H.R. 3633 — what changed

“(iii) digital commodity;”

“(B) Exclusion—For purposes of this paragraph, the term trading in commodity interests shall not include transacting in digital commodities for the purpose of—

“(i) acting as a digital commodity custodian;

“(ii) establishing, maintaining, or managing inventory or payment instruments for commercial purposes; or

“(iii) maintaining or supporting the operation of, or validating transactions on, a blockchain system.”

“(III) digital commodity;”

“(B) Exclusion—For purposes of this paragraph, the term trading in commodity interests shall not include transacting in digital commodities for the purpose of—

“(i) acting as a digital commodity custodian;

“(ii) establishing, maintaining, or managing inventory or payment instruments for commercial purposes; or

“(iii) maintaining or supporting the operation of, or validating transactions on, a blockchain system.”

“(III) a digital commodity;”

“(16) Terms related to digital commodities

“(A) Associated person of a digital commodity broker

“(i) In general—Except as provided in clause (ii), 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.

“(ii) 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.

“(B) Associated person of a digital commodity dealer

“(i) In general—Except as provided in clause (ii), 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.

“(ii) 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.

“(C) Bank Secrecy Act—The term Bank Secrecy Act means—

“(i) section 21 of the Federal Deposit Insurance Act (12 U.S.C. 1829b);

“(ii) chapter 2 of title I of Public Law 91–508 (12 U.S.C. 1951 et seq.); and

“(iii) subchapter II of chapter 53 of title 31, United States Code.

“(D) Decentralized finance messaging system

“(i) 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 for the purpose of executing a transaction by the user.

“(ii) Additional requirements—The term decentralized finance messaging system does not include any system that provides any person other than the user with control over—

“(I) the funds of the user; or

“(II) the execution of the transaction of the user.

“(E) Decentralized finance trading protocol

“(i) 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 non-discretionary; and

“(II) without reliance on any other person to maintain control of the digital assets of the user during any part of the financial transaction.

“(ii) Exclusions

“(I) In general—The term decentralized finance trading protocol does not include a blockchain system if—

changed “(aa) a person or group of persons under common control or acting pursuant to an agreement to act in concert has the unilateral authority, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, to control or materially alter the functionality, operation, or rules of consensus or agreement of the blockchain system; or

changed “(bb) the blockchain system does not operate, execute execute, and enforce its operations and transactions based solely on pre-established, transparent rules encoded directly within the source code of the blockchain system.

changed “(II) Special rule—For purposes of subclause (I), a decentralized governance system shall not be considered to be a person or a group of persons under common control.control or acting pursuant to an agreement to act in concert.

“(F) Digital commodity

“(i) In general—The term digital commodity means a digital asset that is intrinsically linked to a blockchain system, and the value of which is derived from or is reasonably expected to be derived from the use of the blockchain system.

“(ii) Relationship to a blockchain system—For purposes of this subparagraph, a digital asset is intrinsically linked to a blockchain system if the digital asset is directly related to the functionality or operation of the blockchain system or to the activities or services for which the blockchain system is created or utilized, including where the digital asset is—

“(I) issued or generated by the programmatic functioning of the blockchain system;

“(II) used to transfer value between participants in the blockchain system;

“(III) used to access the activities or services of the blockchain system;

“(IV) used to participate in the decentralized governance system of the blockchain system;

“(V) used or removed from circulation in whole or in part to pay fees or otherwise verify or validate transactions on the blockchain system;

“(VI) used as payment or incentive to participants in the blockchain system to engage in the activities of the blockchain system, provide services to other participants in the blockchain system, or otherwise participate in the functionality of the blockchain system; or

“(VII) used as payment or incentive to participants in the blockchain system to validate transactions, secure the blockchain system, provide computational services, maintain or distribute information, or otherwise participate in the operations of the blockchain system.

“(iii) Exclusion—The term digital commodity does not include any of the following:

“(I) Security

“(aa) Any security, other than a note, an investment contract, or a certificate of interest or participation in any profit-sharing agreement.

changed “(bb) A note, an investment contract, or a certificate of interest or participation in any profit-sharing agreement that represents or gives the holder an ownership interest or other interest in the revenues, profits, obligations, debts, assets, or assets or debts to be acquired of the issuer of the digital asset or another person (other than a decentralized governance system).that—

added “(AA) represents or gives the holder an ownership interest or other interest in the revenues, profits, obligations, debts, assets, or assets or debts to be acquired of the issuer of the digital asset or another person (other than a decentralized governance system);

added “(BB) makes the holder a creditor of the issuer of the digital asset or another person; or

added “(CC) represents or gives the holder the right to receive interest or the return of principal from the issuer of the digital asset or another person.

“(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—

“(aa) a security future, as defined in section 2a of the Securities Act of 1933;

“(bb) a security-based swap, as defined in section 2a of the Securities Act of 1933;

“(cc) 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), as defined in section 2a of the Securities Act of 1933; or

“(dd) a put, call, straddle, option, or privilege on any security, as defined in section 2a of the Securities Act of 1933.

“(III) Permitted payment stablecoin—A digital asset that is a permitted payment stablecoin.

“(IV) Banking deposit

“(aa) A deposit (as defined under section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)), regardless of the technology used to record the deposit.

“(bb) 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—

“(aa) an agricultural commodity;

“(bb) an excluded commodity, other than a security; or

“(cc) 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—

“(aa) a contract of sale of a commodity for future delivery or an option thereon;

“(bb) a security futures product;

“(cc) a swap;

“(dd) an agreement, contract, or transaction described in section 2(c)(2)(C)(i) or 2(c)(2)(D)(i);

“(ee) a commodity option authorized under section 4c; or

“(ff) a leverage transaction authorized under section 19.

“(VII) Pooled investment vehicle

“(aa) In general—A digital asset that, based on its terms and other characteristics, is, represents, or is functionally equivalent to—

“(AA) a commodity pool, as defined in this Act; or

“(BB) a pooled investment vehicle.

added “(bb) Pooled investment vehicle defined—In this subclause, the term pooled investment vehicle means—

added “(AA) any investment company as defined in section 3(a) of the Investment Company Act of 1940 (15 U.S.C. 80a–3(a));

added “(BB) any company that would be an investment company under section 3(a) of such Act but for the exclusion provided from that definition by paragraph (1), (7), or (9) of section 3(c) of such Act (15 U.S.C. 80a–3(c)(1), (7), or (9)); or

added “(CC) any entity or person that is not an investment company but holds or will hold assets other than securities.

added “(VIII) Good, collectible, and other non-commodity asset—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, such as—

removed “(bb) Pooled investment vehicle defined—In this subclause, the term pooled investment vehicle means any investment company as defined in section 3(a) of the Investment Company Act of 1940 (15 U.S.C. 80a–3(a)) or any company that would be an investment company under section 3(a) of such Act but for the exclusion provided from that definition by paragraph (1), (7), or (9) of section 3(c) of such Act (15 U.S.C. 80a–3(c)(1), (7), or (9)).

removed “(VIII) Good, collectible, and other non-commodity asset—A digital asset that has inherent value, utility, or significance beyond its mere existence as a digital asset, including the digital equivalent of a tangible or intangible good, such as—

“(aa) a work of art, a musical composition, a literary work, or other intellectual property;

“(bb) collectibles, merchandise, virtual land, and video game assets;

“(cc) affinity, rewards, or loyalty points, including airline miles or credit card points, that are not primarily speculative in nature; or

“(dd) rights, licenses, and tickets.

“(iv) Rule of construction—No presumption shall exist that a digital asset is a security, nor shall a digital asset be excluded from being a digital commodity pursuant to clause (iii)(I), solely due to—

added “(I) the digital asset providing voting or economic rights with respect to the blockchain system to which the digital asset relates or the decentralized governance system of the blockchain system to which the digital asset relates;

added “(II) the value of the digital asset having the potential to appreciate or depreciate in response to the efforts, operations, or financial performance of the blockchain system to which the digital asset relates or the decentralized governance system of the blockchain system to which the digital asset relates; or

added “(III) the value of the digital asset appreciating or depreciating due to the use of the blockchain system to which the digital asset relates or the decentralized governance system of the blockchain system to which the digital asset relates.

removed “(I) the digital asset providing voting or economic rights with respect to the blockchain system to which the digital asset relates or the decentralized governance system of the blockchain system;

removed “(II) the value of the digital asset having the potential to appreciate or depreciate in response to the efforts, operations, or financial performance of the decentralized governance system of the blockchain system to which the digital asset relates; or

removed “(III) the value of the digital asset appreciating or depreciating due to the adoption and use of the blockchain system to which the digital asset relates or the decentralized governance system of the blockchain system.

“(G) Digital commodity broker

“(i) In general—The term digital commodity broker means any person who, as a regular business—

“(I) is engaged in—

“(aa) soliciting or accepting an order from a customer for—

“(AA) the purchase or sale of a digital commodity; or

“(BB) an agreement, contract, or transaction described in section 2(c)(2)(D)(iv); and

“(bb) in conjunction with the activities in item (aa), accepts or maintains control over—

“(AA) the funds of any customer; or

“(BB) the execution of any transaction of a customer;

“(II) is engaged in soliciting or accepting orders from a customer for the purchase or sale of a unit of a digital commodity on or subject to the rules of a registered entity; or

“(III) is registered with the Commission as a digital commodity broker.

“(ii) Exceptions—The term ‘digital commodity broker’ does not include a person solely because the person—

“(I) solicits or accepts an order described in clause (i)(I)(aa)(AA) from a customer who is an eligible contract participant;

added “(II) 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

removed “(II) enters into a digital commodity transaction the primary purpose of which is to make, send, receive, or facilitate payments, whether involving a payment service provider or on a peer-to-peer basis; or

“(III) is a bank (as defined under section 3(a) of the Securities Exchange Act of 1934) engaging in certain banking activities with respect to a digital commodity in the same or a similar manner as a bank is excluded from the definition of a broker under such section, as determined by the Commission.

“(iii) 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 will effectuate the purposes of this Act.

“(H) Digital commodity dealer

“(i) In general—The term digital commodity dealer means any person who, as a regular business—

“(I) is, or offers to be a counterparty to a person for the purchase or sale of a digital commodity as a regular business, and in conjunction with the activities, accepts or maintains control over the funds of any counterparty; or

“(II) is registered with the Commission as a digital commodity dealer.

“(ii) Exception—The term digital commodity dealer does not include a person solely because the person—

“(I) is or offers to be a counterparty to a person who is an eligible contract participant;

“(II) enters into a digital commodity transaction with an eligible contract participant;

“(III) enters into a digital commodity transaction on or through a registered digital commodity exchange, with a registered digital commodity broker, or through a decentralized finance trading protocol;

“(IV) enters into a digital commodity transaction for the person’s own account, either individually or in a fiduciary capacity, but not as a part of a regular business;

added “(V) 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

removed “(V) enters into a digital commodity transaction the primary purpose of which is to make, send, receive, or facilitate payments, whether involving a payment service provider or on a peer-to-peer basis; or

“(VI) is a bank (as defined under section 3(a) of the Securities Exchange Act of 1934) 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 such Act, as determined by the Commission.

“(iii) 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 will effectuate the purposes of this Act.

“(I) 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.

“(J) Mixed digital asset transaction—The term mixed digital asset transaction means a transaction in which a digital commodity is traded for a security.

“(K) Terms defined under the Securities Act of 1933—The terms blockchain system, decentralized governance system, digital asset, digital commodity issuer, digital commodity affiliated person, digital commodity related person, end user distribution, mature blockchain system, and permitted payment stablecoin have the meaning given those terms, respectively, under section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)).”

“(G) a digital commodity exchange registered under section 5i.”

“(J) Except as expressly provided in this Act, nothing in the CLARITY Act of 2025 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—

“(I) a contract of sale of a commodity for future delivery or an option on such a contract;

“(II) a swap;

“(III) a security futures product;

“(IV) an option authorized under section 4c of this Act;

“(V) an agreement, contract, or transaction described in subparagraph (C)(i) or (D)(i) of subsection (c)(2) of this section; or

“(VI) a leverage transaction authorized under section 19; or

“(ii) the activities of any person with respect to any such an agreement, contract, or transaction.”

“(H) permitted payment stablecoins.”

added “(iv) Agreements for margin financing—Notwithstanding clause (iii), a digital commodity broker may, subject to the requirements of section 4u(c)(2), offer to or enter into an agreement for margin financing with a customer for the purchase or sale of a digital commodity, provided any purchase or sale made pursuant to the agreement shall result in the delivery of the digital commodity into or from an account carried for the customer, as determined by the Commission by rule or regulation, based on commercial spot market practices.”

removed “(iv) Notwithstanding clause (iii), a digital commodity broker may, subject to the requirements of section 4u(c)(3), offer to or enter into an agreement for margin financing with a customer for the purchase or sale of a digital commodity.”

“(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 an appropriate Federal banking agency or a State bank supervisor (within the meaning of section 3 of the Federal Deposit Insurance Act); or

“(II) an offer or sale of an investment contract involving a digital commodity or of a securities offer or sale involving a digital commodity.

“(iii) Mixed digital asset transactions

“(I) In general—Clause (i) shall not apply to a mixed digital asset transaction.

“(II) Reports on mixed digital asset transactions—A digital commodity issuer, digital commodity related person, digital commodity affiliated person, or other person registered with the Securities and Exchange Commission that engages in a mixed digital asset transaction, shall, on request of the Commission, open to inspection and examination by the Commission all books and records relating to the mixed digital asset transaction, subject to the confidentiality and disclosure requirements of section 8.

“(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, confirmed the execution of, solicited, or accepted—

“(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.”

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

“(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 shall make or rely on a certification under subsection (d) for the digital commodity.”

“(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

“(A) In general—In making a written certification under this paragraph, the eligible entity shall furnish to the Commission an analysis of how the digital commodity meets the requirements of section 5i(c)(3).

“(B) Reliance on prior disclosures—In making a certification under this subsection, an eligible entity may rely on the records and disclosures of any relevant person registered with the Securities and Exchange Commission or other State or Federal agency.

“(3) Modifications

“(A) In general—An eligible entity shall modify a certification made under paragraph (1) to—

“(i) account for significant changes in any information provided to the Commission under paragraph (2)(A)(ii); or

“(ii) permit or restrict trading in units of a digital commodity held by a digital commodity related person or a digital commodity affiliated person.

“(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 through notice to the eligible entity that there are novel or complex issues that require additional time to analyze, that the explanation by the submitting eligible entity is inadequate, or of a potential inconsistency with this Act—

“(i) once, for 30 business days, through written notice to the eligible entity by the Commission; 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 deficiencies with the certification, including any—

“(I) novel or complex issues which 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 unless the Commission finds that the listing is inconsistent with this Act (including any regulation 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 paragraph.

“(7) Eligible entity defined—In this subsection, the term eligible entity means a registered entity or group of registered entities acting jointly.”

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

“5i. Registration of digital commodity exchanges

“(a) In general

“(1) Registration

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

“(B) Application—A person desiring to register as a digital commodity exchange shall submit to the Commission an application in such form and containing such information as the Commission may require for the purpose of making the determinations required for approval.

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

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

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

“(2) Additional registrations

“(A) With the Commission—In order to foster the development of fair and orderly markets, protect customers, and promote responsible innovation, the Commission—

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

“(ii) shall prescribe rules to address conflicts of interests and activities of the entity; and

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

“(B) With a registered futures association

changed “(i) In general—A registered digital commodity exchange shall also be become and remain a member of a registered futures association and comply with rules related to such activity, if the registered digital commodity exchange accepts customer funds required to be segregated under subsection (d).

“(ii) Rulemaking required—The Commission shall require any registered futures association with a digital commodity exchange as a member to provide such rules as may be necessary to further compliance with subsection (d), protect customers, and promote the public interest.

“(C) Registration required—A person required to be registered as a digital commodity exchange under this section shall register with the Commission as such regardless of whether the person is registered with another State or Federal regulator.

“(b) Trading

“(1) Prohibition on certain trading practices

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

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

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

“(2) Prohibition on acting as a counterparty

“(A) In general—A digital commodity exchange or any affiliate of such an exchange shall not trade on or subject to the rules of the digital commodity exchange for its own account.

changed “(B) Exceptions—The Commission shall, by rule, permit a digital commodity exchange or Exceptions—Subject to any affiliate of conditions, requirements, or limitations imposed by the Commission pursuant to subparagraph (C), a digital commodity exchange to may engage in trading on the exchange so long as the trading is not solely for the purpose of the profit of the exchange, including the following:

“(i) Customer direction—A transaction for, or entered into at the direction of, or for the benefit of, an unaffiliated customer.

“(ii) Risk management—A transaction to manage the credit, market, and liquidity risks associated with the digital commodity business of the exchange.

“(iii) Operational needs—A transaction related to the operational needs of the business of the digital commodity exchange or its affiliate.

“(iv) Functional use—A transaction related to the functional operation of a blockchain system.

changed “(C) Notice requirement—In order for a digital commodity exchange Rulemaking—The Commission may, by rule, establish conditions, requirements, or any affiliate other limitations on the activities of a digital commodity exchange to engage in trading on the affiliated exchange and its affiliate permitted pursuant to subsection (B), notice must be given to the Commission subparagraph (B) that shall enumerate how any proposed activity is consistent with are necessary for the exceptions in subsection (B) and protection of customers, the purposes promotion of this Act.innovation, or the maintenance of fair, orderly, and efficient markets.

added “(D) Notice requirement—In order for a digital commodity exchange or any affiliate of a digital commodity exchange to engage in trading on the affiliated exchange pursuant to subsection (B), notice must be given to the Commission that shall enumerate how any proposed activity is consistent with the exceptions in subsection (B) and the purposes of this Act.

“(c) Core principles for digital commodity exchanges

“(1) Compliance with core principles

“(A) In general—To be registered, and maintain registration, as a digital commodity exchange, a digital commodity exchange shall comply with—

“(i) the core principles described in this subsection; and

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

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

“(2) Compliance with rules—A digital commodity exchange shall—

“(A) establish and enforce compliance with any rule of the digital commodity exchange, including—

“(i) the terms and conditions of the trades traded or processed on or through the digital commodity exchange; and

“(ii) any limitation on access to the digital commodity exchange;

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

“(i) to provide market participants with impartial access to the market; and

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

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

“(3) Listing standards for digital commodities

removed “(A) In general—A digital commodity exchange shall not permit trading in a digital commodity unless—

changed “(i) reports with respect to the “(A) In general—A digital commodity required under section 4B(b)(3) of the Securities Act of 1933 (or, with respect exchange shall establish policies and procedures to permit trading in a digital commodity not issued in reliance on section 4(a)(8) of the Securities Act of 1933, a comparable set of reports, where required by the Securities and Exchange Commission) have been filed with the Securities and Exchange Commission; oronly if—

changed “(ii) the blockchain system “(i) reports with respect to which the digital commodity relates, together with the digital commodity, is certified required under, as applicable, section 4B(b)(3) or 4B(b)(5)(C) of the Securities Act of 1933 (or, with respect to a mature blockchain system under digital commodity not issued in reliance on section 42 4(a)(8) of the Securities Exchange Act of 1934.1933, a comparable set of reports, where required by the Securities and Exchange Commission) have been filed with the Securities and Exchange Commission;

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

added “(iii) the blockchain system to which the digital commodity relates, together with the digital commodity, is certified as a mature blockchain system under section 42 of the Securities Exchange Act of 1934.

“(B) Public information requirements

added “(i) In general—A digital commodity exchange shall—

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

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

added “(ii) Required information—With respect to a digital commodity and each blockchain system to which the digital commodity relates for which the digital commodity exchange will make the digital commodity available to the customers of the digital commodity exchange, the following information:

removed “(i) In general—A digital commodity exchange shall permit trading only in a digital commodity if the information required in clause (ii) is correct, current, and available to the public.

removed “(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 in this clause is as follows:

“(I) Source code—The source code for any blockchain system to which the digital commodity relates.

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

“(III) Digital commodity economics—A narrative description of the purpose of any blockchain system to which the digital commodity relates and the operation of any such blockchain system, including—

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

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

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

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

“(IV) Trading volume and volatility—The trading volume and volatility of the digital commodity on the exchange.

“(V) Additional information—Such additional information as the Commission may determine by rule to be necessary for a customer to understand the financial and operational risks of a digital commodity, and to be practically feasible to provide.

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

“(I) be conspicuous;

added “(II) use plain language comprehensible to customers;

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

added “(IV) succinctly explain the information that is required to be communicated to the customer.

removed “(II) use plain language comprehensible to customers; and

removed “(III) succinctly explain the information that is required to be communicated to the customer.

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

added “(C) Digital commodities held by related and digital commodity affiliated persons—A digital commodity exchange shall establish policies and procedures designed to permit the trading of a unit of a digital commodity acquired from the issuer and held by a digital commodity affiliated person or a digital commodity related person, only in accordance with the requirements of section 4C of the Securities Act of 1933.

removed “(C) Digital commodities held by related and digital commodity affiliated persons—A digital commodity exchange shall permit the trading of a unit of a digital commodity held by a digital commodity affiliated person or a digital commodity related person, only pursuant to section 4C of the Securities Act of 1933.

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

“(5) Monitoring of trading and trade processing

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

“(B) Protection of markets and market participants—A digital commodity exchange shall establish and enforce rules—

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

“(ii) to promote fair and equitable trading on the exchange.

“(C) Trading procedures—A digital commodity exchange shall—

“(i) establish and enforce rules or terms and conditions defining, or specifications detailing—

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

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

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

“(6) Ability to obtain information—A digital commodity exchange shall—

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

“(B) provide the information to the Commission on request; and

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

“(7) Emergency authority—A digital commodity exchange shall adopt rules to provide for the exercise of emergency authority, in consultation or cooperation with the Commission or a registered entity, as is necessary and appropriate, including the authority to facilitate the liquidation or transfer of open positions in any digital commodity or to suspend or curtail trading in a digital commodity.

“(8) Timely publication of trading information

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

“(B) Capacity of digital commodity exchange—A digital commodity exchange shall have the capacity to electronically capture and transmit trade information with respect to transactions executed on the exchange.

“(9) Recordkeeping and reporting

“(A) In general—A digital commodity exchange shall—

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

removed “(i) maintain records relating to the operation of the exchange, including a complete audit trail, in a form and manner acceptable to the Commission for a period of 5 years;

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

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

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

“(i) the Board;

“(ii) the Securities and Exchange Commission;

“(iii) each appropriate Federal banking agency;

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

“(v) the Financial Stability Oversight Council;

“(vi) the Department of Justice; and

“(vii) any other person that the Commission determines to be appropriate, including—

“(I) foreign financial supervisors (including foreign futures authorities);

“(II) foreign central banks; and

“(III) foreign ministries.

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

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

“(10) Antitrust considerations—Unless necessary or appropriate to achieve the purposes of this Act, a digital commodity exchange shall not—

“(A) adopt any rules or take any actions that result in any unreasonable restraint of trade; or

“(B) impose any material anticompetitive burden on trading.

“(11) Conflicts of interest—The digital commodity exchange shall establish and enforce rules—

“(A) to minimize conflicts of interest in the decision making processes of the contract market; and

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

“(12) Financial resources

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

added “(B) Minimum amount of financial resources—A digital commodity exchange shall possess financial resources that, at a minimum, exceed the sum of—

removed “(B) Minimum amount of financial resources—A digital commodity exchange shall possess financial resources that, at a minimum, exceed—

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

“(ii) the total amount necessary to meet the financial obligations of the digital commodity exchange to all customers of the digital commodity exchange.

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

“(14) Governance fitness standards

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

“(B) Fitness standards—A digital commodity exchange shall establish and enforce appropriate fitness standards for—

“(i) officers and directors; and

“(ii) any individual or entity with direct access to, or control of, customer assets.

“(15) System safeguards—A digital commodity exchange shall—

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

“(i) are reliable and secure; and

“(ii) have adequate scalable capacity;

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

“(i) the timely recovery and resumption of operations; and

“(ii) the fulfillment of the responsibilities and obligations of the digital commodity exchange; and

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

“(i) order processing and trade matching;

“(ii) price reporting;

“(iii) market surveillance; and

“(iv) maintenance of a comprehensive and accurate audit trail.

“(d) Holding of customer assets

“(1) In general—A digital commodity exchange shall hold customer money, assets, and property in a manner to minimize the risk of loss to the customer or unreasonable delay in customer access to the money, assets, and property of the customer.

added “(2) Segregation of funds

added “(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.

added “(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.

added “(C) Exceptions

removed “(A) Segregation of funds

removed “(i) 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.

removed “(ii) Commingling prohibited—Money, assets, and property of a customer described in clause (i) 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.

removed “(B) Exceptions

“(i) Use of funds

added “(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.

added “(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.

added “(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.

added “(3) Permitted investments—Money described in paragraph (2) may be invested in obligations of the United States, in general obligations of any State or of any political subdivision of a State, and in obligations fully guaranteed as to principal and interest by the United States, or in any other investment that the Commission may by rule or regulation prescribe, and such investments shall be made in accordance with such rules and regulations and subject to such conditions as the Commission may prescribe.

added “(4) Customer protection during bankruptcy

removed “(I) In general—Notwithstanding subparagraph (A), money, assets, and property of customers of a digital commodity exchange 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.

removed “(II) Withdrawal—Notwithstanding subparagraph (A), such share of the money, assets, and property described in subclause (I) of this clause 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 of a digital commodity.

removed “(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 described in subparagraph (A) 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.

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

removed “(3) 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.

added “(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.

added “(5) Misuse of customer property

removed “(D) Assets removed from segregation—Assets removed from segregation due to a customer election under paragraph (5) shall not be considered customer property for purposes of section 761 of title 11, United States Code.

removed “(4) Misuse of customer property

“(A) In general—It shall be unlawful—

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

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

added “(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.

added “(6) Participation in blockchain services

added “(A) In general—A customer shall have the right to waive the restrictions in paragraph (2) for any unit of a digital commodity to be used under subparagraph (B) of this paragraph, by affirmatively electing, in writing to the digital commodity exchange, to waive the restrictions.

removed “(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 (5) 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.

removed “(5) Participation in blockchain services

removed “(A) In general—A customer shall have the right to waive the restrictions in paragraph (1) for any unit of a digital commodity to be used under subparagraph (B), by affirmatively electing, in writing to the digital commodity exchange, to waive the restrictions.

“(B) Use of funds—Customer digital commodities removed from segregation under subparagraph (A) may be pooled and used by the digital commodity exchange or its designee to provide a blockchain service for a blockchain system to which the unit of the digital asset removed from segregation in subparagraph (A) relates.

“(C) Limitations

“(i) In general—The Commission shall, by rule, establish notice and disclosure requirements, and may, by rule, establish any other limitations and rules related to the waiving of any restrictions under this paragraph that are reasonably necessary to protect customers, including eligible contract participants, non-eligible contract participants, or any other class of customers.

“(ii) Customer choice—A digital commodity exchange may not require a waiver from a customer described in subparagraph (A) as a condition of doing business on the exchange.

added “(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.

removed “(D) Blockchain service defined—In this subparagraph, 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.

“(e) Market access requirements—The Commission may, by rule, impose any additional requirements related to the operations and activities of the digital commodity exchange and an affiliated digital commodity broker necessary to protect market participants, promote fair and equitable trading on the digital commodity exchange, and promote responsible innovation.

“(f) Designation of chief compliance officer

“(1) In general—A digital commodity exchange shall designate an individual to serve as a chief compliance officer.

“(2) Duties—The chief compliance officer shall—

“(A) report directly to the board or to the senior officer of the exchange;

“(B) review compliance with the core principles in this subsection;

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

“(D) establish and administer the policies and procedures required to be established pursuant to this section;

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

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

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

“(4) Annual reports

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

“(i) the compliance of the digital commodity exchange with this Act; and

“(ii) the policies and procedures, including the code of ethics and conflicts of interest policies, of the digital commodity exchange.

“(B) Requirements—The chief compliance officer shall—

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

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

“(g) Appointment of trustee

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

“(2) Assumption of jurisdiction—If the Commission applies for appointment of a trustee under paragraph (1)—

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

“(B) if the court takes jurisdiction under subparagraph (A), the court shall appoint the Commission, or a person designated by the Commission, as trustee with power to take possession and continue to operate or terminate the operations of the digital commodity exchange in an orderly manner for the protection of customers subject to such terms and conditions as the court may prescribe.

“(h) Qualified digital asset custodian—A digital commodity exchange shall hold in a qualified digital asset custodian each unit of a digital asset that is—

“(1) the property of a customer of the digital commodity exchange;

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

“(3) otherwise so required by the Commission to reasonably protect customers.

“(i) Exemptions

added “(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 registered digital commodity exchange) exempt, either unconditionally or on stated terms or conditions or for stated periods and either retroactively or prospectively, or both, a registered digital commodity exchange from the requirements of this section, if the Commission determines that—

removed “(1) In order to promote responsible innovation and fair competition, or protect customers, the Commission may (on its own initiative or on application of the registered digital commodity exchange) exempt, either unconditionally or on stated terms or conditions or for stated periods and either retroactively or prospectively, or both, a registered digital commodity exchange from the requirements of this section, 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.

added “(2) Foreign exchanges—The Commission may exempt, conditionally or unconditionally, a digital commodity exchange from registration under this section if the Commission finds that the digital commodity exchange is subject to comparable, comprehensive supervision and regulation on a consolidated basis by the appropriate governmental authorities in the home country of the facility.

removed “(2) The Commission may exempt, conditionally or unconditionally, a digital commodity exchange from registration under this section if the Commission finds that the digital commodity exchange is subject to comparable, comprehensive supervision and regulation on a consolidated basis by the appropriate governmental authorities in the home country of the facility.

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

“(k) Federal preemption—Notwithstanding any other provision of law, the Commission shall have exclusive jurisdiction over any digital commodity exchange registered under this section with respect to activities and transactions subject to this Act.”

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

“5j. Qualified digital asset custodians

“(a) In general—A person is a qualified digital asset custodian for purposes of this Act if the person—

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

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

“(b) Supervision requirement—A person is in compliance with this subsection if the person is subject to—

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

“(2) adequate supervision and appropriate regulation for custody and safekeeping of digital assets by—

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

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

“(C) an appropriate foreign governmental authority in the home country of the digital commodity custodian.

“(c) Other requirements—A person shall be in compliance with this subsection if:

“(1) Not otherwise prohibited—The person has not been prohibited by its supervisor from engaging in an activity with respect to the custody and safekeeping of digital assets.

“(2) Information sharing

“(A) In general—The person shares information with the Commission on request and complies with such requirements for periodic sharing of information regarding customer accounts that the person holds on behalf of an entity registered with the Commission as the Commission determines by rule are reasonably necessary to effectuate any of the provisions, or to accomplish any of the purposes, of this Act.

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

“(C) Rulemaking for CFTC entities

“(i) In general—The Commission shall prescribe rules to permit a person registered with the Commission to be a qualified digital asset custodian in compliance with this section.

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

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

“(II) establish sufficient system safeguards;

“(III) prevent or mitigate conflicts of interest, as appropriate; and

“(IV) establish separate governance arrangements for the custodial function of the entity.

“(d) Adequate supervision and appropriate regulation

“(1) In general—For purposes of subsection (b), the terms adequate supervision and appropriate regulation mean such minimum standards for supervision and regulation as are reasonably necessary to protect the digital assets held by a person registered under this Act, including standards relating to the licensing, examination, and supervisory processes that require the person to, at a minimum—

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

“(B) hold capital sufficient for the financial integrity of the person;

“(C) protect customer assets;

“(D) establish and maintain books and records regarding the business of the person;

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

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

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

“(H) establish a business continuity plan to ensure functionality in cases of disruption; and

“(I) establish policies and procedures to resolve complaints.

“(2) Rulemaking with respect to definitions

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

“(B) Conditional treatment of certain custodians before rulemaking—Before the effective date of a rulemaking under subparagraph (A), a trust company is deemed subject to adequate supervision and appropriate regulation if—

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

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

“(iii) the trust company is in good standing with its State bank supervisor.

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

changed “(e) Authority To temporarily suspend standards—The Commission may, by rule or order, temporarily suspend, in whole or in part, any requirement imposed under, or any standard referred to in, this section 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.”

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

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

“(a) Registration

“(1) Requirement—It shall be unlawful for any person to act as a digital commodity broker or digital commodity dealer unless the person is registered as such with the Commission.

“(2) Additional registration

“(A) Rules—In order to foster the development of fair and orderly markets, protect customers, and promote responsible innovation, the Commission—

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

“(ii) shall prescribe rules to address conflicts of interests and the activities of the entity; and

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

changed “(B) With membership in a registered futures association—Any person required to be registered as a digital commodity broker or digital commodity dealer under this section shall be become and remain a member of a registered futures association.

“(b) Requirements

“(1) In general—A person shall register as a digital commodity broker or digital commodity dealer by filing a registration application with the Commission.

“(2) Contents

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

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

“(3) Statutory disqualification—Except to the extent otherwise specifically provided by rule, regulation, or order, it shall be unlawful for a digital commodity broker or digital commodity dealer to permit any person who is associated with a digital commodity broker or a digital commodity dealer and who is subject to a statutory disqualification to effect or be involved in effecting a contract of sale of a digital commodity on behalf of the digital commodity broker or the digital commodity dealer, respectively, if the digital commodity broker or digital commodity dealer, respectively, knew, or in the exercise of reasonable care should have known, of the statutory disqualification.

“(c) Rulemaking

“(1) In general—The Commission shall prescribe such rules applicable to registered digital commodity brokers and registered digital commodity dealers as are appropriate to carry out this section, including rules in the public interest that limit the activities of digital commodity brokers and digital commodity dealers.

“(2) Financing agreements

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

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

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

changed “(B) Specific authority—Except as prohibited in section 2(c)(2)(G)(iii), the Commission may also make, promulgate, and enforce such rules and regulations as, in the judgment of the Commission, are reasonably necessary to effectuate any of the provisions of, or to accomplish any of the purposes of, this Act in connection with an agreement referred to in subparagraph (A) of this paragraph, which may include, without limitation, requirements regarding registration with the Commission and membership in a registered futures association.paragraph.

“(d) Capital requirements

“(1) In general—Each digital commodity broker and digital commodity dealer shall meet such minimum capital requirements as the Commission may prescribe to address the risks associated with digital commodity trading and to ensure that the digital commodity broker or digital commodity dealer, respectively, is able, at all times, to—

“(A) meet, and continue to meet the obligations of such a registrant; and

“(B) fulfill obligations to customers or counterparties for any margined, leveraged, or financed transactions.

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

“(e) Reporting and recordkeeping—Each digital commodity broker and digital commodity dealer—

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

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

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

“(f) Daily trading records

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

“(2) Information requirements—The daily trading records shall include such information as the Commission shall require by rule or regulation.

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

“(4) Audit trail—Each digital commodity broker and digital commodity dealer shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions.

“(g) Business conduct standards

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

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

“(B) diligent supervision of the business of the registered digital commodity broker or digital commodity dealer, respectively; and

“(C) such other matters as the Commission deems appropriate.

“(2) Business conduct requirements—The Commission shall, by rule, prescribe business conduct requirements which—

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

changed “(i) information about the material risks and characteristics of the digital commodity;commodity; and

“(ii) information about the material risks and characteristics of the transaction;

“(B) establish a duty for such a digital commodity broker and such a digital commodity dealer to communicate in a fair and balanced manner based on principles of fair dealing and good faith;

“(C) establish standards governing digital commodity broker and digital commodity dealer marketing and advertising, including testimonials and endorsements; and

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

“(3) Prohibition on fraudulent practices—It shall be unlawful for a digital commodity broker or digital commodity dealer to—

“(A) employ any device, scheme, or artifice to defraud any customer or counterparty;

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

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

“(h) Duties

“(1) Risk management procedures—Each digital commodity broker and digital commodity dealer shall establish robust and professional risk management systems adequate for managing the day-to-day business of the digital commodity broker or digital commodity dealer, respectively.

“(2) Disclosure of general information—Each digital commodity broker and digital commodity dealer shall disclose to the Commission information concerning—

“(A) the terms and conditions of the transactions of the digital commodity broker or digital commodity dealer, respectively;

“(B) the trading operations, mechanisms, and practices of the digital commodity broker or digital commodity dealer, respectively;

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

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

“(3) Ability to obtain information—Each digital commodity broker and digital commodity dealer shall—

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

“(B) provide the information to the Commission, on request.

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

“(5) Antitrust considerations—Unless necessary or appropriate to achieve the purposes of this Act, a digital commodity broker or digital commodity dealer shall not—

“(A) adopt any process or take any action that results in any unreasonable restraint of trade; or

“(B) impose any material anticompetitive burden on trading or clearing.

“(i) Designation of chief compliance officer

“(1) In general—Each digital commodity broker and digital commodity dealer shall designate an individual to serve as a chief compliance officer.

“(2) Duties—The chief compliance officer shall—

“(A) report directly to the board or to the senior officer of the registered digital commodity broker or registered digital commodity dealer;

“(B) review the compliance of the registered digital commodity broker or registered digital commodity dealer with respect to the registered digital commodity broker and registered digital commodity dealer requirements described in this section;

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

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

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

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

“(i) compliance office review;

“(ii) look-back;

“(iii) internal or external audit finding;

“(iv) self-reported error; or

“(v) validated complaint; and

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

“(3) Annual reports

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

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

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

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

“(i) accompanies each appropriate financial report of the registered digital commodity broker or registered digital commodity dealer that is required to be furnished to the Commission pursuant to this section; and

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

“(j) Segregation of digital commodities

“(1) Holding of customer assets

“(A) In general—Each digital commodity broker and digital commodity dealer shall hold customer money, assets, and property in a manner to minimize the risk of loss to the customer or unreasonable delay in customer access to the money, assets, and property of the customer.

“(B) Qualified digital asset custodian—Each digital commodity broker and digital commodity dealer shall hold in a qualified digital asset custodian each unit of a digital asset that is—

“(i) the property of a customer or counterparty of the digital commodity broker or digital commodity dealer, respectively;

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

“(iii) otherwise so required by the Commission to reasonably protect customers or promote the public interest.

“(2) Segregation of funds

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

“(B) Commingling prohibited

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

“(ii) Exceptions

“(I) Use of funds

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

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

“(II) Commission action—In accordance with such terms and conditions as the Commission may prescribe by rule, regulation, or order, any money, assets, or property of the customers of a digital commodity broker or digital commodity dealer may be commingled and deposited in customer accounts with any other money, assets, or property received by the digital commodity broker or digital commodity dealer, respectively, and required by the Commission to be separately accounted for and treated and dealt with as belonging to the customer of the digital commodity broker or digital commodity dealer, respectively.

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

“(4) Customer protection during bankruptcy

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

changed “(B) Transactions—A transaction involving a unit of a digital commodity occurring with a digital commodity broker or digital commodity dealer shall be considered a “contract 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” trade for purposes of the definition of a “commodity contract” in section 761 of title 11, United States Code.

“(C) Brokers and dealers—A digital commodity broker and a digital commodity dealer shall be considered a futures commission merchant for purposes of section 761 of title 11, United States Code.

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

“(5) Misuse of customer property

“(A) In general—It shall be unlawful—

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

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

“(B) Use further defined—For purposes of this section, “use” of a digital commodity includes utilizing any unit of a digital asset to participate in a blockchain service defined in paragraph (6) or a decentralized governance system associated with the digital commodity or the blockchain system to which the digital commodity relates in any manner other than that expressly directed by the customer from whom the unit of a digital commodity was received.

“(6) Participation in blockchain services

“(A) In general—A customer shall have the right to waive the restrictions in paragraph (2) for any unit of a digital commodity to be used under subparagraph (B) of this paragraph, by affirmatively electing, in writing to the digital commodity broker or digital commodity dealer, to waive the restrictions.

“(B) Use of funds—Customer digital commodities removed from segregation under subparagraph (A) may be pooled and used by the digital commodity broker or digital commodity dealer, or one of their designees, to provide a blockchain service for a blockchain system to which the unit of the digital asset removed from segregation in subparagraph (A) relates.

“(C) Limitations

“(i) In general—The Commission shall, by rule, establish notice and disclosure requirements, and may, by rule, establish any other limitations and rules related to the waiving of any restrictions under this paragraph that are reasonably necessary to protect customers, including eligible contract participants, non-eligible contract participants, or any other class of customers.

“(ii) Customer choice—A digital commodity broker or digital commodity dealer may not require a waiver from a customer described in subparagraph (A) as a condition of doing business with the broker or dealer.

changed “(D) Blockchain service defined—In this subparagraph, 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.

changed “(k) Federal preemption—Notwithstanding any other provision of law, the Commission shall have exclusive jurisdiction over any digital commodity broker or digital commodity dealer registered under this section with respect to activities subject to this Act, except as provided in section 5k.Act.

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

“(1)

“(A) the exemption would be consistent with the public interest and the purposes of this Act; and

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

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

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

“4v. Decentralized finance activities not subject to this Act

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

“(1) Compiling network transactions or relaying, searching, sequencing, validating, or acting in a similar capacity.

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

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

changed “(4) Developing, publishing, constituting, administering, maintaining, or otherwise distributing a blockchain system or other than a decentralized finance trading protocol.

changed “(5) Developing, publishing, constituting, administering, maintaining, or otherwise distributing 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 contract of 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.”

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

“5k. Exemption for certain registered entities engaged in digital commodity activities

“(a) By alternative trading systems

“(1) In general—On receipt by the Commission from an alternative trading system of a written or electronic notice that contains such information as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors, the alternative trading system shall be exempt from registration as a digital commodity exchange pursuant to section 5i if—

“(A) the alternative trading system does not list any retail commodity transactions pursuant to section 2(c)(2)(D);

changed “(B) the provider, or an affiliate affiliated person of the provider, of the alternative trading system is not otherwise registered under this Act;

“(C) the alternative trading system lists or trades no other contracts of sale of commodities, except for digital commodities, currencies, and securities; and

“(D) the registration of the alternative trading system is not suspended pursuant to an order by the Securities and Exchange Commission.

“(2) Further requirements—An alternative trading system that provides notice to the Commission pursuant to paragraph (1) of this subsection shall be exempt from the requirements of section 5i to the extent that the alternative trading system—

“(A) is in compliance with requirements consistent with the requirements of section 5i and imposed on the alternative trading system by the Securities and Exchange Commission;

“(B) annually files with the Commission, in a form and manner acceptable to the Commission, a notice that demonstrates compliance with this paragraph and contains any other information the Commission determines to be necessary or appropriate to perform the duties of the Commission under this Act; and

“(C) has total trading volume in digital commodities during any calendar quarter in either of its 2 most recently completed fiscal years that does not exceed the lesser of—

“(i) 25 percent of the total trading volume for all transactions over the same period; or

“(ii) $50,000,000,000.

“(3) Enforcement—This subsection shall not be construed to limit any jurisdiction that the Commission may otherwise have under any other provision of this Act with respect to a contract of sale of a digital commodity or persons effecting contracts of sale of digital commodities.

“(b) By registered intermediaries

“(1) In general—On receipt by the Commission, from a broker or dealer that is registered with the Securities and Exchange Commission, of a written or electronic notice that contains such information as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors, the broker or dealer shall be exempt from registration as a digital commodity broker or digital commodity dealer pursuant to section 4u of this Act if—

changed “(A) the broker or dealer does not offer or engage in any retail commodity transactions pursuant to section 2(c)(2)(D) of this Act or other contracts of sale of commodities, except for digital commodities, currencies, and securities;Act;

changed “(B) the broker or dealer dealer, or an affiliated person of the broker or dealer, is not otherwise registered under this Act;

changed “(C) the broker or dealer is does not subject to a statutory disqualification, as defined under section 3(a) offer or engage in any other contracts of the Securities Exchange Act sale of 1934 (15 U.S.C. 78c(a)); andcommodities, except for digital commodities, currencies, and securities;

changed “(D) the broker or dealer is a member of a national securities association registered pursuant not subject to a statutory disqualification, as defined under section 15A 3(a) of the Securities Exchange Act of 1934.1934 (15 U.S.C. 78c(a)); and

added “(E) the broker or dealer is a member of a national securities association registered pursuant to section 15A of the Securities Exchange Act of 1934.

“(2) Further requirements—A broker or dealer that provides notice to the Commission pursuant to paragraph (1) shall be exempt from the requirements of section 4u to the extent that the broker or dealer—

“(A) is in compliance with requirements consistent with the requirements of section 4u and imposed on the broker or dealer by the Securities and Exchange Commission;

“(B) annually files with the Commission, in a form and manner acceptable to the Commission, a notice that demonstrates compliance with this subsection and contains any other information the Commission determines to be necessary or appropriate to perform the duties of the Commission under this Act; and

“(C) has consolidated annual gross financial revenues in either of its 2 most recently completed fiscal years from sales, commissions or other activities in digital commodities that do not exceed the lesser of—

“(i) 10 percent of the total annual gross revenues during the same period; or

“(ii) $100,000,000.

“(3) Enforcement—This subsection shall not be construed to limit any jurisdiction that the Commission may otherwise have under any other provision of this Act with respect to a contract of sale of a digital commodity and persons effecting contracts of sale of digital commodities.”

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

“4w. Limitation on transactions by blockchain control persons

“(a) Limitation—It shall be unlawful for a blockchain control person with respect to a blockchain system certified as a mature blockchain system in accordance with section 42 of the Securities Exchange Act of 1934 to sell a unit of a digital commodity related to the blockchain system unless the person files notice with the Commission, in a form and manner determined by the Commission, that the person has or intends to obtain an authority described in subsection (b)(1) with respect to the blockchain system, and complies with rules adopted by the Commission that require—

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

“(2)

“(A) the use of a digital commodity broker to effect the sale; or

changed “(B) such other sales restrictions applicable to the blockchain control person, or any of its digital commodity affiliated persons, blockchain control person, to prevent manipulation and distortion of the value of the digital commodity and promote further maturity of the blockchain system to which the digital commodity relates.

“(b) Definitions—In this section:

changed “(1) Blockchain control person—The term blockchain control person means, with respect to a blockchain system, any person or group of persons under common control control, other than a decentralized governance system, who—

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

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

changed “(2) Digital commodity affiliated Affiliated blockchain control person—The term digital commodity affiliated blockchain control person means any person directly or indirectly controlling, controlled by, or under common control with a blockchain control person, as the Commission by rule or regulation, may determine will effectuate the purposes of this section.”

changed Unless otherwise provided in this title, this title and the amendments made The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended by this title shall take effect 360 days after the date of the enactment preceding provisions of this Act, except that, to the extent a provision of this title requires a rulemaking, the provision shall take effect on is amended by inserting after section 4w the later of—following:

added “4x. Trading requirements for other tradable assets

added “(a) Limitation—A tradable asset shall not be offered, solicited, traded, facilitated, executed, cleared, reported, or otherwise dealt in, on or subject to the rules of a registered entity, or by any other entity registered with the Commission, except in accordance with subsection (b).

added “(b) Requirements

added “(1) Treatment of tradable assets—A tradable asset that is offered, solicited, traded, facilitated, executed, cleared, reported, or otherwise dealt in on or subject to the rules of a registered entity, or by any other entity registered with the Commission, shall be treated as a digital commodity for purposes of this Act.

added “(2) Additional rulemaking authority—In addition to the other requirements of this Act, the Commission may, by rule or regulation, impose additional obligations on any person registered under this Act offering, soliciting, trading, facilitating, executing, clearing, reporting, or otherwise dealing in a tradable asset, or class thereof, pursuant to paragraph (1) as are necessary for the protection of customers, the promotion of innovation, and the maintenance of fair, orderly, and efficient markets, including additional obligations related to—

added “(A) disclosure;

added “(B) recordkeeping;

added “(C) capital;

added “(D) reporting;

added “(E) business conduct;

added “(F) documentation;

added “(G) supervision of employees; and

added “(H) segregation.

added “(3) Prohibition on trading—A tradable asset, the primary purpose of which is to be used to commit fraud or market manipulation, or engage in any other conduct that would result in abusive practices or be disruptive to market integrity, shall not be offered, solicited, traded, facilitated, executed, cleared, reported, or otherwise dealt in on or subject to the rules of a registered entity, or by any other entity registered with the Commission.

added “(c) Tradable asset defined—In this section, the term “tradable asset” means a digital asset other than—

added “(1) a digital commodity that is treated as such other than by reason of subsection (b)(1) of this section; or

added “(2) a digital asset excluded from the definition of digital commodity pursuant to subclause (I) through (VII) of section 1a(16)(F)(iii).

added “(d) Guidance on fraudulent, manipulative, or disruptive tradable assets—The Commission may, after public notice and comment, issue guidance establishing criteria for determining if the primary purpose of a tradable asset is to be used to commit fraud or market manipulation, or engage in any other conduct that would result in abusive practices or be disruptive to market integrity.”

changed It is the sense of Congress that nothing Unless otherwise provided in this Act or any amendment title, this title and the amendments 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 shall take effect 270 days after the date of the enactment of this Act.