149 
and to be practically feasible to pro-
vide. 
‘‘(iii) 
FORMAT.—The 
Commission 
shall prescribe rules and regulations for 
the standardization and simplification of 
disclosures under clause (ii), including re-
quiring that disclosures— 
‘‘(I) be conspicuous; 
‘‘(II) use plain language com-
prehensible to customers; and 
‘‘(III) succinctly explain the in-
formation that is required to be com-
municated to the customer. 
‘‘(iv) RELIANCE
ON
PREVIOUS
DIS-
CLOSURES.—In complying with this sub-
paragraph, a digital commodity exchange 
may rely on and make available to the pub-
lic relevant information publicly disclosed 
to the Commission, the Securities and Ex-
change Commission, or an appropriate 
Federal banking agency. 
‘‘(C) DIGITAL COMMODITIES HELD BY RE-
LATED AND DIGITAL COMMODITY AFFILIATED 
PERSONS.—A digital commodity exchange shall 
permit the trading of a unit of a digital com-
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modity 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 en-
sure the safety of customer money, assets, and prop-
erty. 
‘‘(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 MAR-
KET PARTICIPANTS.—A digital commodity ex-
change shall establish and enforce rules— 
‘‘(i) to protect markets and market 
participants from abusive practices com-
mitted by any party, including abusive 
practices committed by a party acting as 
an agent for a participant; and 
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‘‘(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 specifica-
tions 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 proc-
essing of digital commodities on or 
through the facilities of the digital 
commodity exchange; and 
‘‘(ii) monitor trading in digital com-
modities to prevent manipulation, price 
distortion, and disruptions, through sur-
veillance, 
compliance, 
and 
disciplinary 
practices and procedures, including meth-
ods for conducting real-time monitoring of 
trading and comprehensive and accurate 
trade reconstructions. 
‘‘(6) ABILITY
TO
OBTAIN
INFORMATION.—A 
digital commodity exchange shall— 
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‘‘(A) establish and enforce rules that will 
allow the facility to obtain any necessary infor-
mation to perform any of the functions de-
scribed in this section; 
‘‘(B) provide the information to the Com-
mission 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 com-
modity exchange shall adopt rules to provide for the 
exercise of emergency authority, in consultation or 
cooperation with the Commission or a registered en-
tity, as is necessary and appropriate, including the 
authority to facilitate the liquidation or transfer of 
open positions in any digital commodity or to sus-
pend or curtail trading in a digital commodity. 
‘‘(8) TIMELY PUBLICATION OF TRADING INFOR-
MATION.— 
‘‘(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 pre-
scribed by the Commission. 
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‘‘(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— 
‘‘(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 Com-
mission, such information as the Commis-
sion determines to be necessary or appro-
priate 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. 
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‘‘(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 bank-
ing agency; 
‘‘(iv) each appropriate State bank su-
pervisor (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 Com-
mission determines to be appropriate, in-
cluding— 
‘‘(I) foreign financial supervisors 
(including foreign futures authorities); 
‘‘(II) foreign central banks; and 
‘‘(III) foreign ministries. 
‘‘(C) CONFIDENTIALITY AGREEMENT.—Be-
fore the Commission may share information 
with any entity described in subparagraph (B), 
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the Commission shall receive a written agree-
ment from the entity stating that the entity 
shall abide by the confidentiality requirements 
described in section 8 relating to the informa-
tion on digital commodities that is provided. 
‘‘(D) PROVIDING INFORMATION.—A digital 
commodity exchange shall provide to the Com-
mission (including any designee of the Commis-
sion) 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 
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‘‘(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, oper-
ational, and managerial resources, as deter-
mined by the Commission, to discharge each re-
sponsibility of the digital commodity exchange. 
‘‘(B) MINIMUM AMOUNT OF FINANCIAL RE-
SOURCES.—A digital commodity exchange shall 
possess financial resources that, at a minimum, 
exceed— 
‘‘(i) the total amount that would en-
able 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 dis-
ciplinary procedures that authorize the digital com-
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modity 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, includ-
ing delegation of the functions to third parties. 
‘‘(14) GOVERNANCE FITNESS STANDARDS.— 
‘‘(A) GOVERNANCE
ARRANGEMENTS.—A 
digital commodity exchange shall establish gov-
ernance 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 di-
rect access to, or control of, customer as-
sets. 
‘‘(15) SYSTEM
SAFEGUARDS.—A digital com-
modity exchange shall— 
‘‘(A) establish and maintain a program of 
risk analysis and oversight to identify and mini-
mize sources of operational and security risks, 
through the development of appropriate controls 
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and procedures, and automated systems in ac-
cordance 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 resump-
tion of operations; and 
‘‘(ii) the fulfillment of the responsibil-
ities and obligations of the digital com-
modity exchange; and 
‘‘(C) periodically conduct tests to verify 
that the backup resources of the digital com-
modity exchange are sufficient to ensure contin-
ued— 
‘‘(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 ex-
change shall hold customer money, assets, and prop-
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erty 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. 
‘‘(A) SEGREGATION OF FUNDS.— 
‘‘(i) IN
GENERAL.—A digital com-
modity exchange shall treat and deal with 
all money, assets, and property that is re-
ceived by the digital commodity exchange, 
or accrues to a customer as the result of 
trading in digital commodities, as belong-
ing to the customer. 
‘‘(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 ex-
change 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. 
‘‘(B) EXCEPTIONS.— 
‘‘(i) USE OF FUNDS.— 
‘‘(I) 
IN
GENERAL.—Notwith-
standing subparagraph (A), money, 
assets, and property of customers of a 
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digital commodity exchange described 
in subparagraph (A) may, for conven-
ience, be commingled and deposited in 
the same account or accounts with 
any bank, trust company, derivatives 
clearing organization, or qualified dig-
ital asset custodian. 
‘‘(II) 
WITHDRAWAL.—Notwith-
standing 
subparagraph 
(A), 
such 
share of the money, assets, and prop-
erty described in subclause (I) of this 
clause as in the normal course of busi-
ness 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, law-
fully accruing in connection with the 
contract of sale of a digital com-
modity. 
‘‘(ii) COMMISSION ACTION.—Notwith-
standing subparagraph (A), in accordance 
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‘‘(3) CUSTOMER
PROTECTION
DURING
BANK-
RUPTCY.— 
‘‘(A) CUSTOMER
PROPERTY.—All assets 
held on behalf of a customer by a digital com-
modity 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 con-
tracts of sale of a digital commodity (including 
money, assets, or property accruing to the cus-
tomer 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 in-
volving 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 con-
tract 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 pur-
poses 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 commis-
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sion merchant for purposes of section 761 of 
title 11, United States Code. 
‘‘(D) ASSETS
REMOVED
FROM
SEGREGA-
TION.—Assets removed from segregation due to 
a customer election under paragraph (5) shall 
not be considered customer property for pur-
poses of section 761 of title 11, United States 
Code. 
‘‘(4) MISUSE OF CUSTOMER PROPERTY.— 
‘‘(A) IN GENERAL.—It shall be unlawful— 
‘‘(i) for any digital commodity ex-
change 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 ex-
change, 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 
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digital commodity exchange or any person 
other than the customers of the digital 
commodity exchange. 
‘‘(B) USE FURTHER DEFINED.—For pur-
poses of this section, ‘use’ of a digital com-
modity includes utilizing any unit of a digital 
asset to participate in a blockchain service de-
fined in paragraph (5) or a decentralized gov-
ernance system associated with the digital com-
modity 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. 
‘‘(5) PARTICIPATION
IN
BLOCKCHAIN
SERV-
ICES.— 
‘‘(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 ex-
change, to waive the restrictions. 
‘‘(B) USE
OF
FUNDS.—Customer digital 
commodities removed from segregation under 
subparagraph (A) may be pooled and used by 
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the digital commodity exchange or its designee 
to provide a blockchain service for a blockchain 
system to which the unit of the digital asset re-
moved from segregation in subparagraph (A) 
relates. 
‘‘(C) LIMITATIONS.— 
‘‘(i) IN GENERAL.—The Commission 
shall, by rule, establish notice and disclo-
sure requirements, and may, by rule, es-
tablish any other limitations and rules re-
lated 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 sub-
paragraph (A) as a condition of doing 
business on the exchange. 
‘‘(D) BLOCKCHAIN SERVICE DEFINED.—In 
this subparagraph, the term ‘blockchain service’ 
means any activity relating to validating trans-
actions on a blockchain system, providing secu-
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rity for a blockchain system, or other similar 
activity required for the ongoing operation of a 
blockchain system. 
‘‘(e) MARKET ACCESS REQUIREMENTS.—The Com-
mission may, by rule, impose any additional requirements 
related to the operations and activities of the digital com-
modity exchange and an affiliated digital commodity 
broker necessary to protect market participants, promote 
fair and equitable trading on the digital commodity ex-
change, and promote responsible innovation. 
‘‘(f) DESIGNATION
OF CHIEF COMPLIANCE OFFI-
CER.— 
‘‘(1) IN
GENERAL.—A digital commodity ex-
change 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 prin-
ciples 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 
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exchange, resolve any conflicts of interest that 
may arise; 
‘‘(D) establish and administer the policies 
and procedures required to be established pur-
suant 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 remedi-
ation 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, re-
mediation, 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— 
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‘‘(i) the compliance of the digital com-
modity exchange with this Act; and 
‘‘(ii) the policies and procedures, in-
cluding the code of ethics and conflicts of 
interest policies, of the digital commodity 
exchange. 
‘‘(B) REQUIREMENTS.—The chief compli-
ance officer shall— 
‘‘(i) submit each report described in 
subparagraph (A) with the appropriate fi-
nancial report of the digital commodity ex-
change that is required to be submitted to 
the Commission pursuant to this section; 
and 
‘‘(ii) include in the report a certifi-
cation that, under penalty of law, the re-
port is accurate and complete. 
‘‘(g) APPOINTMENT OF TRUSTEE.— 
‘‘(1) IN GENERAL.—If a proceeding under sec-
tion 5e results in the suspension or revocation of the 
registration of a digital commodity exchange, or if a 
digital commodity exchange withdraws from registra-
tion, the Commission, on notice to the digital com-
modity exchange, may apply to the appropriate 
United States district court where the digital com-
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modity 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 jurisdic-
tion 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 pos-
session and continue to operate or terminate 
the operations of the digital commodity ex-
change in an orderly manner for the protection 
of customers subject to such terms and condi-
tions 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; 
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‘‘(2) required to be held by the digital com-
modity exchange under subsection (c)(12) of this 
section; or 
‘‘(3) otherwise so required by the Commission 
to reasonably protect customers. 
‘‘(i) EXEMPTIONS.— 
‘‘(1) In order to promote responsible innovation 
and fair competition, or protect customers, the Com-
mission may (on its own initiative or on application 
of the registered digital commodity exchange) ex-
empt, either unconditionally or on stated terms or 
conditions or for stated periods and either retro-
actively 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 mate-
rial adverse effect on the ability of the Commis-
sion or the digital commodity exchange to dis-
charge regulatory or self-regulatory duties 
under this Act. 
‘‘(2) The Commission may exempt, condi-
tionally or unconditionally, a digital commodity ex-
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change from registration under this section if the 
Commission finds that the digital commodity ex-
change is subject to comparable, comprehensive su-
pervision 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 dig-
ital 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 reg-
istered under this section with respect to activities and 
transactions subject to this Act.’’. 
SEC. 405. QUALIFIED DIGITAL ASSET CUSTODIANS. 
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: 
‘‘SEC. 5j. QUALIFIED DIGITAL ASSET CUSTODIANS. 
‘‘(a) IN GENERAL.—A person is a qualified digital 
asset custodian for purposes of this Act if the person— 
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‘‘(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 reg-
ulation for custody and safekeeping of digital assets 
by— 
‘‘(A) a State bank supervisor (within the 
meaning of section 3 of the Federal Deposit In-
surance 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. 
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‘‘(c) OTHER REQUIREMENTS.—A person shall be in 
compliance with this subsection if: 
‘‘(1) NOT OTHERWISE PROHIBITED.—The per-
son 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 in-
formation with the Commission on request and 
complies with such requirements for periodic 
sharing of information regarding customer ac-
counts that the person holds on behalf of an en-
tity 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 de-
scribed in subparagraph (A) by providing the 
Commission with a detailed listing, in writing, 
of the digital assets of a customer in the cus-
tody of, or use by, the person. 
‘‘(C) RULEMAKING FOR CFTC ENTITIES.— 
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‘‘(i) IN GENERAL.—The Commission 
shall prescribe rules to permit a person 
registered with the Commission to be a 
qualified digital asset custodian in compli-
ance with this section. 
‘‘(ii) CONTENT.—In prescribing the 
rules under subparagraph (A), the Com-
mission shall require a person registered 
with the Commission to— 
‘‘(I) implement requirement con-
sistent with the requirements in sub-
section (d)(1); 
‘‘(II) establish sufficient system 
safeguards; 
‘‘(III) prevent or mitigate con-
flicts of interest, as appropriate; and 
‘‘(IV) establish separate govern-
ance 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 ‘appro-
priate regulation’ mean such minimum standards for 
supervision and regulation as are reasonably nec-
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essary to protect the digital assets held by a person 
registered under this Act, including standards relat-
ing to the licensing, examination, and supervisory 
processes that require the person to, at a min-
imum— 
‘‘(A) receive a review and evaluation of 
ownership, character and fitness, conflicts of in-
terest, business model, financial statements, 
funding resources, and policies and procedures 
of the person; 
‘‘(B) hold capital sufficient for the finan-
cial 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 au-
dited financial statements to the applicable su-
pervisor described in subsection (b); 
‘‘(F) provide disclosures to the applicable 
supervisor described in subsection (b) regarding 
actions, proceedings, and other items as deter-
mined by the supervisor; 
‘‘(G) maintain and enforce policies and 
procedures for compliance with applicable State 
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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 re-
solve complaints. 
‘‘(2) RULEMAKING WITH RESPECT TO DEFINI-
TIONS.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, the Commission may, by rule, further 
define the terms ‘adequate supervision’ and ‘ap-
propriate regulation’ as necessary and appro-
priate for the protection of customers, and con-
sistent with the purposes of this Act. 
‘‘(B) CONDITIONAL TREATMENT OF CER-
TAIN CUSTODIANS BEFORE RULEMAKING.—Be-
fore 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; 
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‘‘(ii) the State bank supervisor has es-
tablished licensing, examination, and su-
pervisory processes that require the trust 
company to, at a minimum, meet the con-
ditions 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 ef-
fective date of the rulemaking. 
‘‘(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 
if the Commission determines that the suspension would 
be consistent with the public interest and the purposes of 
this Act.’’. 
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178 
SEC. 406. REGISTRATION AND REGULATION OF DIGITAL 
COMMODITY BROKERS AND DEALERS. 
The Commodity Exchange Act (7 U.S.C. 1 et seq.) 
is amended by inserting after section 4t the following: 
‘‘SEC. 4u. REGISTRATION AND REGULATION OF DIGITAL 
COMMODITY BROKERS AND DEALERS. 
‘‘(a) REGISTRATION.— 
‘‘(1) REQUIREMENT.—It shall be unlawful for 
any person to act as a digital commodity broker or 
digital commodity dealer unless the person is reg-
istered as such with the Commission. 
‘‘(2) ADDITIONAL REGISTRATION.— 
‘‘(A) RULES.—In order to foster the devel-
opment 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 burden-
some 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 
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‘‘(iii) may after an analysis of the 
risks and benefits, prescribe rules to pro-
vide for portfolio margining. 
‘‘(B) WITH
MEMBERSHIP
IN
A
REG-
ISTERED FUTURES ASSOCIATION.—Any person 
required to be registered as a digital commodity 
broker or digital commodity dealer under this 
section shall be a member of a registered fu-
tures 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 pre-
scribed 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 
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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 ef-
fect or be involved in effecting a contract of sale of 
a digital commodity on behalf of the digital com-
modity broker or the digital commodity dealer, re-
spectively, if the digital commodity broker or digital 
commodity dealer, respectively, knew, or in the exer-
cise of reasonable care should have known, of the 
statutory disqualification. 
‘‘(c) RULEMAKING.— 
‘‘(1) IN GENERAL.—The Commission shall pre-
scribe such rules applicable to registered digital com-
modity 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.— 
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‘‘(A) IN GENERAL.—The Commission shall 
prescribe rules and regulations applicable to 
digital commodity brokers or digital commodity 
dealers which shall set forth minimum require-
ments related to disclosure, recordkeeping, mar-
gin 
and 
financing 
arrangements, 
rehypothecation, capital, reporting, business 
conduct, documentation, and supervision of em-
ployees 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 eli-
gible contract participant. 
‘‘(B) SPECIFIC
AUTHORITY.—Except as 
prohibited in section 2(c)(2)(G)(iii), the Com-
mission may also make, promulgate, and en-
force such rules and regulations as, in the judg-
ment of the Commission, are reasonably nec-
essary 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 re-
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garding registration with the Commission and 
membership in a registered futures association. 
‘‘(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 deal-
er, respectively, is able, at all times, to— 
‘‘(A) meet, and continue to meet the obli-
gations 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 mer-
chant, introducing broker, digital commodity broker, 
digital commodity dealer, broker, and dealer shall 
maintain sufficient capital to comply with the strict-
er 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 
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under this Act or the Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.). 
‘‘(e) REPORTING AND RECORDKEEPING.—Each dig-
ital 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 deal-
er, respectively; 
‘‘(2) shall keep books and records in such form 
and manner and for such period as may be pre-
scribed 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 dig-
ital commodity broker or digital commodity dealer, 
respectively, and all related records (including re-
lated forward or derivatives transactions) and re-
corded communications, including electronic mail, in-
stant messages, and recordings of telephone calls, 
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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 identifi-
able 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 Com-
mission, by rule or regulation, prescribes related 
to— 
‘‘(A) fraud, manipulation, and other abu-
sive practices involving spot or margined, lever-
aged, or financed digital commodity trans-
actions (including transactions that are offered 
but not entered into); 
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‘‘(B) diligent supervision of the business of 
the registered digital commodity broker or dig-
ital commodity dealer, respectively; and 
‘‘(C) such other matters as the Commis-
sion deems appropriate. 
‘‘(2) BUSINESS
CONDUCT
REQUIREMENTS.— 
The Commission shall, by rule, prescribe business 
conduct requirements which— 
‘‘(A) require disclosure by a registered dig-
ital commodity broker and registered digital 
commodity dealer to any counterparty to the 
transaction (other than an eligible contract par-
ticipant) of— 
‘‘(i) information about the material 
risks and characteristics of the digital com-
modity; 
‘‘(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 
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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
PRAC-
TICES.—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 ma-
nipulative. 
‘‘(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
INFORMA-
TION.—Each digital commodity broker and digital 
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commodity dealer shall disclose to the Commission 
information concerning— 
‘‘(A) the terms and conditions of the trans-
actions of the digital commodity broker or dig-
ital 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 infor-
mation to perform any of the functions de-
scribed in this section; and 
‘‘(B) provide the information to the Com-
mission, on request. 
‘‘(4) CONFLICTS OF INTEREST.—Each digital 
commodity broker and digital commodity dealer shall 
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establish, maintain, and enforce written policies and 
procedures reasonably designed, taking into consid-
eration 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 com-
modity 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 OFFI-
CER.— 
‘‘(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 com-
modity broker or registered digital commodity 
dealer; 
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189 
‘‘(B) review the compliance of the reg-
istered digital commodity broker or registered 
digital commodity dealer with respect to the 
registered digital commodity broker and reg-
istered digital commodity dealer requirements 
described in this section; 
‘‘(C) in consultation with the board of di-
rectors, a body performing a function similar to 
the board, or the senior officer of the organiza-
tion, resolve any conflicts of interest that may 
arise; 
‘‘(D) be responsible for administering each 
policy and procedure that is required to be es-
tablished pursuant to this section; 
‘‘(E) ensure compliance with this Act (in-
cluding regulations), including each rule pre-
scribed by the Commission under this section; 
‘‘(F) establish procedures for the remedi-
ation of noncompliance issues identified by the 
chief compliance officer through any— 
‘‘(i) compliance office review; 
‘‘(ii) look-back; 
‘‘(iii) internal or external audit find-
ing; 
‘‘(iv) self-reported error; or 
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‘‘(v) validated complaint; and 
‘‘(G) establish and follow appropriate pro-
cedures for the handling, management response, 
remediation, retesting, and closing of non-
compliance 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 dig-
ital commodity dealer with this Act (in-
cluding regulations); and 
‘‘(ii) each policy and procedure of the 
registered digital commodity broker or reg-
istered digital commodity dealer followed 
by the chief compliance officer (including 
the code of ethics and conflict of interest 
policies). 
‘‘(B) REQUIREMENTS.—The chief compli-
ance officer shall ensure that a compliance re-
port under subparagraph (A)— 
‘‘(i) accompanies each appropriate fi-
nancial report of the registered digital 
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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 re-
port is accurate and complete. 
‘‘(j) SEGREGATION OF DIGITAL COMMODITIES.— 
‘‘(1) HOLDING OF CUSTOMER ASSETS.— 
‘‘(A) IN
GENERAL.—Each digital com-
modity 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 ac-
cess to the money, assets, and property of the 
customer. 
‘‘(B) QUALIFIED
DIGITAL
ASSET
CUSTO-
DIAN.—Each digital commodity broker and dig-
ital 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, respec-
tively; 
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‘‘(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 cus-
tomers or promote the public interest. 
‘‘(2) SEGREGATION OF FUNDS.— 
‘‘(A) IN
GENERAL.—Each digital com-
modity broker and digital commodity dealer 
shall treat and deal with all money, assets, and 
property that is received by the digital com-
modity broker or digital commodity dealer, or 
accrues to a customer as the result of trading 
in digital commodities, as belonging to the cus-
tomer. 
‘‘(B) COMMINGLING PROHIBITED.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided 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 com-
modity dealer, respectively, or use any such 
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money, assets, or property to margin, se-
cure, 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 dig-
ital commodity broker or digital 
commodity dealer may, for con-
venience, commingle and deposit 
in the same account or accounts 
with any bank, trust company, 
derivatives clearing organization, 
or qualified digital asset custo-
dian 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 busi-
ness shall be necessary to mar-
gin, guarantee, secure, transfer, 
adjust, or settle a contract of sale 
of a digital commodity with a 
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registered entity may be with-
drawn and applied to such pur-
poses, 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 con-
ditions as the Commission may pre-
scribe 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 dig-
ital 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. 
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‘‘(3) PERMITTED
INVESTMENTS.—Money de-
scribed in paragraph (2) may be invested in obliga-
tions 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 invest-
ment that the Commission may by rule or regulation 
allow. 
‘‘(4) CUSTOMER
PROTECTION
DURING
BANK-
RUPTCY.— 
‘‘(A) CUSTOMER
PROPERTY.—All money, 
assets, or property described in paragraph (2) 
shall be considered customer property for pur-
poses of section 761 of title 11, United States 
Code. 
‘‘(B) TRANSACTIONS.—A transaction in-
volving a unit of a digital commodity occurring 
with a digital commodity broker or digital com-
modity dealer shall be considered a ‘contract for 
the purchase or sale of a commodity for future 
delivery, on or subject to the rules of, a con-
tract market or board of trade’ for purposes of 
the definition of a ‘commodity contract’ in sec-
tion 761 of title 11, United States Code. 
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‘‘(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
SEGREGA-
TION.—Assets removed from segregation due to 
a customer election under paragraph (6) shall 
not be considered customer property for pur-
poses 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 re-
ceived any customer money, assets, or 
property for custody to dispose of, or use 
any such money, assets, or property as be-
longing to the digital commodity broker or 
digital commodity dealer, respectively, or 
any person other than a customer of the 
digital commodity broker or digital com-
modity dealer, respectively; or 
‘‘(ii) for any other person, including 
any depository, digital commodity ex-
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change, 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 belong-
ing to the depositing digital commodity 
broker or digital commodity dealer or any 
person other than the customers of the 
digital commodity broker or digital com-
modity dealer, respectively. 
‘‘(B) USE FURTHER DEFINED.—For pur-
poses of this section, ‘use’ of a digital com-
modity includes utilizing any unit of a digital 
asset to participate in a blockchain service de-
fined in paragraph (6) or a decentralized gov-
ernance system associated with the digital com-
modity 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
SERV-
ICES.— 
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‘‘(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 para-
graph, by affirmatively electing, in writing to 
the digital commodity broker or digital com-
modity 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 com-
modity dealer, or one of their designees, to pro-
vide a blockchain service for a blockchain sys-
tem to which the unit of the digital asset re-
moved from segregation in subparagraph (A) 
relates. 
‘‘(C) LIMITATIONS.— 
‘‘(i) IN GENERAL.—The Commission 
shall, by rule, establish notice and disclo-
sure requirements, and may, by rule, es-
tablish any other limitations and rules re-
lated to the waiving of any restrictions 
under this paragraph that are reasonably 
necessary to protect customers, including 
eligible contract participants, non-eligible 
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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. 
‘‘(D) BLOCKCHAIN SERVICE DEFINED.—In 
this subparagraph, the term ‘blockchain service’ 
means any activity relating to validating trans-
actions on a blockchain system, providing secu-
rity for a blockchain system, or other similar 
activity required for the ongoing operation of a 
blockchain system. 
‘‘(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 re-
spect to activities subject to this Act, except as provided 
in section 5k. 
‘‘(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 
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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 ad-
verse effect on the ability of the Commission to dis-
charge regulatory duties under this Act; or 
‘‘(2) the registered digital commodity broker or 
registered digital commodity dealer is subject to 
comparable, comprehensive supervision and regula-
tion by the appropriate government authorities in 
the home country of the registered digital commodity 
broker or registered digital commodity dealer, re-
spectively.’’. 
SEC. 407. REGISTRATION OF ASSOCIATED PERSONS. 
(a) IN GENERAL.—Section 4k of the Commodity Ex-
change Act (7 U.S.C. 6k) is amended— 
(1) by redesignating subsections (4) through 
(6) as subsections (5) through (7), respectively; 
(2) by inserting after subsection (3) the fol-
lowing: 
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201 
‘‘(4) It shall be unlawful for any person to act as an 
associated person of a digital commodity broker or an as-
sociated person of a digital commodity dealer unless the 
person is registered with the Commission under this Act 
and such registration shall not have expired, been sus-
pended (and the period of suspension has not expired), 
or been revoked. It shall be unlawful for a digital com-
modity broker or a digital commodity dealer to permit 
such a person to become or remain associated with the 
digital commodity broker or digital commodity dealer if 
the digital commodity broker or digital commodity dealer 
knew or should have known that the person was not so 
registered or that the registration had expired, been sus-
pended (and the period of suspension has not expired), 
or been revoked.’’; and 
(3) in subsection (5) (as so redesignated), by 
striking ‘‘or of a commodity trading advisor’’ and in-
serting ‘‘of a commodity trading advisor, of a digital 
commodity broker, or of a digital commodity deal-
er’’. 
(b) CONFORMING AMENDMENTS.—The Commodity 
Exchange Act (7 U.S.C. 1a et seq.) is amended by striking 
‘‘section 4k(6)’’ each place it appears and inserting ‘‘sec-
tion 4k(7)’’. 
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202 
SEC. 408. REGISTRATION OF COMMODITY POOL OPERA-
TORS AND COMMODITY TRADING ADVISORS. 
(a) IN GENERAL.—Section 4m(3) of the Commodity 
Exchange Act (7 U.S.C. 6m(3)) is amended— 
(1) in subparagraph (A)— 
(A) by striking ‘‘any commodity trading 
advisor’’ and inserting ‘‘a commodity pool oper-
ator or commodity trading advisor’’; and 
(B) by striking ‘‘acting as a commodity 
trading advisor’’ and inserting ‘‘acting as a 
commodity pool operator or commodity trading 
advisor’’; and 
(2) in subparagraph (C), by inserting ‘‘digital 
commodities,’’ after ‘‘physical commodities,’’. 
(b) EXEMPTIVE AUTHORITY.—Section 4m of such 
Act (7 U.S.C. 6m) is amended by adding at the end the 
following: 
‘‘(4) EXEMPTIVE
AUTHORITY.—The Commission 
shall promulgate rules to provide appropriate exemptions 
for commodity pool operators and commodity trading advi-
sors, to provide relief from duplicative, conflicting, or un-
duly burdensome requirements or to promote responsible 
innovation, to the extent the exemptions foster the devel-
opment of fair and orderly cash or spot digital commodity 
markets, are necessary or appropriate in the public inter-
est, and are consistent with the protection of customers.’’. 
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SEC. 409. EXCLUSION FOR DECENTRALIZED FINANCE AC-
TIVITIES. 
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: 
‘‘SEC. 4v. DECENTRALIZED FINANCE ACTIVITIES NOT SUB-
JECT TO THIS ACT. 
‘‘(a) IN GENERAL.—Notwithstanding any other pro-
vision 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 rela-
tion to decentralized finance trading protocol: 
‘‘(1) Compiling network transactions or relay-
ing, searching, sequencing, validating, or acting in a 
similar capacity. 
‘‘(2) Providing computational work, operating a 
node or oracle service, or procuring, offering, or uti-
lizing 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. 
‘‘(4) Developing, publishing, constituting, ad-
ministering, maintaining, or otherwise distributing a 
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blockchain system or a decentralized finance trading 
protocol. 
‘‘(5) Developing, publishing, constituting, ad-
ministering, maintaining, or otherwise distributing a 
decentralized finance messaging system or operating 
or participating in a liquidity pool for the purpose 
of executing a contract of sale of a digital com-
modity. 
‘‘(6) Developing, publishing, constituting, ad-
ministering, maintaining, or otherwise distributing 
software or systems that create or deploy hardware 
or software, including wallets or other systems, fa-
cilitating 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 inter-
preted to apply to the anti-fraud, anti-manipulation, or 
false reporting enforcement authorities of the Commis-
sion.’’. 
SEC. 410. RESOURCES FOR IMPLEMENTATION AND EN-
FORCEMENT. 
(a) COLLECTION OF FEES.— 
(1) IN
GENERAL.—The Commodity Futures 
Trading Commission (in this section referred to as 
the ‘‘Commission’’) shall charge and collect a filing 
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fee from each person who files with the Commission 
a statement of provisional registration as a digital 
commodity exchange, digital commodity broker, or 
digital commodity dealer pursuant to section 106. 
(2) AMOUNT.—The fees authorized under para-
graph (1) may be collected and available for obliga-
tion only in the amounts provided in advance in an 
appropriation Act. 
(3) AUTHORITY
TO
ADJUST
FEES.—Notwith-
standing the preceding provisions of this subsection, 
to promote fair competition or innovation, the Com-
mission, in its sole discretion, may reduce or elimi-
nate any fee otherwise required to be paid by a small 
or medium filer under this subsection. 
(b) FEE SCHEDULE.— 
(1) IN GENERAL.—The Commission shall pub-
lish in the Federal Register a schedule of the fees 
to be charged and collected under this section. 
(2) CONTENT.—The fee schedule for a fiscal 
year shall include a written analysis of the estimate 
of the Commission of the total costs of carrying out 
the functions of the Commission under this Act dur-
ing the fiscal year. 
(3) SUBMISSION
TO
CONGRESS.—Before pub-
lishing the fee schedule for a fiscal year, the Com-
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mission shall submit a copy of the fee schedule to 
the Committees on Agriculture and on Appropria-
tions of the House of Representatives and the Com-
mittees on Agriculture, Nutrition, and Forestry and 
on Appropriations of the Senate. 
(4) TIMING.— 
(A) 1ST FISCAL YEAR.—The Commission 
shall publish the fee schedule for the fiscal year 
in which this Act is enacted, within 30 days 
after the date of the enactment of this Act. 
(B) SUBSEQUENT
FISCAL
YEARS.—The 
Commission shall publish the fee schedule for 
each subsequent fiscal year, not less than 90 
days before the due date prescribed by the 
Commission for payment of the annual fee for 
the fiscal year. 
(c) LATE PAYMENT PENALTY.— 
(1) IN GENERAL.—The Commission may im-
pose a penalty against a person that fails to pay an 
annual fee charged under this section, within 30 
days after the due date prescribed by the Commis-
sion for payment of the fee. 
(2) AMOUNT.—The amount of the penalty shall 
be— 
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(A) 5 percent of the amount of the fee due, 
multiplied by 
(B) the whole number of consecutive 30- 
day periods that have elapsed since the due 
date. 
(d) REIMBURSEMENT OF EXCESS FEES.—To the ex-
tent that the total amount of fees collected under this sec-
tion during a fiscal year that begins after the date of the 
enactment of this Act exceeds the amount provided under 
subsection (a)(2) with respect to the fiscal year, the Com-
mission shall reimburse the excess amount to the persons 
who have timely paid their annual fees, on a pro-rata basis 
that excludes penalties, and shall do so within 60 days 
after the end of the fiscal year. 
(e) DEPOSIT OF FEES INTO THE TREASURY.—All 
amounts collected under this section shall be credited to 
the currently applicable appropriation, account, or fund of 
the Commission as discretionary offsetting collections, and 
shall be available for the purposes authorized in subsection 
(f) only to the extent and in the amounts provided in ad-
vance in appropriations Acts. 
(f) AUTHORIZATION OF APPROPRIATIONS.—In addi-
tion to amounts otherwise authorized to be appropriated 
to the Commission, there is authorized to be appropriated 
to the Commission amounts collected under this section 
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to cover the costs the costs of carrying out the functions 
of the Commission under this Act. 
(g) EXPEDITED HIRING AUTHORITY.— 
(1) APPOINTMENT
AUTHORITY.—The Chair-
man, pursuant to section 6(a), may appoint individ-
uals to a position described in paragraph (2) of this 
subsection— 
(A) in accordance with the statutes, rules, 
and regulations governing appointments to posi-
tions in the excepted service (as defined in sec-
tion 2103 of title 5, United States Code); and 
(B) without regard to any statute, rule, or 
regulation governing appointments to positions 
in the competitive service (as defined in section 
2102 of such title). 
(2) POSITION DESCRIBED.—A position referred 
to in subparagraph (1) is a position at the Commis-
sion that— 
(A) is in the competitive service (as defined 
in section 2102 of such title); and 
(B) requires specialized knowledge of dig-
ital commodities markets, financial and capital 
market formation or regulation, financial mar-
ket structures or surveillance, data collection or 
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analysis, or information technology, cybersecu-
rity, or system safeguards. 
(3) RULE
OF
CONSTRUCTION.—The appoint-
ment of a candidate to a position under this sub-
section shall not be considered to cause the position 
to be converted from the competitive service to the 
excepted service. 
(h) SUNSET.—The authorities provided by this sec-
tion shall expire at the end of the 4th fiscal year that be-
gins after the date of the enactment of this Act. 
SEC. 411. DIGITAL COMMODITY ACTIVITIES BY SEC-REG-
ISTERED ENTITIES. 
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: 
‘‘SEC. 5k. EXEMPTION FOR CERTAIN REGISTERED ENTITIES 
ENGAGED IN DIGITAL COMMODITY ACTIVI-
TIES. 
‘‘(a) BY ALTERNATIVE TRADING SYSTEMS.— 
‘‘(1) IN GENERAL.—On receipt by the Commis-
sion from an alternative trading system of a written 
or electronic notice that contains such information 
as the Commission, by rule, may prescribe as nec-
essary or appropriate in the public interest or for 
the protection of investors, the alternative trading 
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210 
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 pur-
suant to section 2(c)(2)(D); 
‘‘(B) the provider, or an affiliate 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 commod-
ities, 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 Commis-
sion. 
‘‘(2) FURTHER
REQUIREMENTS.—An alter-
native trading system that provides notice to the 
Commission pursuant to paragraph (1) of this sub-
section 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 
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211 
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 Com-
mission, a notice that demonstrates compliance 
with this paragraph and contains any other in-
formation 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 ei-
ther 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 Com-
mission may otherwise have under any other provi-
sion 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.— 
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212 
‘‘(1) IN GENERAL.—On receipt by the Commis-
sion, from a broker or dealer that is registered with 
the Securities and Exchange Commission, of a writ-
ten or electronic notice that contains such informa-
tion 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 sec-
tion 4u of this Act if— 
‘‘(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 securi-
ties; 
‘‘(B) the broker or dealer is not otherwise 
registered under this Act; 
‘‘(C) the broker or dealer is not subject to 
a statutory disqualification, as defined under 
section 3(a) of the Securities Exchange Act of 
1934 (15 U.S.C. 78c(a)); and 
‘‘(D) the broker or dealer is a member of 
a national securities association registered pur-
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213 
suant to section 15A of the Securities Exchange 
Act of 1934. 
‘‘(2) FURTHER REQUIREMENTS.—A broker or 
dealer that provides notice to the Commission pursu-
ant to paragraph (1) shall be exempt from the re-
quirements 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 Se-
curities and Exchange Commission; 
‘‘(B) annually files with the Commission, 
in a form and manner acceptable to the Com-
mission, a notice that demonstrates compliance 
with this subsection and contains any other in-
formation the Commission determines to be 
necessary or appropriate to perform the duties 
of the Commission under this Act; and 
‘‘(C) has consolidated annual gross finan-
cial 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 
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214 
‘‘(ii) $100,000,000. 
‘‘(3) ENFORCEMENT.—This subsection shall not 
be construed to limit any jurisdiction that the Com-
mission may otherwise have under any other provi-
sion of this Act with respect to a contract of sale of 
a digital commodity and persons effecting contracts 
of sale of digital commodities.’’. 
SEC. 412. REQUIREMENTS RELATED TO CONTROL PER-
SONS. 
The Commodity Exchange Act (7 U.S.C. 1 et seq.), 
as amended the preceding provisions of this Act, is amend-
ed by inserting after section 4v the following: 
‘‘SEC. 4w. LIMITATION ON TRANSACTIONS BY BLOCKCHAIN 
CONTROL PERSONS. 
‘‘(a) LIMITATION.—It shall be unlawful for a 
blockchain control person with respect to a blockchain sys-
tem 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— 
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‘‘(1) disclosure of information to the Commis-
sion 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 
‘‘(B) such other sales restrictions applicable to 
blockchain control person, or any of its digital com-
modity affiliated persons, to prevent manipulation 
and distortion of the value of the digital commodity 
and promote further maturity of the blockchain sys-
tem to which the digital commodity relates. 
‘‘(b) DEFINITIONS.—In this section: 
‘‘(1) BLOCKCHAIN
CONTROL
PERSON.—The 
term ‘blockchain control person’ means, with respect 
to a blockchain system, any person or group of per-
sons under common control who— 
‘‘(A) has the unilateral authority, directly 
or indirectly, through any contract, arrange-
ment, 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 com-
modity; or 
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‘‘(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. 
‘‘(2) DIGITAL
COMMODITY
AFFILIATED
PER-
SON.—The term ‘digital commodity affiliated 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.’’. 
SEC. 413. EFFECTIVE DATE. 
Unless otherwise provided in this title, this title and 
the amendments made by this title shall take effect 360 
days after the date of the enactment of this Act, except 
that, to the extent a provision of this title requires a rule-
making, the provision shall take effect on the later of— 
(1) 360 days after the date of the enactment of 
this Act; or 
(2) 60 days after the publication in the Federal 
Register of the final rule implementing the provision. 
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SEC. 414. SENSE OF CONGRESS. 
It is the sense of Congress that nothing in this Act 
or any amendment made by this Act should be interpreted 
to authorize any entity to regulate any commodity, other 
than a digital commodity, on any spot market. 
TITLE V—INNOVATION AND 
TECHNOLOGY IMPROVEMENTS 
SEC. 501. FINDINGS; SENSE OF CONGRESS. 
(a) FINDINGS.—Congress finds the following: 
(1) Entrepreneurs and innovators are building 
and deploying this next generation of the internet. 
(2) Digital commodity networks represent a 
new way for people to join together and cooperate 
with one another to undertake certain activities. 
(3) Digital commodities have the potential to be 
the foundational building blocks of these systems, 
aligning the economic incentive for individuals to co-
operate with one another to achieve a common pur-
pose. 
(4) The digital commodity ecosystem has the 
potential to grow our economy and improve everyday 
lives of Americans by facilitating collaboration 
through the use of technology to manage activities, 
allocate resources, and facilitate decision making. 
(5) Blockchain systems and the digital commod-
ities they empower provide control, enhance trans-
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parency, reduce transaction costs, and increase effi-
ciency if proper protections are put in place for in-
vestors, consumers, our financial system, and our 
national security. 
(6) Blockchain technology facilitates new types 
of network participation which businesses in the 
United States may utilize in innovative ways. 
(7) Other digital commodity companies are set-
ting up their operations outside of the United 
States, where countries are establishing frameworks 
to embrace the potential of blockchain technology 
and digital commodities and provide safeguards for 
consumers. 
(8) Digital commodities, despite the purported 
anonymity, provide law enforcement with an excep-
tional tracing tool to identify illicit activity and bring 
criminals to justice. 
(9) The Financial Services Committee of the 
House of Representatives has held multiple hearings 
highlighting various risks that digital commodities 
can pose to the financial markets, consumers, and 
investors that must be addressed as we seek to har-
ness the benefits of these innovations. 
(b) SENSE OF CONGRESS.—It is the sense of Con-
gress that— 
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(1) the United States should seek to prioritize 
understanding the potential opportunities of the next 
generation of the internet; 
(2) the United States should seek to foster ad-
vances in technology that have robust evidence indi-
cating they can improve our financial system and 
create more fair and equitable access to financial 
services for everyday Americans while protecting our 
financial system, investors, and consumers; 
(3) the United States must support the respon-
sible development of digital commodities and the un-
derlying technology in the United States or risk the 
shifting of the development of such assets and tech-
nology outside of the United States, to less regulated 
countries; 
(4) Congress should consult with public and 
private sector stakeholders to understand how to 
enact a functional framework tailored to the specific 
risks and unique benefits of different digital com-
modity-related activities, distributed ledger tech-
nology, distributed networks, and mature blockchain 
systems; 
(5) Congress should enact a functional frame-
work tailored to the specific risks of different digital 
commodity-related activities and unique benefits of 
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distributed ledger technology, distributed networks, 
and mature blockchain systems; and 
(6) consumers and market participants will ben-
efit from a framework for digital commodities con-
sistent with longstanding investor protections in se-
curities and commodities markets, yet tailored to the 
unique benefits and risks of the digital commodity 
ecosystem. 
SEC. 502. MODERNIZATION OF THE SECURITIES AND EX-
CHANGE COMMISSION MISSION. 
(a) SECURITIES ACT OF 1933.—Section 2(b) of the 
Securities Act of 1933 (15 U.S.C. 77(b)) is amended— 
(1) in the heading, by inserting ‘‘INNOVATION,’’ 
after ‘‘EFFICIENCY,’’; and 
(2) by inserting ‘‘innovation,’’ after ‘‘effi-
ciency,’’. 
(b) SECURITIES EXCHANGE ACT OF 1934.—Section 
3(f) of the Securities Exchange Act of 1934 (15 U.S.C. 
78(c)) is amended— 
(1) in the heading, by inserting ‘‘INNOVATION,’’ 
after ‘‘EFFICIENCY,’’; and 
(2) by inserting ‘‘innovation,’’ after ‘‘effi-
ciency,’’. 
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(c) INVESTMENT ADVISERS ACT OF 1940.—Section 
202(c) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b–2) is amended— 
(1) in the heading, by inserting ‘‘INNOVATION,’’ 
after ‘‘EFFICIENCY,’’; and 
(2) by inserting ‘‘innovation,’’ after ‘‘effi-
ciency,’’. 
(d) INVESTMENT COMPANY ACT OF 1940.—Section 
2(c) of the Investment Company Act of 1940 (15 U.S.C. 
80a–2) is amended— 
(1) in the heading, by inserting ‘‘INNOVATION,’’ 
after ‘‘EFFICIENCY,’’; and 
(2) by inserting ‘‘innovation,’’ after ‘‘effi-
ciency,’’. 
SEC. 503. STRATEGIC HUB FOR INNOVATION AND FINAN-
CIAL TECHNOLOGY. 
Section 4 of the Securities Exchange Act of 1934 (15 
U.S.C. 78d) is amended by adding at the end the fol-
lowing: 
‘‘(k) STRATEGIC HUB FOR INNOVATION AND FINAN-
CIAL TECHNOLOGY.— 
‘‘(1) ESTABLISHMENT.—Not later than 180 
days after the date of the enactment of this sub-
section, the Securities and Exchange Commission 
shall establish a committee to be known as the Stra-
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tegic Hub for Innovation and Financial Technology 
(referred to in this subsection as the ‘FinHub’) to 
support engagement on emerging technologies in the 
financial sector. 
‘‘(2) MEMBERS.—The composition of FinHub 
shall be determined by the Commission, drawing 
from relevant divisions as appropriate, including the 
Division of Trading and Markets, Division of Cor-
porate Finance, and Division of Investment Manage-
ment. 
‘‘(3) RESPONSIBILITIES.—FinHub shall— 
‘‘(A) serve as a resource for the Commis-
sion on emerging financial technology advance-
ments; 
‘‘(B) engage with market participants 
working on emerging financial technologies; and 
‘‘(C) facilitate communication between the 
Commission and businesses working in emerg-
ing financial technology fields with information 
on the Commission, its rules, and regulations. 
‘‘(4) REPORT TO THE COMMISSION.— 
‘‘(A) IN GENERAL.—Not later than Octo-
ber 31 of each year after 2025, FinHub shall 
provide an annual summary of its engagement 
activities to the Commission, which shall be in-
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cluded in the Commission’s annual report to 
Congress. 
‘‘(B) 
CONFIDENTIALITY.—Each 
report 
submitted under this paragraph shall not con-
tain confidential information.’’. 
SEC. 504. CODIFICATION OF LABCFTC. 
(a) IN GENERAL.—Section 18 of the Commodity Ex-
change Act (7 U.S.C. 22) is amended by adding at the 
end the following: 
‘‘(c) LABCFTC.— 
‘‘(1) ESTABLISHMENT.—There is established in 
the Commission LabCFTC. 
‘‘(2) PURPOSE.—The purposes of LabCFTC 
are to— 
‘‘(A) promote responsible financial tech-
nology innovation and fair competition for the 
benefit of the American public; 
‘‘(B) serve as an information platform to 
inform the Commission about new financial 
technology innovation; and 
‘‘(C) provide outreach to financial tech-
nology innovators to discuss their innovations 
and the regulatory framework established by 
this Act and the regulations promulgated there-
under. 
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‘‘(3) DIRECTOR.—LabCFTC shall have a Direc-
tor, who shall be appointed by the Commission and 
serve at the pleasure of the Commission. Notwith-
standing section 2(a)(6)(A), the Director shall re-
port directly to the Commission and perform such 
functions and duties as the Commission may pre-
scribe. 
‘‘(4) DUTIES.—LabCFTC shall— 
‘‘(A) advise the Commission with respect 
to rulemakings or other agency or staff action 
regarding financial technology; 
‘‘(B) provide internal education and train-
ing to the Commission regarding financial tech-
nology; 
‘‘(C) advise the Commission regarding fi-
nancial technology that would bolster the Com-
mission’s oversight functions; 
‘‘(D) engage with academia, students, and 
professionals on financial technology issues, 
ideas, and technology relevant to activities 
under this Act; 
‘‘(E) provide persons working in emerging 
technology fields with information on the Com-
mission, its rules and regulations, and the role 
of a registered futures association; and 
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‘‘(F) encourage persons working in emerg-
ing technology fields to engage with the Com-
mission and obtain feedback from the Commis-
sion on potential regulatory issues. 
‘‘(5) REPORT TO CONGRESS.— 
‘‘(A) IN GENERAL.—Not later than Octo-
ber 31 of each year after 2025, LabCFTC shall 
submit to the Committee on Agriculture of the 
House of Representatives and the Committee 
on Agriculture, Nutrition, and Forestry of the 
Senate a report on its activities. 
‘‘(B) CONTENTS.—Each report required 
under paragraph (1) shall include— 
‘‘(i) the total number of persons that 
met with LabCFTC; 
‘‘(ii) a summary of general issues dis-
cussed during meetings with the person; 
‘‘(iii) information on steps LabCFTC 
has taken to improve Commission services, 
including responsiveness to the concerns of 
persons; 
‘‘(iv) recommendations made to the 
Commission with respect to the regula-
tions, guidance, and orders of the Commis-
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sion and such legislative actions as may be 
appropriate; and 
‘‘(v) any other information determined 
appropriate by the Director of LabCFTC. 
‘‘(C) CONFIDENTIALITY.—A report under 
paragraph (A) shall abide by the confidentiality 
requirements in section 8. 
‘‘(6) RECORDS AND ENGAGEMENT.—The Com-
mission shall— 
‘‘(A) maintain systems of records to track 
engagements 
with 
the 
public 
through 
LabCFTC; 
‘‘(B) store communications and materials 
received in connection with any such engage-
ment in accordance with Commission policies 
and procedures on data retention and confiden-
tiality; and 
‘‘(C) take reasonable steps to protect any 
confidential or proprietary information received 
through LabCFTC engagement.’’. 
(b) 
CONFORMING
AMENDMENTS.—Section 
2(a)(6)(A) of such Act (7 U.S.C. 2(a)(6)(A)) is amend-
ed— 
(1) by striking ‘‘paragraph and in’’ and insert-
ing ‘‘paragraph,’’; and 
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(2) by inserting ‘‘and section 18(c)(3),’’ before 
‘‘the executive’’. 
(c) EFFECTIVE DATE.—The Commodity Futures 
Trading Commission shall implement the amendments 
made by this section (including complying with section 
18(c)(7) of the Commodity Exchange Act) within 180 
days after the date of the enactment of this Act. 
SEC. 505. STUDY ON DECENTRALIZED FINANCE. 
(a) IN GENERAL.—The Commodity Futures Trading 
Commission, the Securities and Exchange Commission, 
and the Secretary of the Treasury shall jointly carry out 
a study on decentralized finance that analyzes— 
(1) the nature, size, role, and use of decentral-
ized finance blockchain applications; 
(2) the operation of blockchain applications that 
comprise decentralized finance; 
(3) the interoperability of blockchain applica-
tions and other blockchain systems; 
(4) the interoperability of blockchain applica-
tions and software-based systems, including websites 
and wallets; 
(5) 
the 
decentralized 
governance 
systems 
through which blockchain applications may be devel-
oped, published, constituted, administered, main-
tained, or otherwise distributed, including— 
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(A) whether the systems enhance or de-
tract from— 
(i) the decentralization of the decen-
tralized finance; and 
(ii) the inherent benefits and risks of 
the decentralized governance system; and 
(B) any procedures, requirements, or best 
practices that would mitigate the risks identi-
fied in subparagraph (A)(ii); 
(6) the benefits of decentralized finance, includ-
ing— 
(A) operational resilience and availability 
of blockchain systems; 
(B) interoperability of blockchain systems; 
(C) market competition and innovation; 
(D) transaction efficiency; 
(E) transparency and traceability of trans-
actions; and 
(F) disintermediation; 
(7) the risks of decentralized finance, includ-
ing— 
(A) pseudonymity of users and trans-
actions; 
(B) disintermediation; and 
(C) cybersecurity vulnerabilities; 
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(8) the extent to which decentralized finance 
has integrated with the traditional financial markets 
and any potential risks or improvements to the sta-
bility of the markets; 
(9) how the levels of illicit activity in decentral-
ized finance compare with the levels of illicit activity 
in traditional financial markets; 
(10) methods for addressing illicit activity in 
decentralized finance and traditional markets that 
are tailored to the unique attributes of each; 
(11) how decentralized finance may increase the 
accessibility of cross-border transactions; and 
(12) the feasibility of embedding self-executing 
compliance and risk controls into decentralized fi-
nance. 
(b) CONSULTATION.—In carrying out the study re-
quired under subsection (a), the Commodity Futures 
Trading Commission and the Securities and Exchange 
Commission shall consult with the Secretary of the Treas-
ury on the factors described under paragraphs (7) through 
(10) of subsection (a). 
(c) REPORT.—Not later than 1 year after the date 
of enactment of this Act, the Commodity Futures Trading 
Commission and the Securities and Exchange Commission 
shall jointly submit to the relevant congressional commit-
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tees a report that includes the results of the study re-
quired by subsection (a). 
(d) GAO STUDY.—The Comptroller General of the 
United States shall— 
(1) carry out a study on decentralized finance 
that analyzes the information described under para-
graphs (1) through (12) of subsection (a); and 
(2) not later than 1 year after the date of en-
actment of this Act, submit to the relevant congres-
sional committees a report that includes the results 
of the study required by paragraph (1). 
(e) DEFINITIONS.—In this section: 
(1) DECENTRALIZED FINANCE.— 
(A) IN GENERAL.—The term ‘‘decentral-
ized finance’’ means blockchain applications (in-
cluding decentralized finance trading protocols 
and related decentralized finance messaging 
systems) that allow users to engage in financial 
transactions in a self-directed manner so that a 
third-party intermediary does not effectuate the 
transactions or take custody of digital commod-
ities of a user during any part of the trans-
actions. 
(B) RELATIONSHIP TO EXCLUDED ACTIVI-
TIES.—The term ‘‘decentralized finance’’ shall 
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not be interpreted to limit or exclude any activ-
ity from the activities described in section 
15I(a) of the Securities Exchange Act of 1934 
or section 4v(a) of the Commodity Exchange 
Act. 
(2) 
RELEVANT
CONGRESSIONAL
COMMIT-
TEES.—The term ‘‘relevant congressional commit-
tees’’ means— 
(A) the Committees on Financial Services 
and Agriculture of the House of Representa-
tives; and 
(B) the Committees on Banking, Housing, 
and Urban Affairs and Agriculture, Nutrition, 
and Forestry of the Senate. 
SEC. 506. STUDY ON NON-FUNGIBLE TOKENS. 
(a) IN GENERAL.—The Comptroller General of the 
United States shall carry out a study of non-fungible to-
kens that analyzes— 
(1) the nature, size, role, purpose, and use of 
non-fungible tokens; 
(2) the similarities and differences between non- 
fungible tokens and other digital commodities, in-
cluding digital commodities and permitted payment 
stablecoins, and how the markets for those digital 
commodities intersect with each other; 
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(3) how non-fungible tokens are minted by 
issuers and subsequently administered to purchasers; 
(4) how non-fungible tokens are stored after 
being purchased by a consumer; 
(5) the interoperability of non-fungible tokens 
between different blockchain systems; 
(6) the scalability of different non-fungible to-
kens marketplaces; 
(7) the benefits of non-fungible tokens, includ-
ing verifiable digital ownership; 
(8) the risks of non-fungible tokens, including— 
(A) intellectual property rights; 
(B) cybersecurity risks; and 
(C) market risks; 
(9) whether and how non-fungible tokens have 
integrated with traditional marketplaces, including 
those for music, real estate, gaming, events, and 
travel; 
(10) whether and how non-fungible tokens can 
be used to facilitate commerce or other activities 
through the representation of documents, identifica-
tion, contracts, licenses, and other commercial, gov-
ernment, or personal records; 
(11) any potential risks to traditional markets 
from such integration; and 
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(12) the levels and types of illicit activity in 
non-fungible tokens markets. 
(b) REPORT.—Not later than 1 year after the date 
of the enactment of this Act, the Comptroller General, 
shall make publicly available a report that includes the re-
sults of the study required by subsection (a). 
SEC. 507. STUDY ON EXPANDING FINANCIAL LITERACY 
AMONGST DIGITAL COMMODITY HOLDERS. 
(a) IN GENERAL.—The Commodity Futures Trading 
Commission with the Securities and Exchange Commis-
sion shall jointly conduct a study to identify— 
(1) the existing level of financial literacy among 
retail digital commodity holders, including subgroups 
of investors identified by the Commodity Futures 
Trading Commission with the Securities and Ex-
change Commission; 
(2) methods to improve the timing, content, and 
format of financial literacy materials regarding dig-
ital commodities provided by the Commodity Fu-
tures Trading Commission and the Securities and 
Exchange Commission; 
(3) methods to improve coordination between 
the Securities and Exchange Commission and the 
Commodity Futures Trading Commission with other 
agencies, including the Financial Literacy and Edu-
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cation Commission as well as nonprofit organizations 
and State and local jurisdictions, to better dissemi-
nate financial literacy materials; 
(4) the efficacy of current financial literacy ef-
forts with a focus on rural communities and commu-
nities with majority minority populations; 
(5) the most useful and understandable relevant 
information, including clear disclosures, that retail 
digital commodity holders need to make informed fi-
nancial decisions before engaging with or purchasing 
a digital commodity or service that is typically sold 
to retail investors of digital commodities; 
(6) the most effective public-private partner-
ships in providing financial literacy regarding digital 
commodities to consumers; 
(7) the most relevant metrics to measure suc-
cessful improvement of the financial literacy of an 
individual after engaging with financial literacy ef-
forts; and 
(8) in consultation with the Financial Literacy 
and Education Commission, a strategy (including to 
the extent practicable, measurable goals and objec-
tives) to increase financial literacy of investors re-
garding digital commodities. 
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(b) REPORT.—Not later than 1 year after the date 
of the enactment of this Act, the Commodity Futures 
Trading Commission and the Securities and Exchange 
Commission shall jointly submit a written report on the 
study required by subsection (a) to the Committees on Fi-
nancial Services and on Agriculture of the House of Rep-
resentatives and the Committees on Banking, Housing, 
and Urban Affairs and on Agriculture, Nutrition, and 
Forestry of the Senate. 
SEC. 508. STUDY ON FINANCIAL MARKET INFRASTRUCTURE 
IMPROVEMENTS. 
(a) IN GENERAL.—The Commodity Futures Trading 
Commission and the Securities and Exchange Commission 
shall jointly conduct a study to assess whether additional 
guidance or rules are necessary to facilitate the develop-
ment of tokenized securities and derivatives products, and 
to the extent such guidance or rules would foster the devel-
opment of fair and orderly financial markets, be necessary 
or appropriate in the public interest, and be consistent 
with the protection of investors and customers. 
(b) REPORT.— 
(1) TIME LIMIT.—Not later than 1 year after 
the date of enactment of this Act, the Commodity 
Futures Trading Commission and the Securities and 
Exchange Commission shall jointly submit to the rel-
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evant congressional committees a report that in-
cludes the results of the study required by sub-
section (a). 
(2) RELEVANT
CONGRESSIONAL
COMMITTEES 
DEFINED.—In this section, the term ‘‘relevant con-
gressional committees’’ means— 
(A) the Committees on Financial Services 
and on Agriculture of the House of Representa-
tives; and 
(B) the Committees on Banking, Housing, 
and Urban Affairs and on Agriculture, Nutri-
tion, and Forestry of the Senate. 
Æ 
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