I 

116TH CONGRESS 

2D SESSION H. R. 8373 

To provide for orderly and secure digital commodity exchange markets, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 24, 2020 

Mr. CONAWAY (for himself, Mr. AUSTIN SCOTT of Georgia, Mr. JOHNSON of 

South Dakota, Mr. EMMER, Mr. SOTO, and Mr. SCHWEIKERT) introduced 

the following bill; which was referred to the Committee on Agriculture 

A BILL 

To provide for orderly and secure digital commodity exchange 

markets, 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 Commodity Ex5 change Act of 2020’’. 

6 SEC. 2. AMENDMENTS TO THE COMMODITY EXCHANGE 

7 ACT. 

8 (a) DEFINITIONS.—Section 1a of the Commodity Ex9 change Act (7 U.S.C. 1a) is amended— 

10 (1) in paragraph (40)— 


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1 (A) in subparagraph (E), by striking 

2 ‘‘and’’ at the end; and 

3 (B) by redesignating subparagraph (F) as 

4 subparagraph (G) and inserting after subpara5 graph (E) the following: 

6 ‘‘(F) a digital commodity exchange reg7 istered under section 5i; and’’; and 

8 (2) by adding at the end the following: 

9 ‘‘(52) DIGITAL COMMODITY.—The term ‘digital 

10 commodity’ means any form of fungible intangible 

11 personal property that can be exclusively possessed 

12 and transferred person to person without necessary 

13 reliance on an intermediary, and which does not rep14 resent a financial interest in a company, partner15 ship, or investment vehicle. 

16 ‘‘(53) DIGITAL COMMODITY CUSTODIAN.—The 

17 term ‘digital commodity custodian’ means an entity 

18 that holds, maintains, or safeguards digital commod19 ities and other assets on behalf of digital commodity 

20 market participants. 

21 ‘‘(54) DIGITAL COMMODITY EXCHANGE.—The 

22 term ‘digital commodity exchange’ means a trading 

23 facility that lists for trading at least one digital com24 modity. 


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1 ‘‘(55) DIGITAL COMMODITY PRESALE.—The 

2 term ‘digital commodity presale’ means the delivery 

3 of a unit of a digital commodity, or any promise or 

4 right to a future unit of a digital commodity, to a 

5 participant in a securities offering conducted in com6 pliance with the Securities Act of 1933 before the 

7 listing of the digital commodity for trading on a reg8 istered digital commodity exchange.’’. 

9 (b) COMMISSION JURISDICTION OVER RETAIL DIG10 ITAL COMMODITY TRANSACTIONS.—Section 2(c)(2) of 

11 such Act (7 U.S.C. 2(c)(2)) is amended— 

12 (1) in subparagraph (D)(ii)— 

13 (A) in subclause (III), in the matter that 

14 precedes item (aa), by inserting ‘‘of a com15 modity, other than a digital commodity,’’ before 

16 ‘‘that’’; and 

17 (B) by redesignating subclauses (IV) and 

18 (V) as subclauses (V) and (VI) and inserting 

19 after subclause (III) the following: 

20 ‘‘(IV) a contract of sale of a dig21 ital commodity that— 

22 ‘‘(aa) results in actual deliv23 ery within 2 days or such other 

24 period as the Commission may 

25 determine by rule or regulation 


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1 based upon the typical commer2 cial practice in cash or spot mar3 kets for the digital commodity in4 volved; or 

5 ‘‘(bb) is executed on or sub6 ject to the rules of a registered 

7 digital commodity exchange;’’; 

8 and 

9 (2) by adding at the end the following: 

10 ‘‘(F) COMMISSION JURISDICTION OVER DIGITAL

11 COMMODITY TRANSACTIONS.— 

12 ‘‘(i) Notwithstanding any other provision of 

13 law, the Commission shall have exclusive jurisdiction 

14 over any agreement, contract, or transaction involv15 ing a contract of sale of any digital commodity in 

16 interstate commerce which is offered, solicited, trad17 ed, executed, or otherwise dealt in on or subject to 

18 the rules of a registered entity, including the con19 duct of any such office or business. 

20 ‘‘(ii) Notwithstanding any other provision of 

21 law, the Commission shall have exclusive jurisdiction 

22 over any agreement, contract, or transaction involv23 ing a unit of a digital commodity, or any promise or 

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1 tained through a digital commodity presale and sub2 ject to the restrictions in section 4c(h). 

3 ‘‘(iii) Nothing in this subparagraph shall be 

4 construed to limit the power of any State or other 

5 Federal regulatory agency, or to provide the Com6 mission with jurisdiction, with respect to— 

7 ‘‘(I) custodial or depository activities for a 

8 digital asset, or custodial or depository activi9 ties for any promise or right to a future digital 

10 asset, of an entity regulated by a State or an11 other Federal regulatory agency; or 

12 ‘‘(II) a securities offering or transaction 

13 associated with— 

14 ‘‘(aa) a digital commodity presale; or 

15 ‘‘(bb) a sale described in section 

16 4c(h)(3)(A)(i).’’. 

17 (c) PROHIBITED TRANSACTIONS.—Section 4c of such 

18 Act (7 U.S.C. 6c) is amended by adding at the end the 

19 following: 

20 ‘‘(h) PROHIBITED DIGITAL COMMODITY TRANS21 ACTIONS.— 

22 ‘‘(1) IN GENERAL.—It shall be a violation of 

23 this Act for any person who owns or controls a unit 

24 of a digital commodity, or any promise or right to 

25 a future unit of a digital commodity, obtained 


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1 through a digital commodity presale and subject to 

2 the restrictions in this subsection, to offer to enter 

3 into, to enter into, or to execute a contract for the 

4 purchase or sale of the unit, promise, or right, ex5 cept as provided in paragraph (3). 

6 ‘‘(2) UNLAWFUL FACILITATION OF PROHIBITED

7 TRANSACTION.—It shall be a violation of this Act for 

8 any person willfully to execute, confirm the execution 

9 of, or conduct any office or business for the purpose 

10 of soliciting, accepting any order for, or otherwise 

11 dealing in, any transaction in, or in connection with, 

12 a contract for the purchase or sale of a unit of a 

13 digital commodity, or any promise or right to a fu14 ture unit of a digital commodity, which such person 

15 has reason to believe is obtained through a digital 

16 commodity presale and subject to the restrictions in 

17 this subsection, except as provided in paragraph (3). 

18 ‘‘(3) EXCEPTIONS.— 

19 ‘‘(A) OFF-EXCHANGE TRANSACTIONS.— 

20 ‘‘(i) SALE OF A PROMISE OR RIGHT.— 

21 A promise or right to a future unit of a 

22 digital commodity obtained through a dig23 ital commodity presale may be sold pursu24 ant to a securities transaction conducted in 


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1 compliance with the Securities Act of 

2 1933. 

3 ‘‘(ii) SALE OF A DIGITAL COM4 MODITY.—A unit of a digital commodity 

5 obtained through a digital commodity 

6 presale may be sold to an accredited 

7 imvestor (as defined in section 2(a)(15) of 

8 the Securities Act of 1933). 

9 ‘‘(iii) TREATMENT.—For purposes of 

10 this subsection, a unit of a digital com11 modity or any promise or right to a future 

12 unit of a digital commodity obtained 

13 through a transaction utilizing this excep14 tion shall continue to be considered to be 

15 obtained through a digital commodity 

16 presale. 

17 ‘‘(B) ON-EXCHANGE TRANSACTIONS.— 

18 ‘‘(i) IN GENERAL.—A unit of a digital 

19 commodity that is obtained through a dig20 ital commodity presale or a transaction de21 scribed in subparagraph (A) may be of22 fered for sale or exchange on a registered 

23 digital commodity exchange, subject to any 

24 limitations imposed by the exchange. 


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1 ‘‘(ii) TREATMENT.—For purposes of 

2 this subsection, a unit of a digital com3 modity obtained through a transaction uti4 lizing this exception shall not be considered 

5 to be obtained though a digital commodity 

6 presale. 

7 ‘‘(C) UTILIZATION OF PRESOLD DIGITAL

8 COMMODITIES.— 

9 ‘‘(i) IN GENERAL.—A unit of a digital 

10 commodity that is obtained through a dig11 ital commodity presale may be— 

12 ‘‘(I) utilized for the purposes of 

13 receiving the non-financial rights or 

14 services associated with the digital 

15 commodity; or 

16 ‘‘(II) exchanged or sold in such 

17 limited quantities as the Commission 

18 determines support the public use and 

19 functioning of services and rights as20 sociated with the digital commodity. 

21 ‘‘(ii) TREATMENT.—For purposes of 

22 this subsection, a unit of a digital com23 modity obtained through a transaction uti24 lizing this exception shall not be considered 


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1 to be obtained though a digital commodity 

2 presale. 

3 ‘‘(D) PRIOR DIGITAL COMMODITIES.—A 

4 unit of a digital commodity shall not be subject 

5 to this subsection if, before the date of the en6 actment of this subsection, the digital com7 modity was publicly available for trading on a 

8 trading facility licensed as a money transmitter 

9 in a State or territory of the United States. 

10 ‘‘(4) TRANSITION RULES.— 

11 ‘‘(A) IN GENERAL.—For the purpose of a 

12 transaction described in paragraph (3)(B), the 

13 Commission shall consider a trading facility to 

14 be a registered digital commodity exchange if— 

15 ‘‘(i) the trading facility— 

16 ‘‘(I) has been continuously li17 censed as a money transmitter in at 

18 least 20 States or territories of the 

19 United States since August 1, 2019; 

20 ‘‘(II) is a designated contract 

21 market; or 

22 ‘‘(III) is a swap execution facil23 ity; 


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1 ‘‘(ii) the trading facility submits a 

2 listing notice to the Commission con3 taining— 

4 ‘‘(I) documentation demonstrat5 ing its licensing referred to in clause 

6 (i)(I); and 

7 ‘‘(II) the determination made by 

8 the trading facility under section 

9 5i(c)(3) that the digital commodity 

10 that is the subject of the transaction 

11 is not readily susceptible to manipula12 tion; and 

13 ‘‘(iii) the Commission has not issued a 

14 notice of disapproval of the listing notice. 

15 ‘‘(B) DISAPPROVAL PROCESS.—In making 

16 a disapproval under subparagraph (A), the 

17 Commission shall— 

18 ‘‘(i) issue any disapproval within 20 

19 business days after receipt of a completed 

20 listing notice; and 

21 ‘‘(ii) identify the specific deficiencies 

22 with the listing notice that necessitated the 

23 disapproval. 


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1 ‘‘(C) EXTENSIONS.—The Commission may 

2 extend the time for disapproval under subpara3 graph (B)— 

4 ‘‘(i) once, for 20 days, through writ5 ten notice to the digital commodity ex6 change given by a division director; and 

7 ‘‘(ii) once, for an additional 90 busi8 ness days, through notice given by the 

9 Commission which includes a description of 

10 any deficiencies with the listing notice, in11 cluding any— 

12 ‘‘(I) novel or complex issues 

13 which require additional time to ana14 lyze; 

15 ‘‘(II) missing information or in16 adequate explanations; or 

17 ‘‘(III) potential inconsistencies 

18 with this Act. 

19 ‘‘(D) EXPIRATION.—The authority pro20 vided by this subparagraph shall expire 1 year 

21 after the date of the final promulgation of the 

22 digital commodity exchange registration re23 quirements, or on the first registration of a dig24 ital commodity exchange, whichever occurs ear25 lier.’’. 


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1 (d) COMMON PROVISIONS APPLICABLE TO REG2 ISTERED ENTITIES.—Section 5c of such Act (7 U.S.C. 

3 7a–2) is amended— 

4 (1) in subsection (a), by striking ‘‘5(d) and 

5 5b(c)(2)’’ and inserting ‘‘5(d), 5b(c)(2), and 5i(c)’’; 

6 (2) in subsection (b)— 

7 (A) in each of paragraphs (1) and (2), by 

8 inserting ‘‘digital commodity exchange,’’ before 

9 ‘‘derivatives’’; and 

10 (B) in paragraph (3), by inserting ‘‘digital 

11 commodity exchange,’’ before ‘‘derivatives’’ each 

12 place it appears; and 

13 (3) in subsection (c)— 

14 (A) in paragraph (2), by inserting ‘‘or par15 ticipants’’ before ‘‘(in’’; 

16 (B) in paragraph (4)(B), by striking 

17 ‘‘1a(10)’’ and inserting ‘‘1a(9)’’; and 

18 (C) in paragraph (5), by adding at the end 

19 the following: 

20 ‘‘(D) SPECIAL RULES FOR THE LISTING OF

21 CERTAIN DIGITAL COMMODITIES.— 

22 ‘‘(i) IN GENERAL.—In the case of list23 ing a digital commodity for trading which 

24 has not yet been listed for trading on an25 other registered entity, paragraphs (2) and 


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1 (3) shall apply as if the listing were a rule, 

2 and paragraph (2) shall be applied by sub3 stituting ‘20 business days’ for ‘10 busi4 ness days’. 

5 ‘‘(ii) TRANSITIONAL EXTENSION.— 

6 For 1 year after the registration of the 

7 first digital commodity exchange, the Com8 mission shall have an additional 20 busi9 ness days review any certification under 

10 clause (i). 

11 ‘‘(iii) DIGITAL COMMODITY

12 PRESALES.—In conjunction with listing a 

13 digital commodity in which any unit of the 

14 digital commodity was obtained through a 

15 digital commodity presale, the Commission 

16 shall require the registered entity to pro17 hibit the sale of any unit of the digital 

18 commodity that was obtained in violation 

19 of section 4c(h).’’. 

20 (e) REGISTRATION OF DIGITAL COMMODITY EX21 CHANGES; QUALIFIED DIGITAL COMMODITY

22 CUSTODIANS.—The Commodity Exchange Act (7 U.S.C. 

23 1 et seq.) is amended by inserting after section 5h the 

24 following: 


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1 ‘‘SEC. 5i. REGISTRATION OF DIGITAL COMMODITY EX2 CHANGES. 

3 ‘‘(a) IN GENERAL.— 

4 ‘‘(1) VOLUNTARY REGISTRATION.— 

5 ‘‘(A) IN GENERAL.—Any trading facility 

6 that offers or seeks to offer a market in digital 

7 commodities may register with the Commission 

8 as a digital commodity exchange. 

9 ‘‘(B) APPLICATION.—A person desiring to 

10 register as a digital commodity exchange shall 

11 submit to the Commission an application in 

12 such form and containing such information as 

13 the Commission may require for the purpose of 

14 making the determinations required for ap15 proval under subsections (c) and (e). 

16 ‘‘(2) DEEMED REGISTRATION.—A registered 

17 designated contract market or registered swap exe18 cution facility which fulfills the requirements of this 

19 section shall be considered a registered digital com20 modity exchange. 

21 ‘‘(b) TRADING.— 

22 ‘‘(1) IN GENERAL.—A digital commodity ex23 change that is registered under subsection (a) may 

24 make available for trading any digital commodity 

25 that is not readily subject to manipulation, subject 

26 to this subsection. 


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1 ‘‘(2) RULES GOVERNING MARGINED OR LEVER2 AGED TRADING.—The Commission may make, pro3 mulgate, and enforce such rules governing margined, 

4 leveraged, or financed transactions as are reasonably 

5 necessary to protect market participants and pro6 mote the orderly settlement of transactions with re7 spect to— 

8 ‘‘(A) disclosure; 

9 ‘‘(B) recordkeeping; 

10 ‘‘(C) capital, margin, and other financial 

11 resources; 

12 ‘‘(D) reporting; 

13 ‘‘(E) business conduct; 

14 ‘‘(F) documentation; and 

15 ‘‘(G) such other matters as the Commis16 sion demonstrates to be necessary. 

17 ‘‘(3) PROHIBITION ON CERTAIN TRADING PRAC18 TICES.—Sections 4b, 4c, and 6(c) shall apply to any 

19 agreement, contract, or transaction in a digital com20 modity as if the agreement, contract, or transaction 

21 were a contract of sale of a commodity for future de22 livery. 

23 ‘‘(4) PROHIBITION ON TRADING DERIVATIVES

24 PRODUCTS.—Registration as a digital commodity ex25 change shall not permit a trading facility to offer 


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1 any contract of sale of a commodity for future deliv2 ery, option, or swap for trading without also being 

3 registered as a designated contract market or swap 

4 execution facility. 

5 ‘‘(c) CORE PRINCIPLES FOR DIGITAL COMMODITY

6 EXCHANGES.— 

7 ‘‘(1) COMPLIANCE WITH CORE PRINCIPLES.— 

8 ‘‘(A) IN GENERAL.—To be registered, and 

9 maintain registration, as a digital commodity 

10 exchange, the digital commodity exchange shall 

11 comply with— 

12 ‘‘(i) the core principles described in 

13 this subsection; and 

14 ‘‘(ii) any requirement that the Com15 mission may impose by rule or regulation 

16 pursuant to section 8a(5). 

17 ‘‘(B) REASONABLE DISCRETION OF A DIG18 ITAL COMMODITY EXCHANGE.—Unless other19 wise determined by the Commission by rule or 

20 regulation, a digital commodity exchange de21 scribed in subparagraph (A) shall have reason22 able discretion in establishing the manner in 

23 which the digital commodity exchange complies 

24 with the core principles described in this sub25 section. 


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1 ‘‘(2) COMPLIANCE WITH RULES.—A digital 

2 commodity exchange shall— 

3 ‘‘(A) establish and enforce compliance with 

4 any rule of the digital commodity exchange, in5 cluding— 

6 ‘‘(i) the terms and conditions of the 

7 trades traded or processed on or through 

8 the digital commodity exchange; and 

9 ‘‘(ii) any limitation on access to the 

10 digital commodity exchange; 

11 ‘‘(B) establish and enforce trading, trade 

12 processing, and participation rules that will 

13 deter abuses and have the capacity to detect, 

14 investigate, and enforce those rules, including 

15 means— 

16 ‘‘(i) to provide market participants 

17 with impartial access to the market; and 

18 ‘‘(ii) to capture information that may 

19 be used in establishing whether rule viola20 tions have occurred; and 

21 ‘‘(C) establish rules governing the oper22 ation of the exchange, including rules specifying 

23 trading procedures to be used in entering and 

24 executing orders traded or posted on the facil25 ity. 


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1 ‘‘(3) DIGITAL COMMODITIES NOT READILY SUS2 CEPTIBLE TO MANIPULATION.— 

3 ‘‘(A) IN GENERAL.—The digital commodity 

4 exchange shall permit trading only in digital 

5 commodities that are not readily susceptible to 

6 manipulation. 

7 ‘‘(B) DETERMINATIONS.—Prior to offering 

8 trading in any digital commodity, the digital 

9 commodity exchange shall make a determina10 tion under this paragraph as to whether the 

11 digital commodity is readily susceptible to ma12 nipulation. 

13 ‘‘(C) CONSIDERATIONS.—In making a de14 termination under this paragraph, the exchange 

15 shall consider the digital commodity’s— 

16 ‘‘(i) purpose and use; 

17 ‘‘(ii) governance structure; 

18 ‘‘(iii) participation; 

19 ‘‘(iv) distribution; 

20 ‘‘(v) intended, current, and proposed 

21 functionality; 

22 ‘‘(vi) other relevant factors deter23 mined by the exchange; and 

24 ‘‘(vii) any other factor required by the 

25 Commission. 


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1 ‘‘(D) RULES FOR DIGITAL COMMODITY

2 PRESALES.—The digital commodity exchange 

3 shall have in place such rules as may be nec4 essary to reasonably ensure the orderly sale of 

5 any unit of a digital commodity obtained 

6 through a digital commodity presale. 

7 ‘‘(4) TREATMENT OF CUSTOMER ASSETS.— 

8 ‘‘(A) REQUIRED STANDARDS AND PROCE9 DURES.—Each digital commodity exchange 

10 shall establish standards and procedures that 

11 are designed to protect and ensure the safety of 

12 customer money, assets, and property. 

13 ‘‘(B) HOLDING OF CUSTOMER ASSETS.— 

14 ‘‘(i) IN GENERAL.—Each digital com15 modity exchange shall hold customer 

16 money, assets, and property in a manner 

17 to minimize the customer’s risk of loss or 

18 unreasonable delay in the access to the 

19 money, assets, and property of the cus20 tomer. 

21 ‘‘(ii) SEGREGATION OF FUNDS.— 

22 ‘‘(I) IN GENERAL.—A digital 

23 commodity exchange shall treat and 

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1 erty of any customer received as be2 longing to the customer. 

3 ‘‘(II) COMMINGLING PROHIB4 ITED.—Money, assets, and property of 

5 a customer described in subclause (I) 

6 shall be separately accounted for and 

7 shall not be commingled with the 

8 funds of the digital commodity ex9 change or be used to margin, secure, 

10 or guarantee any trades or accounts 

11 of any customer or person other than 

12 the person for whom the same are 

13 held. 

14 ‘‘(iii) EXCEPTIONS.— 

15 ‘‘(I) USE OF FUNDS.— 

16 ‘‘(aa) IN GENERAL.—Not17 withstanding clause (ii), money, 

18 assets, and property of customers 

19 of a described in clause (ii) may, 

20 for convenience, be commingled 

21 and deposited in the same ac22 count or accounts with any bank, 

23 trust company, or qualified dig24 ital commodity custodian. 


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1 ‘‘(bb) WITHDRAWAL.—Not2 withstanding clause (ii), such 

3 share of the money, assets, and 

4 property described in item (aa) 

5 as in the normal course of busi6 ness shall be necessary to mar7 gin, guarantee, secure, transfer, 

8 adjust, or settle a digital com9 modity transaction with a reg10 istered entity may be withdrawn 

11 and applied to such purposes, in12 cluding the payment of commis13 sions, brokerage, interest, taxes, 

14 storage, and other charges, law15 fully accruing in connection with 

16 the digital commodity trans17 action. 

18 ‘‘(II) COMMISSION ACTION.— 

19 Notwithstanding clause (ii), in accord20 ance with such terms and conditions 

21 as the Commission may prescribe by 

22 rule, regulation, or order, any money, 

23 assets, or property of the customers of 

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1 gled and deposited in customer ac2 counts with any other money, assets, 

3 or property received by the digital 

4 commodity exchange and required by 

5 the Commission to be separately ac6 counted for and treated and dealt 

7 with as belonging to the customer of 

8 the digital commodity exchange. 

9 ‘‘(C) PERMITTED INVESTMENTS.—Money 

10 described in clause (ii) may be invested in obli11 gations of the United States, in general obliga12 tions of any State or of any political subdivision 

13 of a State, and in obligations fully guaranteed 

14 as to principal and interest by the United 

15 States, or in any other investment that the 

16 Commission may by rule or regulation pre17 scribe, and such investments shall be made in 

18 accordance with such rules and regulations and 

19 subject to such conditions as the Commission 

20 may prescribe. 

21 ‘‘(D) CUSTOMER PROPERTY.—Assets held 

22 on behalf of a customer by a digital commodity 

23 exchange shall be considered to be customer 

24 property as such term is defined in section 761 

25 of title 11, United States Code, with regard to 


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1 all money, assets, and property of any customer 

2 received by a digital commodity exchange for 

3 trading or custody, or to margin, guarantee, or 

4 secure digital commodity transactions (includ5 ing money, assets, or property accruing to the 

6 customer as the result of such transactions). 

7 ‘‘(E) MISUSE OF CUSTOMER PROPERTY.— 

8 It shall be unlawful— 

9 ‘‘(i) for any digital commodity ex10 change that has received any customer 

11 money, assets, or property for custody to 

12 dispose of, or use any such money, assets, 

13 or property as belonging to the digital 

14 commodity exchange; or 

15 ‘‘(ii) for any other person, including 

16 any depository, other digital commodity ex17 change, or digital commodity custodian 

18 that has received any customer money, as19 sets, or property for deposit, to hold, dis20 pose of, or use any such money, assets, or 

21 property as belonging to the depositing 

22 digital commodity exchange or any person 

23 other than the customers of the digital 

24 commodity exchange. 

25 ‘‘(F) CUSTOMER RIGHT TO OPT OUT.— 


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1 ‘‘(i) IN GENERAL.—A customer shall 

2 have the right to waive the restrictions in 

3 subparagraph (B), by affirmatively elect4 ing, in writing to the digital commodity ex5 change, to waive the restrictions. 

6 ‘‘(ii) LIMITATIONS.—The Commission 

7 may, by rule, establish notice and disclo8 sure requirements, segregation require9 ments, investment limitations, and other 

10 rules related to the waiving of any restric11 tions under this paragraph that are rea12 sonably necessary to protect customers, in13 cluding eligible contract participants, non14 eligible contract participants, or any other 

15 class of customers. 

16 ‘‘(5) MONITORING OF TRADING AND TRADE

17 PROCESSING.— 

18 ‘‘(A) IN GENERAL.—The digital commodity 

19 exchange shall provide a competitive, open, and 

20 efficient market and mechanism for executing 

21 transactions that protects the price discovery 

22 process of trading on the exchange. 

23 ‘‘(B) PROTECTION OF MARKETS AND MAR24 KET PARTICIPANTS.—The digital commodity ex25 change shall establish and enforce rules— 


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1 ‘‘(i) to protect markets and market 

2 participants from abusive practices com3 mitted by any party, including abusive 

4 practices committed by a party acting as 

5 an agent for a participant; and 

6 ‘‘(ii) to promote fair and equitable 

7 trading on the exchange. 

8 ‘‘(C) The digital commodity exchange 

9 shall— 

10 ‘‘(i) establish and enforce rules or 

11 terms and conditions defining, or specifica12 tions detailing— 

13 ‘‘(I) trading procedures to be 

14 used in entering and executing orders 

15 traded on or through the facilities of 

16 the digital commodity exchange; and 

17 ‘‘(II) procedures for trade proc18 essing of digital commodities on or 

19 through the facilities of the digital 

20 commodity exchange; and 

21 ‘‘(ii) monitor trading in digital com22 modities to prevent manipulation, price 

23 distortion, and disruptions of the delivery 

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1 tices and procedures, including methods 

2 for conducting real-time monitoring of 

3 trading and comprehensive and accurate 

4 trade reconstructions. 

5 ‘‘(6) ABILITY TO OBTAIN INFORMATION.—The 

6 digital commodity exchange shall— 

7 ‘‘(A) establish and enforce rules that will 

8 allow the facility to obtain any necessary infor9 mation to perform any of the functions de10 scribed in this section; 

11 ‘‘(B) provide the information to the Com12 mission on request; and 

13 ‘‘(C) have the capacity to carry out such 

14 international information-sharing agreements as 

15 the Commission may require. 

16 ‘‘(7) EMERGENCY AUTHORITY.—The digital 

17 commodity exchange shall adopt rules to provide for 

18 the exercise of emergency authority, in consultation 

19 or cooperation with the Commission or a registered 

20 entity, as is necessary and appropriate, including the 

21 authority to facilitate the liquidation or transfer of 

22 open positions in any digital commodity or to sus23 pend or curtail trading in a digital commodity. 

24 ‘‘(8) REPORTING REQUIREMENTS.— 


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1 ‘‘(A) DUTY OF DIGITAL COMMODITY EX2 CHANGE.—Each digital commodity exchange 

3 shall provide to the Commission all information 

4 that is determined by the Commission to be 

5 necessary to perform each responsibility of the 

6 Commission under this Act. 

7 ‘‘(B) TIMELY PUBLICATION OF TRADING

8 INFORMATION.— 

9 ‘‘(i) IN GENERAL.—The digital com10 modity exchange shall make public timely 

11 information on price, trading volume, and 

12 other trading data on digital commodities 

13 to the extent prescribed by the Commis14 sion. 

15 ‘‘(ii) CAPACITY OF DIGITAL COM16 MODITY EXCHANGE.—The digital com17 modity exchange shall be required to have 

18 the capacity to electronically capture and 

19 transmit trade information with respect to 

20 transactions executed on the exchange. 

21 ‘‘(9) RECORDKEEPING AND REPORTING.— 

22 ‘‘(A) IN GENERAL.—A digital commodity 

23 exchange shall— 

24 ‘‘(i) maintain records of all activities 

25 relating to the business of the facility, inVerDate Sep 11 2014 04:31 Oct 16, 2020 Jkt 019200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\H8373.IH H8373

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1 cluding a complete audit trail, in a form 

2 and manner acceptable to the Commission 

3 for a period of 5 years; 

4 ‘‘(ii) report to the Commission, in a 

5 form and manner acceptable to the Com6 mission, such information as the Commis7 sion determines to be necessary or appro8 priate for the Commission to perform the 

9 duties of the Commission under this Act; 

10 and 

11 ‘‘(iii) keep any such records of digital 

12 commodities which relate to a security 

13 open to inspection and examination by the 

14 Securities and Exchange Commission. 

15 ‘‘(B) INFORMATION-SHARING.—Subject to 

16 section 8, and on request, the Commission shall 

17 share information collected under subparagraph 

18 (A) with— 

19 ‘‘(i) the Board; 

20 ‘‘(ii) the Securities and Exchange 

21 Commission; 

22 ‘‘(iii) each appropriate Federal bank23 ing agency; 


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1 ‘‘(iv) each appropriate State bank su2 pervisor (within the meaning of section 3 

3 of the Federal Deposit Insurance Act); 

4 ‘‘(v) the Financial Stability Oversight 

5 Council; 

6 ‘‘(vi) the Department of Justice; and 

7 ‘‘(vii) any other person that the Com8 mission determines to be appropriate, in9 cluding— 

10 ‘‘(I) foreign financial supervisors 

11 (including foreign futures authorities); 

12 ‘‘(II) foreign central banks; and 

13 ‘‘(III) foreign ministries. 

14 ‘‘(C) CONFIDENTIALITY AGREEMENT.—Be15 fore the Commission may share information 

16 with any entity described in subparagraph (B), 

17 the Commission shall receive a written agree18 ment from each entity stating that the entity 

19 shall abide by the confidentiality requirements 

20 described in section 8 relating to the informa21 tion on digital commodity transactions that is 

22 provided. 

23 ‘‘(D) PROVIDING INFORMATION.—Each 

24 digital commodity exchange shall provide to the 

25 Commission (including any designee of the 


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1 Commission) information under subparagraph 

2 (A) in such form and at such frequency as is 

3 required by the Commission. 

4 ‘‘(10) ANTITRUST CONSIDERATIONS.—Unless 

5 necessary or appropriate to achieve the purposes of 

6 this Act, the digital commodity exchange shall not— 

7 ‘‘(A) adopt any rules or take any actions 

8 that result in any unreasonable restraint of 

9 trade; or 

10 ‘‘(B) impose any material anticompetitive 

11 burden on trading. 

12 ‘‘(11) CONFLICTS OF INTEREST.—The digital 

13 commodity exchange shall— 

14 ‘‘(A) establish and enforce rules to mini15 mize conflicts of interest in its decision-making 

16 process; and 

17 ‘‘(B) establish a process for resolving the 

18 conflicts of interest. 

19 ‘‘(12) FINANCIAL RESOURCES.— 

20 ‘‘(A) IN GENERAL.—Each digital com21 modity exchange shall have adequate financial, 

22 operational, and managerial resources, as deter23 mined by the Commission, to discharge each re24 sponsibility of the digital commodity exchange. 


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1 ‘‘(B) MINIMUM AMOUNT OF FINANCIAL RE2 SOURCES.—Each digital commodity exchange 

3 shall possess financial resources that, at a min4 imum, exceed the total amount that would en5 able the digital commodity exchange to conduct 

6 an orderly wind down of its activities. 

7 ‘‘(C) ADDITIONAL FINANCIAL RESOURCES

8 FOR LEVERAGE TRADING.—The Commission 

9 may require such additional financial resources 

10 as are necessary to enable a digital commodity 

11 exchange which offers margined, leveraged, or 

12 financed transactions to fulfill its customer obli13 gations. 

14 ‘‘(13) GOVERNANCE FITNESS STANDARDS.— 

15 ‘‘(A) GOVERNANCE ARRANGEMENTS.— 

16 Each digital commodity exchange shall establish 

17 governance arrangements that are transparent 

18 to fulfill public interest requirements. 

19 ‘‘(B) FITNESS STANDARDS.—Each digital 

20 commodity exchange shall establish and enforce 

21 appropriate fitness standards for— 

22 ‘‘(i) directors; 

23 ‘‘(ii) any individual or entity with di24 rect access to the settlement activities of 

25 the digital commodity exchange; 


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1 ‘‘(iii) any individual or entity with di2 rect access to any affiliated digital com3 modity custodian; 

4 ‘‘(iv) any entity offering affiliated 

5 services for the digital commodity ex6 change; and 

7 ‘‘(v) any party affiliated with any in8 dividual or entity described in this clause. 

9 ‘‘(14) SYSTEM SAFEGUARDS.—The digital com10 modity exchange shall— 

11 ‘‘(A) establish and maintain a program of 

12 risk analysis and oversight to identify and mini13 mize sources of operational and security risks, 

14 through the development of appropriate controls 

15 and procedures, and automated systems, that— 

16 ‘‘(i) are reliable and secure; and 

17 ‘‘(ii) have adequate scalable capacity; 

18 ‘‘(B) establish and maintain emergency 

19 procedures, backup facilities, and a plan for dis20 aster recovery that allow for— 

21 ‘‘(i) the timely recovery and resump22 tion of operations; and 

23 ‘‘(ii) the fulfillment of the responsibil24 ities and obligations of the digital com25 modity exchange; and 


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1 ‘‘(C) periodically conduct tests to verify 

2 that the backup resources of the digital com3 modity exchange are sufficient to ensure contin4 ued— 

5 ‘‘(i) order processing and trade 

6 matching; 

7 ‘‘(ii) price reporting; 

8 ‘‘(iii) market surveillance; and 

9 ‘‘(iv) maintenance of a comprehensive 

10 and accurate audit trail. 

11 ‘‘(d) APPOINTMENT OF TRUSTEE.— 

12 ‘‘(1) IN GENERAL.—If a proceeding under sec13 tion 5e results in the suspension or revocation of the 

14 registration of a digital commodity exchange, or if a 

15 digital commodity exchange withdraws from registra16 tion, the Commission, on notice to the digital com17 modity exchange, may apply to the appropriate 

18 United States district court where the digital com19 modity exchange is located for the appointment of a 

20 trustee. 

21 ‘‘(2) ASSUMPTION OF JURISDICTION.—If the 

22 Commission applies for appointment of a trustee 

23 under paragraph (1)— 

24 ‘‘(A) the court may take exclusive jurisdic25 tion over the digital commodity exchange and 


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1 the records and assets of the digital commodity 

2 exchange, wherever located; and 

3 ‘‘(B) if the court takes jurisdiction under 

4 subparagraph (A), the court shall appoint the 

5 Commission, or a person designated by the 

6 Commission, as trustee with power to take pos7 session and continue to operate or terminate 

8 the operations of the digital commodity ex9 change in an orderly manner for the protection 

10 of customers subject to such terms and condi11 tions as the court may prescribe. 

12 ‘‘(e) QUALIFIED DIGITAL COMMODITY CUSTO13 DIAN.—A digital commodity exchange shall hold in a 

14 qualified digital commodity custodian each unit of a digital 

15 commodity that is— 

16 ‘‘(1) the property of a customer of the digital 

17 commodity exchange; 

18 ‘‘(2) required to be held by the digital com19 modity exchange under subsection (b)(2) or (c)(12) 

20 of this section; or 

21 ‘‘(3) otherwise so required by the Commission 

22 to reasonably protect customers or promote the pub23 lic interest. 

24 ‘‘(f) EXEMPTIONS.—In order to promote responsible 

25 economic or financial innovation and fair competition, or 


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1 protect customers, the Commission may (on its own initia2 tive or on application of the registered digital commodity 

3 exchange) exempt, either unconditionally or on stated 

4 terms or conditions or for stated periods and either retro5 actively or prospectively, or both, a registered digital com6 modity exchange from the requirements of this section, if 

7 the Commission determines that— 

8 ‘‘(1) the exemption would be consistent with the 

9 public interest and the purposes of this Act; and 

10 ‘‘(2) the exemption will not have a material ad11 verse effect on the ability of the Commission or the 

12 digital commodity exchange to discharge regulatory 

13 or self-regulatory duties under this Act. 

14 ‘‘(g) CUSTOMER DEFINED.—In this section, the term 

15 ‘customer’ means any person that maintains an account 

16 for the trading of digital commodities directly with a dig17 ital commodity exchange (other than a person that is 

18 owned or controlled, directly or indirectly, by the digital 

19 commodity exchange) for its own behalf or on behalf of 

20 other any person. 

21 ‘‘(h) FEES.— 

22 ‘‘(1) IN GENERAL.—The Commission may, by 

23 rule, establish— 

24 ‘‘(A) an initial application fee to offset the 

25 cost to review an application under this section 


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1 and the initial registration of a digital com2 modity exchange under this section; and 

3 ‘‘(B) an annual supervisory fee to offset 

4 the cost to provide ongoing supervision and 

5 oversight of a digital commodity exchange 

6 under this section. 

7 ‘‘(2) IMPOSITION; COLLECTION.—The Commis8 sion may impose on, and collect from applicants and 

9 entities registered under this section fees established 

10 under paragraph (1), in reasonable amounts to off11 set the costs described in paragraph (1). 

12 ‘‘(3) RETENTION OF FEES.—Any fees collected 

13 under this section shall remain available for expendi14 ture, without further appropriation, until expended 

15 for the purpose of— 

16 ‘‘(A) implementing this section; and 

17 ‘‘(B) providing ongoing registration, super18 vision, and oversight under this section. 

19 ‘‘(i) FEDERAL PREEMPTION.—Notwithstanding any 

20 other provision of law, the Commission shall have exclusive 

21 jurisdiction over any digital commodity exchange reg22 istered under this section. 


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1 ‘‘SEC. 5j. QUALIFIED DIGITAL COMMODITY CUSTODIANS. 

2 ‘‘(a) IN GENERAL.—The Commission shall designate 

3 a digital commodity custodian as a qualified digital com4 modity custodian, if— 

5 ‘‘(1) the Commission finds the digital com6 modity custodian is subject to adequate supervision 

7 and appropriate regulation by an appropriate Fed8 eral banking agency, a State bank supervisor (within 

9 the meaning of section 3 of the Federal Deposit In10 surance Act), or an appropriate government author11 ity in the home country of the organization; and 

12 ‘‘(2) the digital commodity custodian agrees to 

13 such regular and periodic sharing of information as 

14 the Commission determines by rule shall be reason15 ably necessary to effectuate any of the provisions, or 

16 to accomplish any of the purposes, of this Act. 

17 ‘‘(b) RULEMAKING AUTHORITY.—For purposes of 

18 subsection (a), the Commission, by rule or order, shall de19 fine ‘adequate supervision’ and ‘appropriate regulation’ as 

20 any regulatory regime which meets such minimum stand21 ards for supervision and regulation as the Commission de22 termines are reasonably necessary to protect the property 

23 of customers of a registered digital commodity exchange, 

24 including minimum standards relating to— 

25 ‘‘(1) financial resources; 

26 ‘‘(2) risk management requirements; 


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1 ‘‘(3) governance arrangements; 

2 ‘‘(4) fitness standards; 

3 ‘‘(5) recordkeeping; 

4 ‘‘(6) information-sharing; and 

5 ‘‘(7) conflicts of interest. 

6 ‘‘(c) AUTHORITY TO TEMPORARILY SUSPEND

7 STANDARDS.—The Commission may, by rule or order, 

8 temporarily suspend, in whole or in part, any requirement 

9 imposed under, or any standard referred to in, this section 

10 if the Commission determines that the suspension would 

11 be consistent with the public interest and the purposes of 

12 this Act.’’. 

Æ 


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