II 

117TH CONGRESS 

2D SESSION S. 5030 

To provide digital asset intermediaries with a safe harbor from certain enforcement actions by the Securities and Exchange Commission, and for 

other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 29, 2022 

Mr. HAGERTY introduced the following bill; which was read twice and referred 

to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To provide digital asset intermediaries with a safe harbor 

from certain enforcement actions by the Securities and 

Exchange Commission, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Digital Trading Clarity 

5 Act of 2022’’. 

6 SEC. 2. SAFE HARBOR. 

7 (a) DEFINITIONS.—In this section: 

8 (1) ASSOCIATED PERSON.—The term ‘‘associ9 ated person’’, with respect to an intermediary, has 


kjohnson on DSK79L0C42PROD with BILLS
2 

•S 5030 IS

1 the meaning given the term by any applicable self2 regulatory organization. 

3 (2) BANK; EXCHANGE; SECURITIES LAWS; 

4 SELF-REGULATORY ORGANIZATION; STATUTORY DIS5 QUALIFICATION.—Except as otherwise expressly pro6 vided, the terms ‘‘bank’’, ‘‘exchange’’, ‘‘securities 

7 laws’’, ‘‘self-regulatory organization’’, and ‘‘statutory 

8 disqualification’’ have the meanings given those 

9 terms in section 3(a) of the Securities Exchange Act 

10 of 1934 (15 U.S.C. 78c(a)). 

11 (3) BROKER-DEALER.—The term ‘‘broker-deal12 er’’ means a person that is a broker or a dealer, as 

13 those terms are defined in section 3(a) of the Securi14 ties Exchange Act of 1934 (15 U.S.C. 78c(a)). 

15 (4) COMMISSION.—The term ‘‘Commission’’ 

16 means the Securities and Exchange Commission. 

17 (5) DIGITAL ASSET.—The term ‘‘digital asset’’ 

18 means an electronically native asset that— 

19 (A) confers economic, proprietary, or ac20 cess authority; and 

21 (B) is recorded using cryptographically-se22 cured distributed ledger technology or any simi23 lar analogue. 

24 (6) INTERMEDIARY.—The term ‘‘inter25 mediary’’— 


kjohnson on DSK79L0C42PROD with BILLS
3 

•S 5030 IS

1 (A) means any centralized platform, in2 cluding an exchange, that— 

3 (i) has customers; and 

4 (ii) makes a digital asset available for 

5 trading among multiple buyers and sellers 

6 under a Federal or State law, rule, or reg7 ulation that authorizes the platform to pro8 vide those services; and 

9 (B) does not include any individual. 

10 (7) LIST.—The term ‘‘list’’, with respect to an 

11 asset, means— 

12 (A) to make the asset available for trading; 

13 and 

14 (B) to effect transactions in the asset. 

15 (8) NATIONAL SECURITIES EXCHANGE.—The 

16 term ‘‘national securities exchange’’ means an ex17 change registered as a national securities exchange 

18 pursuant to section 6 of the Securities Exchange Act 

19 of 1934 (15 U.S.C. 78f). 

20 (9) SECURITY.—Except as otherwise expressly 

21 provided, the term ‘‘security’’— 

22 (A) with respect to an application of the 

23 Securities Act of 1933 (15 U.S.C. 77a et seq.), 

24 has the meaning given the term in section 2(a) 

25 of that Act (15 U.S.C. 77b(a)); and 


kjohnson on DSK79L0C42PROD with BILLS
4 

•S 5030 IS

1 (B) with respect to an application of the 

2 Securities Exchange Act of 1934 (15 U.S.C. 

3 78a et seq.), has the meaning given the term in 

4 section 3(a) of that Act (15 U.S.C. 78c(a)). 

5 (b) SAFE HARBOR.— 

6 (1) IN GENERAL.—Any digital asset with re7 spect to which a determination has not been made 

8 under subsection (d), and that is listed through an 

9 intermediary that has satisfied the requirements de10 scribed in subsection (c), shall not be considered to 

11 be a security. 

12 (2) APPLICATION.—Paragraph (1) shall apply 

13 to all activities of an intermediary that lists a digital 

14 asset that satisfies the conditions of that paragraph, 

15 including the listing of that digital asset through the 

16 intermediary. 

17 (c) REQUIREMENTS.—The requirements described in 

18 this subsection with respect to an intermediary are as fol19 lows: 

20 (1) The intermediary shall establish a process 

21 for listing digital assets through the intermediary, 

22 which shall be reasonably designed to permit the 

23 intermediary to determine whether the digital asset 

24 is a security. 


kjohnson on DSK79L0C42PROD with BILLS
5 

•S 5030 IS

1 (2) The process established under paragraph 

2 (1) shall include written policies and procedures to 

3 conduct and document an accurate classification of 

4 the applicable digital asset for the purposes of the 

5 securities laws, which shall be supported by mate6 rials that include legal analysis performed by attor7 neys with expertise in the securities laws, which shall 

8 take into consideration— 

9 (A) relevant Commission rules, enforce10 ment actions, no-action letters, and exemptive 

11 orders and other relevant guidance provided by 

12 the Commission or the staff of the Commission; 

13 (B) relevant guidance from, or formal ac14 tion taken by, other Federal agencies, including 

15 the Commodity Futures Trading Commission; 

16 and 

17 (C) relevant case law. 

18 (3) The intermediary, and any associated per19 son with respect to the intermediary, shall consent 

20 to service of process for any civil action brought by, 

21 or any proceeding before, the Commission or a self22 regulatory organization of which the intermediary is 

23 a member. 

24 (4) The intermediary, and each associated per25 son to which paragraph (3) applies, shall maintain 


kjohnson on DSK79L0C42PROD with BILLS
6 

•S 5030 IS

1 a written record of the consent provided under that 

2 paragraph, which shall be made available to the 

3 Commission and any applicable self-regulatory orga4 nization, upon request. 

5 (5) The intermediary shall— 

6 (A) determine and confirm that neither the 

7 intermediary nor any associated person with re8 spect to the intermediary is subject to a statu9 tory disqualification, which may be made on a 

10 good faith basis pursuant to a questionnaire 

11 completed by those associated persons; and 

12 (B) maintain a written record of the deter13 minations and confirmations made under sub14 paragraph (A), including any questionnaires de15 scribed in that subparagraph, which shall be 

16 made available to the Commission and any ap17 plicable self-regulatory organization, upon re18 quest. 

19 (6)(A) The intermediary shall establish, main20 tain, and enforce written policies, procedures, and 

21 controls, consistent with industry best practices and 

22 guidance of the Commission, that are reasonably de23 signed to demonstrate effective control with respect 

24 to the applicable digital asset and to protect against 

25 theft, loss, and accidental use of the private keys, or 


kjohnson on DSK79L0C42PROD with BILLS
7 

•S 5030 IS

1 a shard of a private key, that the intermediary con2 trols, including with respect to— 

3 (i) onboarding the digital asset and associ4 ating the digital asset with a private key, or a 

5 shard of a private key, in possession or under 

6 control of the intermediary; 

7 (ii) systems used to create, store, or use 

8 those private keys and shards of those private 

9 keys; 

10 (iii) the generation of cryptographically 

11 strong private keys and shards of private keys; 

12 and 

13 (iv) creating backup keys and shards of 

14 private keys. 

15 (B) Without limitation, the requirement under 

16 subparagraph (A) may be satisfied through— 

17 (i) a proprietary self-custody system; 

18 (ii) a self-custody vendor that provides self19 custody services, such as key generation and re20 covery, if the systems of that vendor meet or 

21 exceed the reasonably designed security require22 ments of the intermediary; or 

23 (iii) a custodian, such as a bank, that the 

24 Commission has determined is a satisfactory 

25 control location. 


kjohnson on DSK79L0C42PROD with BILLS
8 

•S 5030 IS

1 (7) The intermediary shall— 

2 (A) adopt customer protection measures, 

3 including— 

4 (i) in order to identify potentially ma5 nipulative or fraudulent conduct, by estab6 lishing, maintaining, and enforcing written 

7 policies, procedures, and controls that are 

8 reasonably designed to fulfill all applicable 

9 obligations of the intermediary under— 

10 (I) subchapter II of chapter 53 of 

11 title 31, United States Code; and 

12 (II) the International Money 

13 Laundering Abatement and Financial 

14 Anti-Terrorism Act of 2001 (title III 

15 of Public Law 107–56) and the 

16 amendments made by that Act; and 

17 (ii) by creating and keeping records in 

18 accordance with the obligations of the 

19 intermediary for a period of not less than 

20 3 years, the first 2 years of which shall be 

21 in an easily accessible place; and 

22 (B) make all records created and kept 

23 under subparagraph (A) available to the Com24 mission and any applicable self-regulatory orga25 nization, upon request. 


kjohnson on DSK79L0C42PROD with BILLS
9 

•S 5030 IS

1 (8) The intermediary shall disclose on the 

2 website of the intermediary the risks associated with 

3 trading in the applicable digital asset, including that 

4 the protection provided pursuant to the Securities 

5 Investor Protection Act of 1970 (15 U.S.C. 78aaa et 

6 seq.)— 

7 (A) does not apply to digital assets that 

8 are not securities, as defined in section 16 of 

9 that Act (15 U.S.C. 78lll); and 

10 (B) may not apply to all digital assets that 

11 are securities. 

12 (9) The intermediary shall enter into a written 

13 agreement with a bank or registered broker-dealer 

14 for the purposes of a compliance period described in 

15 subsection (e), which shall provide that— 

16 (A) beginning not later than 180 days 

17 after the date on which that compliance period 

18 begins, and until the intermediary is registered 

19 as described in paragraph (10)(B), that bank or 

20 broker-dealer shall facilitate transactions in 

21 that digital asset in a manner that is consistent 

22 with the obligations of the bank or broker-deal23 er under the Securities Exchange Act of 1934 

24 (15 U.S.C. 78a et seq.), which shall include— 


kjohnson on DSK79L0C42PROD with BILLS
10 

•S 5030 IS

1 (i) effecting transactions in that dig2 ital asset; 

3 (ii) issuing required confirmations and 

4 statements to customers relating to the 

5 transactions described in clause (i); 

6 (iii) maintaining required books and 

7 records relating to the transactions de8 scribed in clause (i); 

9 (iv) ensuring that the broker-dealer 

10 remains compliant with the requirements 

11 under section 240.15c3–1 of title 17, Code 

12 of Federal Regulations, or any successor 

13 regulation, with respect to the transactions 

14 described in clause (i), including that the 

15 broker-dealer shall be subject to a 

16 $250,000 net capital requirement under 

17 such section 240.15c3–1, in addition to 

18 any other capital requirements that the 

19 Commission or any applicable self-regu20 latory organization may determine to be 

21 appropriate to protect investors; and 

22 (v) in a manner that complies with, or 

23 is exempt from, the requirements under 

24 section 240.15c3–3 of title 17, Code of 

25 Federal Regulations, or any successor regVerDate Sep 11 2014 02:24 Oct 14, 2022 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S5030.IS S5030

kjohnson on DSK79L0C42PROD with BILLS
11 

•S 5030 IS

1 ulation, receiving, delivering, and safe2 guarding funds and securities in connec3 tion with the transactions described in 

4 clause (i); 

5 (B) the intermediary shall notify customers 

6 of the intermediary that, during the period be7 ginning on the date described in subparagraph 

8 (A) and ending on the date on which that com9 pliance period ends, that bank or broker-dealer 

10 will effect transactions of that digital asset, as 

11 described in subparagraph (A)(i); and 

12 (C) within a reasonable timeframe, and not 

13 later than 180 days after the date on which 

14 that compliance period ends, the intermediary 

15 shall transfer operations that support effecting 

16 transactions in that digital asset to that bank 

17 or broker-dealer, unless that intermediary is a 

18 bank or has registered as a broker-dealer. 

19 (10) The intermediary shall certify that, if the 

20 applicable digital asset is determined under sub21 section (d) to be a security, after the end of any 

22 compliance period described in subsection (e), if ap23 plicable, the intermediary shall— 

24 (A) stop listing the digital asset; or 


kjohnson on DSK79L0C42PROD with BILLS
12 

•S 5030 IS

1 (B) if the digital asset is registered under 

2 section 5 of the Securities Act of 1933 (15 

3 U.S.C. 77e), or otherwise qualifies for an ex4 emption from such registration, and the inter5 mediary wishes to list the digital asset through 

6 the intermediary, register as— 

7 (i) a broker-dealer; or 

8 (ii) a national securities exchange. 

9 (d) COMMISSION OR COURT DETERMINATION.— 

10 (1) IN GENERAL.— 

11 (A) DETERMINATION.—If the Commission 

12 (through a statement, formal rulemaking, or 

13 enforcement action, and without objection from 

14 the Commodity Futures Trading Commission), 

15 or a court of the United States in a final judg16 ment, determines that a digital asset is a secu17 rity, the Division of Examinations of the Com18 mission shall request information from any 

19 intermediary listing the digital asset to deter20 mine if the intermediary satisfies the require21 ments under subsection (c). 

22 (B) REQUEST BY INTERMEDIARY.—An 

23 intermediary may submit to the Commission a 

24 request for the Commission to make a deter25 mination under subparagraph (A). 


kjohnson on DSK79L0C42PROD with BILLS
13 

•S 5030 IS

1 (2) ENTRY INTO COMPLIANCE PERIOD.—If, 

2 after a request for information under paragraph (1), 

3 the Division of Examinations of the Commission de4 termines that an intermediary has satisfied the re5 quirements under subsection (c) with respect to a 

6 digital asset, the intermediary and digital asset shall 

7 enter the compliance period described in subsection 

8 (e). 

9 (3) FAILURE TO COMPLY.—If, after a request 

10 for information under paragraph (1), the Division of 

11 Examinations of the Commission determines that an 

12 intermediary has not satisfied the requirements 

13 under subsection (c) with respect to a digital asset— 

14 (A) the digital asset shall be considered to 

15 be a security with respect to that intermediary; 

16 and 

17 (B) the intermediary shall be subject to all 

18 legal requirements with respect to the activities 

19 of the intermediary with respect to the digital 

20 asset as a result of the application of subpara21 graph (A). 

22 (e) COMPLIANCE PERIOD.— 

23 (1) IN GENERAL.—With respect to an inter24 mediary and a digital asset described in subsection 

25 (d)(2), the following shall apply: 


kjohnson on DSK79L0C42PROD with BILLS
14 

•S 5030 IS

1 (A) During the 2-year period beginning on 

2 the date on which the determination described 

3 in subsection (d)(1) is made, the following shall 

4 apply: 

5 (i) The intermediary shall not be sub6 ject to an enforcement action by the Com7 mission, or any other cause of action, for 

8 a violation of section 5 or 17 of the Securi9 ties Act of 1933 (15 U.S.C. 77e, 77q), or 

10 of section 10(b) of the Securities Exchange 

11 Act of 1934 (15 U.S.C. 78j(b)), solely with 

12 respect to listing that digital asset. 

13 (ii) The intermediary shall not be sub14 ject to any enforcement action by the Com15 mission for failure to register as a broker16 dealer or as a national securities exchange 

17 (or for any associated requirements with 

18 respect to any such registrant) in connec19 tion with the activities of the intermediary 

20 with respect to that digital asset. 

21 (iii) In the case of a determination 

22 made by the Commission under subsection 

23 (d)(1), the intermediary may seek declara24 tory relief in an appropriate court of the 

25 United States stating that the digital asset 


kjohnson on DSK79L0C42PROD with BILLS
15 

•S 5030 IS

1 is not a security, notwithstanding that de2 termination by the Commission. 

3 (iv) With respect to an action brought 

4 under clause (iii), the court may, in the 

5 discretion of the court, permit the inter6 mediary to continue to list the digital asset 

7 during the pendency of the action. 

8 (B) Beginning on the date that is 180 

9 days after the date on which the 2-year period 

10 described in subparagraph (A) begins, the bank 

11 or broker-dealer described in subsection (c)(9) 

12 shall facilitate all transactions of the inter13 mediary with respect to the relevant digital 

14 asset, as described in subsection (c)(9)(A), until 

15 the date on which the intermediary is registered 

16 as described in subsection (c)(10)(B). 

17 (2) END OF COMPLIANCE PERIOD.—After the 

18 end of the 2-year period described in paragraph 

19 (1)(A), any broker-dealer or exchange that lists the 

20 applicable digital asset shall stop listing that digital 

21 asset, if— 

22 (A) the digital asset— 

23 (i) is not registered under section 5 of 

24 the Securities Act of 1933 (15 U.S.C. 

25 77e); or 


kjohnson on DSK79L0C42PROD with BILLS
16 

•S 5030 IS

1 (ii) does not otherwise qualify for an 

2 exemption from registration under section 

3 5 of the Securities Act of 1933 (15 U.S.C. 

4 77e); or 

5 (B) an appropriate court of the United 

6 States has determined in an action described in 

7 paragraph (1)(A)(iii) that the digital asset is a 

8 security. 

9 (f) RETROACTIVE EFFECT.—With respect to a digital 

10 asset that the Commission has determined is a security, 

11 if the Commission subsequently determines that the digital 

12 asset is not a security, the applicable intermediary shall 

13 not be subject to any enforcement action by the Commis14 sion, or any other cause of action, for a violation of section 

15 5 or 17 of the Securities Act of 1933 (15 U.S.C. 77e, 

16 77q), or of section 10(b) of the Securities Exchange Act 

17 of 1934 (15 U.S.C. 78j(b)), solely with respect to listing 

18 that digital asset. 

Æ 


kjohnson on DSK79L0C42PROD with BILLS