I 

116TH CONGRESS 

2D SESSION H. R. 8378 

To amend the securities laws to exclude investment contract assets from 

the definition of a security. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 24, 2020 

Mr. EMMER (for himself, Mr. CONAWAY, Mr. SOTO, and Mr. KHANNA) introduced the following bill; which was referred to the Committee on Financial Services 

A BILL 

To amend the securities laws to exclude investment contract 

assets from the definition of a security. 

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 ‘‘Securities Clarity Act’’. 

5 SEC. 2. SENSE OF CONGRESS; PURPOSE. 

6 (a) SENSE OF CONGRESS.—It is the sense of Con7 gress that— 

8 (1) among the ways that participants in the 

9 digital asset industry have raised capital and earned 

10 revenue is through arrangements in which investors 


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1 provide funds for the development of blockchain2 based protocols in exchange for digital assets or the 

3 future delivery of digital assets to be used in those 

4 protocols; 

5 (2) although certain of those fundraising ar6 rangements may be deemed to be ‘‘investment con7 tracts’’ within the meaning given to that term in 

8 section 2(a) of the Securities Act of 1933 (the ‘‘Se9 curities Act’’), the underlying assets sold pursuant 

10 to these arrangements are frequently not themselves 

11 inherently securities as defined in section 2(a) of the 

12 Securities Act and, like other assets sold pursuant to 

13 investment contracts in the past, do not become se14 curities as so defined merely because they are sold 

15 pursuant to an investment contract; 

16 (3) under SEC v. W.J. Howey Co., 328 U.S. 

17 293 (1946), and its progeny, the Federal courts 

18 have consistently held that ‘‘an investment contract, 

19 for purposes of the Securities Act, means a contract, 

20 transaction, or scheme whereby a person invests his 

21 money in a common enterprise and is led to expect 

22 profits solely from the efforts of the promoter or a 

23 third party’’, and have not endorsed the notion that 

24 an asset underlying an investment contract (for ex25 ample, the orange groves sold in Howey) is also conVerDate Sep 11 2014 23:54 Oct 16, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H8378.IH H8378

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1 ferred ‘‘security’’ status merely as a result of its 

2 being sold pursuant to the relevant contract, trans3 action, or scheme; 

4 (4) although the distinction between an invest5 ment contract, which is a security, and the assets 

6 sold pursuant to it had been well-settled for pur7 poses of section 2(a) of the Securities Act, the two 

8 have been unnecessarily conflated in the context of 

9 digital assets; and 

10 (5) this new approach, which conflates an in11 vestment contract and the asset sold pursuant to 

12 that contract or scheme, differs from the approach 

13 taken in many other major jurisdictions around the 

14 world, has discouraged development of the digital 

15 asset sector in the United States, and has hindered 

16 innovation in that industry here without providing 

17 concomitant benefits to those who enter into invest18 ment contracts for the purpose of acquiring digital 

19 assets. 

20 (b) PURPOSE.—The purpose of this Act is to clarify 

21 and codify that an asset sold pursuant to an investment 

22 contract, whether tangible or intangible (including an 

23 asset in digital form), that is not otherwise a security 

24 under the Act, does not become a security as a result of 


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1 being sold or otherwise transferred pursuant to an invest2 ment contract. 

3 SEC. 3. TREATMENT OF INVESTMENT CONTRACT ASSETS. 

4 (a) SECURITIES ACT OF 1933.—Section 2(a) of the 

5 Securities Act of 1933 (15 U.S.C. 77b(a)) is amended— 

6 (1) in paragraph (1), by adding at the end the 

7 following: ‘‘The term ‘security’ does not include an 

8 investment contract asset.’’; and 

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

10 ‘‘(20) The term ‘investment contact asset’ 

11 means an asset, whether tangible or intangible, in12 cluding assets in digital form— 

13 ‘‘(A) sold or otherwise transferred, or in14 tended to be sold or otherwise transferred, pur15 suant to an investment contract; and 

16 ‘‘(B) that is not otherwise a security pur17 suant to the first sentence of paragraph (1).’’. 

18 (b) INVESTMENT ADVISERS ACT OF 1940.—Section 

19 202(a)(18) of the Investment Advisers Act of 1940 (15 

20 U.S.C. 80b–2(a)(18)) is amended by adding at the end 

21 the following: ‘‘The term ‘security’ does not include an in22 vestment contract asset (as such term is defined under 

23 section 2(a) of the Securities Act of 1933).’’. 

24 (c) INVESTMENT COMPANY ACT OF 1940.—Section 

25 2(a)(36) of the Investment Company Act of 1940 (15 


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1 U.S.C. 80a–2(a)(36)) is amended by adding at the end 

2 the following: ‘‘The term ‘security’ does not include an in3 vestment contract asset (as such term is defined under 

4 section 2(a) of the Securities Act of 1933).’’. 

5 (d) SECURITIES EXCHANGE ACT OF 1934.—Section 

6 3(a)(10) of the Securities Exchange Act of 1934 (15 

7 U.S.C. 78c(a)(10)) is amended by adding at the end the 

8 following: ‘‘The term ‘security’ does not include an invest9 ment contract asset (as such term is defined under section 

10 2(a) of the Securities Act of 1933).’’. 

11 (e) SECURITIES INVESTOR PROTECTION ACT OF

12 1970.—Section 16(14) of the Securities Investor Protec13 tion Act of 1970 (15 U.S.C. 78lll(14)) is amended by add14 ing at the end the following: ‘‘The term ‘security’ does 

15 not include an investment contract asset (as such term 

16 is defined under section 2(a) of the Securities Act of 

17 1933).’’. 

Æ 


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