity
dealer''.
SEC. 207. SOFTWARE DEVELOPER PROTECTIONS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
inserting after section 4u (as added by section 205) the following:
``SEC. 4V. APPLICATION TO SOFTWARE DEVELOPERS.
``(a) In General.--Notwithstanding any other provision of this Act,
except as provided in subsection (b), 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, 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, 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. 208. PORTFOLIO MARGINING.
(a) In General.--Section 4d(h) of the Commodity Exchange Act (7
U.S.C. 6d(h)) is amended in the first sentence--
(1) by inserting ``or subsection (f)(2)'' after
``subsection (a)(2)''; and
(2) by inserting ``or a cleared swap'' after ``an option on
such a contract''.
(b) Commodity Broker Debtors.--Section 20(c) of the Commodity
Exchange Act (7 U.S.C. 24(c)) is amended--
(1) by inserting ``and digital commodities'' after
``securities''; and
(2) by inserting ``or cleared swaps account'' after
``futures account''.
SEC. 209. CLARIFICATION ON CUSTOMER PROPERTY.
Section 20(a) of the Commodity Exchange Act (7 U.S.C. 24(a)) is
amended--
(1) in paragraph (4), by striking ``and'' at the end;
(2) in paragraph (5), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(6) that cash, securities, or other property oOfficial legislative text sourced from the public record (cached on CivicsHQ). Display truncated for length.
Official source
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Status
In Committee
- 1Introduced
- 2Committee
- 3Floor
- 4Passed
- 5Signed
Timeline reflects current normalized status only. Full action history is not yet stored in the API.
Sponsors
- Sen. Boozman, John [R-AR]RSenateAR
Cosponsors
No cosponsors on record.
Votes
Voting records are not yet available for this bill.