408 
hold in a qualified digital commodity custo-
dian each unit of a digital commodity that is— 
‘‘(1) the property of a customer of the 
digital commodity exchange; 
‘‘(2) required to be held by the digital 
commodity exchange under subsection 
(c)(12) of this section; or 
‘‘(3) otherwise so required by the 
Commission to reasonably protect cus-
tomers or promote the public interest. 
‘‘(i) EXEMPTIONS.—In order to promote re-
sponsible economic or financial innovation 
and fair competition, or protect customers, 
the Commission may (on its own initiative or 
on application of the registered digital com-
modity exchange) exempt, either uncondition-
ally or on stated terms or conditions or for 
stated periods and either retroactively or pro-
spectively, or both, a registered digital com-
modity exchange from the requirements of 
this section, if the Commission determines 
that— 
‘‘(1)(A) the exemption would be con-
sistent with the public interest and the 
purposes of this Act; and 
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‘‘(B) the exemption will not have a 
material adverse effect on the ability of 
the Commission or the digital commodity 
exchange to discharge regulatory or self- 
regulatory duties under this Act; or 
‘‘(2) the digital commodity exchange 
is subject to comparable, comprehensive 
supervision and regulation by the appro-
priate government authorities in the 
home country of the exchange. 
‘‘(j) CUSTOMER DEFINED.—In this section, 
the term ‘customer’ means any person that 
maintains an account for the trading of dig-
ital commodities directly with a digital com-
modity 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 other any person. 
‘‘(k) 
FEDERAL
PREEMPTION.—Notwith-
standing any other provision of law, the Com-
mission shall have exclusive jurisdiction over 
any digital commodity exchange registered 
under this section. 
‘‘(l) TREATMENT UNDER THE BANK SECRECY 
ACT.—A registered digital commodity ex-
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410 
change shall be treated as a financial institu-
tion for purposes of the Bank Secrecy Act.’’. 
SEC. 405. QUALIFIED DIGITAL COMMODITY CUSTODIANS. 
The Commodity Exchange Act (7 U.S.C. 1 
et seq.), as amended by the preceding provi-
sions of this Act, is amended by inserting after 
section 5i the following: 
‘‘SEC. 5j. QUALIFIED DIGITAL COMMODITY CUSTODIANS. 
‘‘(a) IN GENERAL.—For purposes of this 
Act, a qualified digital commodity custodian 
is a digital commodity custodian who meets 
the following conditions: 
‘‘(1) SUPERVISION.—The digital com-
modity custodian is subject to adequate 
supervision and appropriate regulation. 
‘‘(2) NO PROHIBITION.—The digital com-
modity custodian is— 
‘‘(A) subject to the supervision 
of— 
‘‘(i) an appropriate Federal 
banking agency; 
‘‘(ii) a State bank supervisor 
(within the meaning of section 3 
of the Federal Deposit Insurance 
Act); or 
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‘‘(iii) an appropriate foreign 
governmental authority in the 
home country of the digital com-
modity custodian; and 
‘‘(B) not prohibited by the appli-
cable supervisor referred to in sub-
paragraph (A) from engaging in any 
activity with respect to the holding of 
digital commodities. 
‘‘(3) INFORMATION SHARING.— 
‘‘(A) IN GENERAL.—The digital com-
modity custodian agrees to such peri-
odic sharing of information regarding 
customer accounts the digital com-
modity custodian holds on behalf of 
an entity registered with the Commis-
sion, as the Commission determines 
by rule shall be reasonably necessary 
to effectuate any of the provisions, or 
to accomplish any of the purposes, of 
this Act. 
‘‘(B) PROVISION OF INFORMATION.— 
Any person that is subject to regula-
tion and examination by a prudential 
regulator may satisfy any information 
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request described in subparagraph 
(A), by providing the Commission 
with a detailed listing, in writing, of 
the digital commodities of a customer 
within the custody or use of the per-
son. 
‘‘(b) ADEQUATE SUPERVISION
AND APPRO-
PRIATE REGULATION FURTHER DEFINED.— 
‘‘(1) IN
GENERAL.—In subsection (a), 
the terms ‘adequate supervision’ and ‘ap-
propriate regulation’ mean such min-
imum standards for supervision and reg-
ulation as are reasonably necessary to 
protect the digital commodities of cus-
tomers of an entity registered with the 
Commission, including minimum stand-
ards relating to— 
‘‘(A) accessibility of customer as-
sets; 
‘‘(B) financial resources; 
‘‘(C) risk management require-
ments; 
‘‘(D) governance arrangements; 
‘‘(E) fitness standards; 
‘‘(F) recordkeeping; 
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‘‘(G) information sharing; and 
‘‘(H) conflicts of interest. 
‘‘(2) DEEMED
COMPLIANCE.—For pur-
poses of subsection (a), a bank subject to 
the supervision of an appropriate Federal 
banking agency or a State bank super-
visor (within the meaning of section 3 of 
the Federal Deposit Insurance Act) is 
deemed to be subject to adequate super-
vision and appropriate regulation. 
‘‘(3) RULEMAKING AUTHORITY.—For pur-
poses of subsection (a), the Commission, 
by rule or order, may further define the 
terms ‘adequate supervision’ and ‘appro-
priate regulation’ as necessary in the 
public interest, as appropriate for the 
protection of customers, and consistent 
with the purposes of this Act. 
‘‘(c) 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 
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sion, and shall contain such informa-
tion as the Commission considers 
necessary concerning the business in 
which the applicant is or will be en-
gaged. 
‘‘(B) 
CONTINUAL
REPORTING.—A 
person that is registered as a digital 
commodity broker or digital com-
modity dealer shall continue to sub-
mit to the Commission reports that 
contain such information pertaining 
to the business of the person as the 
Commission may require. 
‘‘(3) 
TRANSITION.—Within 
180 
days 
after the date of the enactment of this 
section, the Commission shall prescribe 
rules providing for the registration of 
digital commodity brokers and digital 
commodity dealers under this section. 
‘‘(4) STATUTORY DISQUALIFICATION.—Ex-
cept 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 
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a digital commodity broker or a digital 
commodity dealer and who is subject to a 
statutory disqualification to effect or be 
involved in effecting a contract for sale of 
a digital commodity on behalf of the dig-
ital commodity broker or the digital com-
modity dealer, respectively, 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. 
‘‘(5) LIMITATIONS ON CERTAIN ASSETS.— 
A registered digital commodity broker or 
registered digital commodity dealer shall 
not offer, offer to enter into, enter into, 
or facilitate any contract for sale of a dig-
ital commodity that has not been cer-
tified under section 5c(d). 
‘‘(c) ADDITIONAL REGISTRATIONS.— 
‘‘(1) WITH THE COMMISSION.—Any per-
son required to be registered as a digital 
commodity broker or digital commodity 
dealer may also be registered as a futures 
commission 
merchant, 
introducing 
broker, or swap dealer. 
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‘‘(2) WITH
THE
SECURITIES
AND
EX-
CHANGE
COMMISSION.—Any 
person 
re-
quired to be registered as a digital com-
modity broker or digital commodity deal-
er under this section may register with 
the Securities and Exchange Commission 
as a digital asset broker or digital asset 
dealer, pursuant to section 15(b) of the 
Securities Exchange Act of 1934, as appli-
cable, if the digital asset broker or digital 
asset dealer limits its solicitation of or-
ders, acceptance of orders, or execution 
of orders, or placing of orders on behalf 
of others involving any contract of sale of 
digital assets. 
‘‘(3) WITH MEMBERSHIP IN A REGISTERED 
FUTURES
ASSOCIATION.—Any person re-
quired to be registered as a digital com-
modity broker or digital commodity deal-
er under this section shall be a member 
of a registered futures association. 
‘‘(4) 
REGISTRATION
REQUIRED.—Any 
person required to be registered as a dig-
ital commodity broker or digital com-
modity dealer under this section shall 
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register with the Commission as such re-
gardless of whether the person is reg-
istered as such with another State or 
Federal regulator. 
‘‘(d) RULEMAKING.— 
‘‘(1) IN
GENERAL.—The Commission 
shall prescribe such rules applicable to 
registered digital commodity brokers and 
registered digital commodity dealers as 
are appropriate to carry out this section, 
including rules in the public interest that 
limit the activities of digital commodity 
brokers and digital commodity dealers. 
‘‘(2) 
MULTIPLE
REGISTRANTS.—The 
Commission shall prescribe rules or regu-
lations permitting, or may otherwise au-
thorize, exemptions or additional re-
quirements applicable to persons with 
multiple registrations under this Act, in-
cluding 
as 
futures 
commission 
mer-
chants, introducing brokers, digital com-
modity brokers, digital commodity deal-
ers, or swap dealers, as may be in the 
public interest to reduce compliance 
costs and promote customer protection. 
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‘‘(e) CAPITAL REQUIREMENTS.— 
‘‘(1) IN GENERAL.—Each registered dig-
ital commodity broker and registered dig-
ital commodity dealer shall meet such 
minimum capital requirements as the 
Commission may prescribe to ensure that 
the digital commodity broker or digital 
commodity dealer, respectively, is able 
to— 
‘‘(A) meet, and continue to meet, 
at all times, the obligations of such a 
registrant; 
‘‘(B) conduct an orderly wind- 
down of the activities of the digital 
commodity broker or digital com-
modity dealer, respectively; and 
‘‘(C) in the case of a digital com-
modity dealer, fulfill the customer ob-
ligations of the digital commodity 
dealer for any margined, leveraged, 
or financed transactions. 
‘‘(2) RULE OF CONSTRUCTION.—Nothing 
in this section shall limit, or be construed 
to limit, the authority of the Securities 
and Exchange Commission to set finan-
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cial responsibility rules for a broker or 
dealer registered pursuant to section 
15(b) of the Securities Exchange Act of 
1934 (15 U.S.C. 78o(b)) (except for section 
15(b)(11) of such Act (15 U.S.C. 78o(b)(11)) 
in accordance with section 15(c)(3) of 
such Act (15 U.S.C. 78o(c)(3)). 
‘‘(3) FUTURES
COMMISSION
MERCHANTS 
AND OTHER DEALERS.— 
‘‘(A) IN
GENERAL.—Each futures 
commission 
merchant, 
introducing 
broker, digital commodity broker, 
digital commodity dealer, broker, and 
dealer shall maintain sufficient cap-
ital to comply with the stricter of any 
applicable capital requirements to 
which the futures commission mer-
chant, 
introducing 
broker, 
digital 
commodity broker, digital commodity 
dealer, broker, or dealer, respec-
tively, is subject under this Act or the 
Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.). 
‘‘(B) COORDINATION OF CAPITAL RE-
QUIREMENTS.— 
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421 
‘‘(i) 
COMMISSION
RULE.—The 
Commission shall, by rule, pro-
vide appropriate offsets to any 
applicable 
capital 
requirement 
for a person with multiple reg-
istrations as a digital commodity 
dealer, digital commodity broker, 
futures commission merchant, or 
introducing broker. 
‘‘(ii) JOINT
RULE.—The Com-
mission and the Securities and 
Exchange Commission shall joint-
ly, by rule, provide appropriate 
offsets to any applicable capital 
requirement for a person with 
multiple registrations as a digital 
commodity dealer, digital com-
modity broker, futures commis-
sion 
merchant, 
introducing 
broker, broker, or dealer. 
‘‘(f) 
REPORTING
AND
RECORDKEEPING.— 
Each registered digital commodity broker and 
registered digital commodity dealer— 
‘‘(1) shall make such reports as are re-
quired by the Commission by rule or reg-
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‘‘(A) 
fraud, 
manipulation, 
and 
other 
abusive 
practices 
involving 
spot or margined, leveraged, or fi-
nanced 
digital 
commodity 
trans-
actions (including transactions that 
are offered but not entered into); 
‘‘(B) diligent supervision of the 
business of the registered digital com-
modity broker or digital commodity 
dealer, respectively; and 
‘‘(C) such other matters as the 
Commission deems appropriate. 
‘‘(2) 
BUSINESS
CONDUCT
REQUIRE-
MENTS.—The Commission shall, by rule, 
prescribe business conduct requirements 
which— 
‘‘(A) require disclosure by a reg-
istered digital commodity broker and 
registered digital commodity dealer 
to any counterparty to the trans-
action (other than an eligible con-
tract participant) of— 
‘‘(i) information about the ma-
terial risks and characteristics of 
the digital commodity; and 
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‘‘(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 commu-
nicate in a fair and balanced manner 
based on principles of fair dealing 
and good faith; 
‘‘(C) 
establish 
standards 
gov-
erning digital commodity platform 
marketing and advertising, including 
testimonials and endorsements; and 
‘‘(D) establish such other stand-
ards and requirements as the Com-
mission may determine are— 
‘‘(i) in the public interest; 
‘‘(ii) appropriate for the pro-
tection of customers; or 
‘‘(iii) otherwise in furtherance 
of the purposes of this Act. 
‘‘(3) PROHIBITION ON FRAUDULENT PRAC-
TICES.—It shall be unlawful for a reg-
istered digital commodity broker or reg-
istered digital commodity dealer to— 
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‘‘(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 fraudu-
lent, deceptive, or manipulative. 
‘‘(i) DUTIES.— 
‘‘(1) RISK MANAGEMENT PROCEDURES.— 
Each registered digital commodity broker 
and registered 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 com-
modity dealer, respectively. 
‘‘(2) DISCLOSURE OF GENERAL INFORMA-
TION.—Each registered digital commodity 
broker and registered digital commodity 
dealer shall disclose to the Commission 
information concerning— 
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‘‘(A) the terms and conditions of 
the transactions of the digital com-
modity broker or digital commodity 
dealer, respectively; 
‘‘(B) the trading operations, mech-
anisms, and practices of the digital 
commodity broker or digital com-
modity dealer, respectively; 
‘‘(C) financial integrity protec-
tions 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 registered digital commodity broker 
and registered digital commodity dealer 
shall— 
‘‘(A) establish and enforce inter-
nal systems and procedures to obtain 
any necessary information to perform 
any of the functions described in this 
section; and 
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‘‘(B) provide the information to 
the Commission, on request. 
‘‘(4) CONFLICTS
OF
INTEREST.—Each 
registered digital commodity broker and 
digital commodity dealer shall implement 
conflict-of-interest systems and proce-
dures that— 
‘‘(A) establish structural and insti-
tutional safeguards— 
‘‘(i) to minimize conflicts of in-
terest that might potentially bias 
the judgment or supervision of 
the digital commodity broker or 
digital commodity dealer, respec-
tively, and contravene the prin-
ciples of fair and equitable trad-
ing and the business conduct 
standards described in this Act, 
including conflicts arising out of 
transactions 
or 
arrangements 
with affiliates (including affiliates 
acting as digital asset issuers, dig-
ital commodity dealers, or quali-
fied 
digital 
commodity 
custodians), which may include 
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429 
information partitions and the 
legal separation of different dig-
ital commodity transaction inter-
mediaries; and 
‘‘(ii) to ensure that the activi-
ties of any person within the dig-
ital commodity broker or digital 
commodity dealer relating to re-
search or analysis of the price or 
market for any digital commodity 
or acting in a role of providing 
exchange activities or making de-
terminations as to accepting ex-
change customers are separated 
by appropriate informational par-
titions within the digital com-
modity broker or digital com-
modity dealer from the review, 
pressure, or oversight of persons 
whose involvement in pricing, 
trading, exchange, or clearing ac-
tivities 
might 
potentially 
bias 
their judgment or supervision 
and contravene the core prin-
ciples of open access and the 
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430 
business conduct standards de-
scribed in this Act; and 
‘‘(B) address such other issues as 
the Commission determines to be ap-
propriate. 
‘‘(5) ANTITRUST
CONSIDERATIONS.—Un-
less necessary or appropriate to achieve 
the purposes of this Act, a digital com-
modity broker or digital commodity deal-
er shall not— 
‘‘(A) adopt any process or take 
any action that results in any unrea-
sonable restraint of trade; or 
‘‘(B) impose any material anti-
competitive burden on trading or 
clearing. 
‘‘(j) DESIGNATION OF CHIEF COMPLIANCE OF-
FICER.— 
‘‘(1) IN GENERAL.—Each registered dig-
ital commodity broker and registered dig-
ital commodity dealer shall designate an 
individual to serve as a chief compliance 
officer. 
‘‘(2) DUTIES.—The chief compliance of-
ficer shall— 
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432 
‘‘(F) establish procedures for the 
remediation of noncompliance issues 
identified by the chief compliance of-
ficer through any— 
‘‘(i) compliance office review; 
‘‘(ii) look-back; 
‘‘(iii) 
internal 
or 
external 
audit finding; 
‘‘(iv) self-reported error; or 
‘‘(v) validated complaint; and 
‘‘(G) establish and follow appro-
priate procedures for the handling, 
management response, remediation, 
retesting, and closing of noncompli-
ance issues. 
‘‘(3) ANNUAL REPORTS.— 
‘‘(A) IN
GENERAL.—In accordance 
with rules prescribed by the Commis-
sion, the chief compliance officer 
shall annually prepare and sign a re-
port that contains a description of— 
‘‘(i) the compliance of the reg-
istered digital commodity broker 
or registered digital commodity 
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dealer with respect to this Act (in-
cluding regulations); and 
‘‘(ii) each policy and proce-
dure of the registered digital com-
modity broker or registered dig-
ital commodity dealer of the chief 
compliance officer (including the 
code of ethics and conflict of in-
terest policies). 
‘‘(B) 
REQUIREMENTS.—The 
chief 
compliance officer shall ensure that a 
compliance report under subpara-
graph (A)— 
‘‘(i) accompanies each appro-
priate financial report of the reg-
istered digital commodity broker 
or registered digital commodity 
dealer that is required to be fur-
nished to the Commission pursu-
ant to this section; and 
‘‘(ii) includes a certification 
that, under penalty of law, the 
compliance report is accurate and 
complete. 
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434 
‘‘(k) SEGREGATION
OF
DIGITAL
COMMOD-
ITIES.— 
‘‘(1) HOLDING OF CUSTOMER ASSETS.— 
‘‘(A) IN GENERAL.—Each registered 
digital commodity broker and reg-
istered digital commodity dealer shall 
hold customer money, assets, and 
property in a manner to minimize the 
risk of loss to the customer or unrea-
sonable delay in customer access to 
the money, assets, and property of 
the customer. 
‘‘(B) QUALIFIED DIGITAL COMMODITY 
CUSTODIAN.—Each registered digital 
commodity broker and registered dig-
ital commodity dealer shall hold in a 
qualified digital commodity custodian 
each unit of a digital commodity that 
is— 
‘‘(i) the property of a customer 
or counterparty of the digital 
commodity broker or digital com-
modity dealer, respectively; or 
‘‘(ii) otherwise so required by 
the Commission to reasonably 
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protect customers or promote the 
public interest. 
‘‘(2) SEGREGATION OF FUNDS.— 
‘‘(A) IN GENERAL.—Each registered 
digital commodity broker and reg-
istered digital commodity dealer shall 
treat and deal with all money, assets, 
and property that is received by the 
registered digital commodity broker 
or registered digital commodity deal-
er, or accrues to a customer as the re-
sult of trading in digital commodities, 
as belonging to the customer. 
‘‘(B) COMMINGLING PROHIBITED.— 
‘‘(i) IN
GENERAL.—Except as 
provided in clause (ii), each reg-
istered digital commodity broker 
and registered 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 com-
modity broker or digital com-
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modity dealer, respectively, or 
use any such money, assets, or 
property to margin, secure, or 
guarantee any trades or accounts 
of any customer or person other 
than the person for whom the 
money, assets, or property are 
held. 
‘‘(ii) EXCEPTIONS.— 
‘‘(I) USE OF FUNDS.— 
‘‘(aa) IN
GENERAL.—A 
registered 
digital 
com-
modity 
broker 
or 
reg-
istered digital commodity 
dealer may, for conven-
ience, commingle and de-
posit in the same account 
or 
accounts 
with 
any 
bank, trust company, de-
rivatives clearing organi-
zation, or qualified digital 
commodity 
custodian 
money, assets, and prop-
erty of customers. 
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‘‘(bb) 
WITHDRAWAL.— 
The share of the money, 
assets, and property de-
scribed in item (aa) as in 
the normal course of busi-
ness shall be necessary to 
margin, guarantee, secure, 
transfer, adjust, or settle a 
contract for sale of a dig-
ital commodity with a reg-
istered 
entity 
may 
be 
withdrawn and applied to 
such purposes, including 
the payment of commis-
sions, brokerage, interest, 
taxes, storage, and other 
charges, lawfully accruing 
in connection with the 
contract. 
‘‘(II) COMMISSION ACTION.— 
In 
accordance 
with 
such 
terms and conditions as the 
Commission may prescribe by 
rule, regulation, or order, any 
money, assets, or property of 
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the customers of a registered 
digital commodity broker or 
registered digital commodity 
dealer may be commingled 
and deposited in customer ac-
counts with any other money, 
assets, or property received 
by 
the 
digital 
commodity 
broker or digital commodity 
dealer, respectively, and re-
quired by the Commission to 
be separately accounted for 
and treated and dealt with as 
belonging to the customer of 
the digital commodity broker 
or digital commodity dealer, 
respectively. 
‘‘(3) PERMITTED
INVESTMENTS.—Money 
described in paragraph (2) may be in-
vested in obligations of the United States, 
in general obligations of any State or of 
any political subdivision of a State, in ob-
ligations fully guaranteed as to principal 
and interest by the United States, or in 
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any other investment that the Commis-
sion may by rule or regulation allow. 
‘‘(4) CUSTOMER
PROTECTION
DURING 
BANKRUPTCY.— 
‘‘(A) 
CUSTOMER
PROPERTY.—All 
money, assets, or property described 
in paragraph (2) shall be considered 
customer property for purposes of 
section 761 of title 11, United States 
Code. 
‘‘(B) TRANSACTIONS.—A transaction 
involving a unit of a digital com-
modity occurring with a 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 contract 
market or board of trade’ for pur-
poses of the definition of a ‘com-
modity contract’ in section 761 of title 
11, United States Code. 
‘‘(C) BROKERS
AND
DEALERS.—A 
registered digital commodity dealer 
and a registered digital commodity 
broker shall be considered a futures 
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commission merchant for purposes of 
section 761 of title 11, United States 
Code. 
‘‘(D) ASSETS
REMOVED
FROM
SEG-
REGATION.—Assets removed from seg-
regation due to a customer election 
under paragraph (5) shall not be con-
sidered 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 un-
lawful— 
‘‘(i) for any digital commodity 
broker or digital commodity deal-
er 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 com-
modity broker or digital com-
modity dealer, respectively; or 
‘‘(ii) for any other person, in-
cluding any depository, digital 
commodity exchange, other dig-
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441 
ital commodity broker, other dig-
ital commodity dealer, or digital 
commodity custodian that has re-
ceived any customer money, as-
sets, or property for deposit, to 
hold, dispose of, or use any such 
money, assets, or property, as be-
longing to the depositing digital 
commodity broker or digital com-
modity dealer or any person other 
than the customers of the digital 
commodity broker or digital com-
modity dealer, respectively. 
‘‘(B) USE
FURTHER
DEFINED.—For 
purposes of this section, ‘use’ of a dig-
ital commodity includes utilizing any 
unit of a digital asset to participate in 
a blockchain service defined in para-
graph (5) or a decentralized govern-
ance system associated with the dig-
ital commodity or the blockchain sys-
tem to which the digital commodity 
relates in any manner other than that 
expressly directed by the customer 
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from whom the unit of a digital com-
modity was received. 
‘‘(6) 
PARTICIPATION
IN
BLOCKCHAIN 
SERVICES.— 
‘‘(A) 
IN
GENERAL.—A 
customer 
shall have the right to waive the re-
strictions in paragraph (1) for any 
unit of a digital commodity, by af-
firmatively electing, in writing to the 
digital commodity broker or digital 
commodity dealer, to waive the re-
strictions. 
‘‘(B) USE OF FUNDS.—Customer dig-
ital commodities removed from seg-
regation under subparagraph (A) may 
be pooled and used by the digital 
commodity broker or digital com-
modity dealer, or one of their des-
ignees, to provide a blockchain serv-
ice for a blockchain system to which 
the unit of the digital asset removed 
from segregation in subparagraph (A) 
relates. 
‘‘(C) LIMITATIONS.—The Commis-
sion may, by rule, establish notice 
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443 
and disclosure requirements, and any 
other limitations and rules related to 
the waiving of any restrictions under 
this paragraph that are reasonably 
necessary to protect customers, in-
cluding eligible contract participants, 
non-eligible contract participants, or 
any other class of customers. 
‘‘(D) 
BLOCKCHAIN
SERVICE
DE-
FINED.—In 
this 
subparagraph, 
the 
term ‘blockchain service’ means any 
activity relating to validating trans-
actions on a blockchain system, pro-
viding security for a blockchain sys-
tem, or other similar activity re-
quired for the ongoing operation of a 
blockchain system. 
‘‘(l) 
FEDERAL
PREEMPTION.—Notwith-
standing any other provision of law, the Com-
mission shall have exclusive jurisdiction over 
any digital commodity broker or digital com-
modity dealer registered under this section. 
‘‘(m) EXEMPTIONS.—In order to promote re-
sponsible economic or financial innovation 
and fair competition, or protect customers, 
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the Commission may (on its own initiative or 
on application of the registered digital com-
modity broker or registered digital com-
modity dealer) exempt, unconditionally or on 
stated terms or conditions, or for stated peri-
ods, and retroactively or prospectively, or 
both, a registered digital commodity broker 
or registered digital commodity dealer from 
the requirements of this section, if the Com-
mission determines that— 
‘‘(1)(A) the exemption would be con-
sistent with the public interest and the 
purposes of this Act; and 
‘‘(B) the exemption will not have a 
material adverse effect on the ability of 
the Commission or the digital commodity 
broker or digital commodity dealer to 
discharge regulatory duties under this 
Act; or 
‘‘(2) the registered digital commodity 
broker or registered digital commodity 
dealer is subject to comparable, com-
prehensive supervision and regulation by 
the appropriate government authorities 
in the home country of the registered dig-
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‘‘(B) CONTENTS.—Each report re-
quired under paragraph (1) shall in-
clude— 
‘‘(i) the total number of per-
sons that met with LabCFTC; 
‘‘(ii) a summary of general 
issues discussed 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 regulations, guidance, and or-
ders of the Commission and such 
legislative actions as may be ap-
propriate; and 
‘‘(v) any other information de-
termined appropriate by the Di-
rector of LabCFTC. 
‘‘(C) CONFIDENTIALITY.—A report 
under paragraph (A) shall abide by 
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