Lummis-Gillibrand Responsible Financial Innovation Act
Bill: S.4356 | Sponsor: Sen. Lummis, Cynthia M. (R-WY)
Policy area: Finance and Financial Sector

Summary:
Lummis-Gillibrand Responsible Financial Innovation Act
This bill provides for the regulation of digital assets.
The bill delineates the jurisdiction over digital assets held by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). For example, the bill provides that the SEC has jurisdiction over digital assets that provide their holders with financial interest in a business entity, while the CFTC has jurisdiction over digital assets that do not.
In addition, digital asset exchanges are allowed to register with the CFTC.
Under the bill, depository institutions are allowed to issue payment stablecoins. The bill sets forth requirements, including that institutions must hold in reserves 100% of the value of all outstanding stablecoins and allow stablecoins to be redeemed on a one-to-one basis.
The bill also provides for the tax treatment of digital assets, including an exemption from income tax for purchases using digital assets that result in a gain or loss of $200 or less.
Finally, the bill provides for various reports, studies, and consumer protection standards.

To provide for responsible financial innovation and to bring digital 
                assets within the regulatory perimeter.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Lummis-Gillibrand 
Responsible Financial Innovation Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
                          TITLE I--DEFINITIONS

Sec. 101. Definitions.
            TITLE II--RESPONSIBLE TAXATION OF DIGITAL ASSETS

Sec. 201. Gain from disposition of digital assets.
Sec. 202. Information reporting requirements imposed on brokers with 
                            respect to digital assets.
Sec. 203. Sources of income.
Sec. 204. Decentralized autonomous organizations.
Sec. 205. Tax treatment of digital asset lending agreements and related 
                            matters.
Sec. 206. Implementing effective IRS guidance.
Sec. 207. Analysis of retirement investing in digital assets.
Sec. 208. Digital asset mining and staking.
Sec. 209. Conforming amendments.
              TITLE III--RESPONSIBLE SECURITIES INNOVATION

Sec. 301. Securities offerings involving certain intangible assets.
Sec. 302. Termination of specified periodic disclosure requirements.
Sec. 303. Guidance relating to satisfactory control location.
Sec. 304. Custody and customer protection rules.
              TITLE IV--RESPONSIBLE COMMODITIES INNOVATION

Sec. 401. Definitions.
Sec. 402. Reporting and recordkeeping.
Sec. 403. CFTC jurisdiction over digital asset transactions.
Sec. 404. Registration of digital asset exchanges.
Sec. 405. Violations.
Sec. 406. Market reports.
Sec. 407. Bankruptcy treatment of digital assets.
Sec. 408. Identified banking products.
Sec. 409. Financial institutions definition.
Sec. 410. Offsetting the costs of digital asset regulation.
                TITLE V--RESPONSIBLE CONSUMER PROTECTION

Sec. 501. Responsible consumer protection.
Sec. 502. Source code version of digital assets.
Sec. 503. Settlement finality.
Sec. 504. Notice to customers; enforcement.
Sec. 505. Right to individual management of digital assets.
Sec. 506. Technical and conforming amendments.
               TITLE VI--RESPONSIBLE PAYMENTS INNOVATION

Sec. 601. Issuance of payment stablecoins.
Sec. 602. Sanctions compliance responsibilities of payment stablecoin 
                            issuers.
Sec. 603. Use of the official digital currency of the People's Republic 
                            of China on Government devices.
Sec. 604. Certificate of authority to commence banking.
Sec. 605. Holding company supervision of covered depository 
                            institutions.
Sec. 606. Implementation rules to preserve adequate competition in 
                            payment stablecoins.
Sec. 607. Financial Crimes Enforcement Network Innovation Laboratory.
               TITLE VII--RESPONSIBLE BANKING INNOVATION

Sec. 701. Study on use of distributed ledger technology for reduction 
                            of risk in depository institutions.
Sec. 702. Eligibility for Federal Reserve services to depository 
                            institutions.
Sec. 703. Routing transit number issuance.
Sec. 704. Clarifying application review times with respect to the 
                            Federal banking agencies.
Sec. 705. Examination standards for digital asset activities.
Sec. 706. Asset custody for depository institutions and certain other 
                            entities.
Sec. 707. Reputation risk; requirements for account termination 
                            requests and orders.
Sec. 708. Conforming amendments.
            TITLE VIII--RESPONSIBLE INTERAGENCY COORDINATION

Sec. 801. Timeline for interpretive guidance issued by Federal 
                            financial agencies.
Sec. 802. Interstate sandbox activities.
Sec. 803. State money transmission coordination relating to digital 
                            assets.
Sec. 804. Information sharing among Federal and State financial 
                            regulators.
Sec. 805. Analysis of decentralized finance markets and technologies.
Sec. 806. Analysis of energy consumption in digital asset markets.
Sec. 807. Analysis of self-regulation and registered digital asset 
                            associations.
Sec. 808. Cybersecurity standards for digital asset intermediaries.
Sec. 809. Advisory Committee on Financial Innovation.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Commodity.--The term ``commodity'' has the meaning 
        given the term in section 1a of the Commodity Exchange Act (7 
        U.S.C. 1a).
            (2) Digital asset; digital asset intermediary; distributed 
        ledger technology; payment stablecoin; smart contract; virtual 
        currency.--The terms ``digital asset'', ``digital asset 
        intermediary'', ``distributed ledger technology'', ``payment 
        stablecoin'', ``smart contract'', and ``virtual currency'' have 
        the meanings given the terms in section 9801 of title 31, 
        United States Code, as added by section 101 of this Act.
            (3) Security.--Except as otherwise expressly provided, the 
        term ``security'' has the meaning given the term in section 
        3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).

                          TITLE I--DEFINITIONS

SEC. 101. DEFINITIONS.

    (a) In General.--Subtitle VI of title 31, United States Code, is 
amended by adding after chapter 97 the following:

                      ``CHAPTER 98--DIGITAL ASSETS

``Sec.
``9801. Definitions.
``Sec. 9801. Definitions
    ``In this chapter:
            ``(1) Depository institution.--The term `depository 
        institution' has the meaning given the term in section 19(b)(1) 
        of the Federal Reserve Act (12 U.S.C. 461(b)(1)).
            ``(2) Digital asset.--The term `digital asset'--
                    ``(A) means a natively electronic asset that--
                            ``(i) confers economic, proprietary, or 
                        access rights or powers; and
                            ``(ii) is recorded using cryptographically 
                        secured distributed ledger technology, or any 
                        similar analogue; and
                    ``(B) includes--
                            ``(i) virtual currency and ancillary assets 
                        in accordance with section 2(c)(2)(F) of the 
                        Commodity Exchange Act;
                            ``(ii) payment stablecoins in accordance 
                        with section 403 of the Commodity Futures 
                        Modernization Act of 2000 (7 U.S.C. 27a); and
                            ``(iii) any other security or commodity 
                        that meets the requirements of subparagraph 
                        (A).
            ``(3) Digital asset intermediary.--The term `digital asset 
        intermediary'--
                    ``(A) means--
                            ``(i) a person who holds a license, 
                        registration, or other similar authorization, 
                        as specified by this chapter, the Commodity 
                        Exchange Act (7 U.S.C. 1 et seq.), the 
                        Securities Act of 1933 (15 U.S.C. 77a et seq.), 
                        the Corporation of Foreign Bondholders Act, 
                        1933 (15 U.S.C. 77bb et seq.), the Trust 
                        Indenture Act of 1939 (15 U.S.C. 77aaa et 
                        seq.), the Securities Exchange Act of 1934 (15 
                        U.S.C. 78a et seq.), the Securities Investor 
                        Protection Act of 1970 (15 U.S.C. 78aaa et 
                        seq.), the Investment Company Act of 1940 (15 
                        U.S.C. 80a-1 et seq.), the Investment Advisers 
                        Act of 1940 (15 U.S.C. 80b-1), and the Omnibus 
                        Small Business Capital Formation Act of 1980 
                        (15 U.S.C. 80c), that may conduct market 
                        activities relating in digital assets; or
                            ``(ii) a person who is required by law to 
                        hold a license, registration, or other similar 
                        authorization described in clause (i);
                    ``(B) includes--
                            ``(i) a person who holds a license, 
                        registration, or other similar authorization 
                        under State or Federal law that issues a 
                        payment stablecoin; and
                            ``(ii) a person who is required by law to 
                        hold a license, registration, or other similar 
                        authorization described in clause (i); and
                    ``(C) does not include a depository institution.
            ``(4) Distributed ledger technology.--The term `distributed 
        ledger technology' means technology that enables the operation 
        and use of a ledger that--
                    ``(A) is shared across a set of distributed nodes 
                that participate in a network and store a complete or 
                partial replica of the ledger;
                    ``(B) is synchronized between the nodes;
                    ``(C) has data appended to the ledger by following 
                the specified consensus mechanism of the ledger;
                    ``(D) may be accessible to anyone or restricted to 
                a subset of participants; and
                    ``(E) may require participants to have 
                authorization to perform certain actions or require no 
                authorization.
            ``(5) Payment stablecoin.--The term `payment stablecoin' 
        means a digital asset that is--
                    ``(A) redeemable, on demand, on a 1-to-1 basis for 
                instruments denominated in United States dollars;
                    ``(B) defined as legal tender under section 5103 or 
                under the laws of a foreign country (excluding digital 
                assets);
                    ``(C) issued by a business entity;
                    ``(D) accompanied by a statement from the issuer 
                that the asset is redeemable, as specified in 
                subparagraph (A), from the issuer or another identified 
                person;
                    ``(E) backed by 1 or more financial assets 
                (excluding other digital assets), consistent with 
                subparagraph (A); and
                    ``(F) intended to be used as a medium of exchange.
            ``(6) Person who provides digital asset services.--The term 
        `person who provides digital asset services' means--
                    ``(A) a digital asset intermediary;
                    ``(B) a financial institution, as defined in 
                section 1a of the Commodity Exchange Act (7 U.S.C. 1a);
                    ``(C) any other person conducting digital asset 
                activities pursuant to a Federal or State charter, 
                license, registration, or other similar authorization; 
                and
                    ``(D) any person who is required by law to hold a 
                license, registration, or other similar authorization 
                described in subparagraph (C).
            ``(7) Security.--The term `security' has the meaning given 
        the term in section 3(a) of the Securities Exchange Act of 1934 
        (15 U.S.C. 78c(a)).
            ``(8) Smart contract.--The term `smart contract'--
                    ``(A) means--
                            ``(i) computer code deployed to a 
                        distributed ledger technology network that 
                        executes an instruction based on the occurrence 
                        or nonoccurrence of specified conditions; or
                            ``(ii) any similar analogue; and
                    ``(B) includes taking possession or control of a 
                digital asset and transferring the asset or issuing 
                executable instructions for these actions.
            ``(9) Source code version.--The term `source code 
        version'--
                    ``(A) means the source code version comprising a 
                digital asset; and
                    ``(B) does not include software used to manage or 
                facilitate transactions in a digital asset.
            ``(10) Virtual currency.--The term `virtual currency'--
                    ``(A) means a digital asset that--
                            ``(i) is used primarily as a medium of 
                        exchange, unit of account, store of value, or 
                        any combination of such functions;
                            ``(ii) is not legal tender, as described in 
                        section 5103; and
                            ``(iii) does not derive value from or is 
                        backed by an underlying financial asset (except 
                        other digital assets); and
                    ``(B) includes a digital asset, consistent with 
                subparagraph (A) that is accompanied by a statement 
                from the issuer that a denominated or pegged value will 
                be maintained and be available upon redemption from the 
                issuer or other identified person, based solely on a 
                smart contract.''.
    (b) Technical and Conforming Amendment.--The table of contents for 
subtitle VI of title 31, United States Code, is amended by adding at 
the end the following:

``98. Digital assets........................................    9801''.

            TITLE II--RESPONSIBLE TAXATION OF DIGITAL ASSETS

SEC. 201. GAIN FROM DISPOSITION OF DIGITAL ASSETS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 
139I the following new section:

``SEC. 139J. GAIN OR LOSS FROM SALE OR EXCHANGE OF VIRTUAL CURRENCY.

    ``(a) In General.--Gross income shall not include gain or loss from 
the sale or exchange of virtual currency in a personal transaction (as 
defined in section 988(e)(3)) for goods and services.
    ``(b) Limitation.--
            ``(1) In general.--The amount of gain or loss excluded from 
        gross income under subsection (a) with respect to a sale or 
        exchange shall not exceed $200.
            ``(2) Aggregation rule.--For purposes of this subsection, 
        all sales or exchanges which are part of the same transaction 
        (or a series of related transactions) shall be treated as one 
        sale or exchange.
    ``(c) Other Sales or Exchanges.--Subsection (a) shall not apply to 
sales or exchanges in which virtual currency is sold or exchanged for 
cash, cash equivalents, digital assets (as defined in section 9801 of 
title 31, United States Code), or other securities or commodities.
    ``(d) Virtual Currency.--For purposes of this section, the term 
`virtual currency' has the meaning given such term in section 9801 of 
title 31, United States Code.
    ``(e) Inflation Adjustment.--In the case of any taxable year 
beginning in a calendar year after 2023, the dollar amount in 
subsection (b) shall be increased by an amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) the cost-of-living adjustment determined under 
        section 1(f)(3) for the calendar year in which the taxable year 
        begins, determined by substituting `calendar year 2022' for 
        `calendar year 2016' in subparagraph (A)(ii) thereof.
Any increase determined under the preceding sentence shall be rounded 
to the nearest multiple of $50.''.
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by inserting after the item relating to section 139I the 
following new item:

``Sec. 139J. Gain or loss from sale or exchange of virtual currency.''.
    (c) Reporting of Gains or Losses.--The Secretary shall issue 
regulations providing for information returns on virtual currency 
transactions for which gain or loss is recognized.
    (d) Effective Date.--The amendments made by this section shall 
apply to transactions entered into after December 31, 2022.

SEC. 202. INFORMATION REPORTING REQUIREMENTS IMPOSED ON BROKERS WITH 
              RESPECT TO DIGITAL ASSETS.

    (a) Clarification of Definition of Broker.--Section 6045(c)(1)(D) 
of the Internal Revenue Code of 1986 is amended to read as follows:
                    ``(D) any person who (for consideration) stands 
                ready in the ordinary course of a trade or business to 
                effect sales of digital assets at the direction of 
                their customers.''.
    (b) Reporting of Digital Assets.--
            (1) Brokers.--
                    (A) Definition of digital asset.--Section 
                6045(g)(3)(D) of the Internal Revenue Code of 1986 is 
                amended to read as follows:
                    ``(D) Digital asset.--The term `digital asset' has 
                the meaning given such term in section 9801 of title 
                31, United States Code.''.
                    (B) Applicable date.--Section 6045(g)(3)(C)(iii) of 
                such Code is amended to read as follows:
                            ``(iii) January 1, 2025, in the case of any 
                        specified security which is a digital asset, 
                        and''.
            (2) Furnishing of information.--Section 6045A(d) of such 
        Code is amended to read as follows:
    ``(d) Return Requirement for Certain Transfers of Digital Assets 
Not Otherwise Subject to Reporting.--Any broker, with respect to any 
transfer (which is not part of a sale or exchange executed by such 
broker) during a calendar year of a covered security which is a digital 
asset from an account wholly controlled and maintained by such broker 
to an account which is not maintained by, or an address not associated 
with, a person that such broker knows or has reason to know is also a 
broker, shall make a return for such calendar year, in such form as 
determined by the Secretary, showing the information otherwise required 
to be furnished with respect to transfers subject to subsection (a). 
Information reported by brokers under this section shall be limited to 
customer information that is voluntarily provided by the customer and 
held by the broker for a legitimate business purpose.''.
    (c) Effective Dates.--The amendments made by this section shall 
apply to returns required to be filed and statements required to be 
furnished after December 31, 2025.

SEC. 203. SOURCES OF INCOME.

    (a) In General.--Paragraph (2) of section 864(b) of the Internal 
Revenue Code of 1986 is amended by redesignating subparagraph (C) as 
subparagraph (D) and by inserting after subparagraph (B) the following 
new subparagraph:
                    ``(C) Digital assets.--
                            ``(i) In general.--Trading in digital 
                        assets through a resident broker, commission 
                        agent, custodian, digital asset exchange, or 
                        other independent agent.
                            ``(ii) Trading for taxpayer's own 
                        account.--Trading in digital assets for the 
                        taxpayer's own account, whether by the taxpayer 
                        or the taxpayer's employees or through a 
                        resident broker, commission agent, custodian, 
                        digital asset exchange, or other agent, and 
                        whether or not any such employee or agent has 
                        discretionary authority to make decisions in 
                        effecting the transactions. This clause shall 
                        not apply in the case of a dealer in digital 
                        assets.
                            ``(iii) Definitions.--For purposes of this 
                        subparagraph--
                                    ``(I) Digital asset exchange.--The 
                                term `digital asset exchange' means a 
                                centralized or decentralized platform 
                                which facilitates the transfer of 
                                digital assets.
                                    ``(II) Digital asset.--The term 
                                `digital asset' has the meaning given 
                                such term in section 9801 of title 31, 
                                United States Code.
                            ``(iv) Limitation.--This subparagraph shall 
                        apply only if the digital assets are of a kind 
                        customarily dealt in on a digital asset 
                        exchange and if the transaction is of a kind 
                        customarily consummated at such exchange.''.
    (b) Conforming Amendment.--Subparagraph (D) of section 864(b)(2) of 
the Internal Revenue Code of 1986, as redesignated by subsection (a), 
is amended by striking ``(A)(i) and (B)(i)'' and inserting ``(A)(i), 
(B)(i), and (C)(i)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales and exchanges after December 31, 2022.

SEC. 204. DECENTRALIZED AUTONOMOUS ORGANIZATIONS.

    (a) In General.--Section 7701(a) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(51) Decentralized autonomous organizations.--
                    ``(A) In general.--The default classification of a 
                decentralized autonomous organization shall be as a 
                business entity which is not a disregarded entity.
                    ``(B) Classification of other activities.--The 
                following shall not be considered a business activity 
                of such organization for purposes of determining 
                whether such organization is described in section 
                501(c)(7):
                            ``(i) Treasury management, including mining 
                        and staking of digital assets (as defined in 
                        section 9801 of title 31, United States Code).
                            ``(ii) Raising funds for a charitable 
                        purpose.
                    ``(C) Decentralized autonomous organization.--The 
                term `decentralized autonomous organization' means an 
                organization--
                            ``(i) which utilizes smart contracts (as 
                        defined in section 9801 of title 31, United 
                        States Code) to effectuate collective action 
                        for a business, commercial, charitable, or 
                        similar entity,
                            ``(ii) governance of which is achieved 
                        primarily on a distributed basis, and
                            ``(iii) which is properly incorporated or 
                        organized under the laws of a State or foreign 
                        jurisdiction as a decentralized autonomous 
                        organization, cooperative, foundation, or any 
                        similar entity.''.
    (b) Effective Date.--Except as provided by subsection (c), the 
amendments made by this section shall apply to taxable years beginning 
after December 31, 2022.

SEC. 205. TAX TREATMENT OF DIGITAL ASSET LENDING AGREEMENTS AND RELATED 
              MATTERS.

    (a) In General.--Subsection (a) of section 1058 of the Internal 
Revenue Code of 1986 is amended by striking ``(as defined in section 
1236(c))''.
    (b) Fixed Term.--Paragraph (1) of subsection (b) of section 1058 of 
the Internal Revenue Code of 1986 is amended by inserting ``, including 
a fixed-term transfer that occurs in the ordinary course of a 
securities lending or investment management business'' after 
``transferred''.
    (c) Basis.--Subsection (c) of section 1058 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following: ``All 
appropriate basis adjustments to an agreement under subsection (b) 
shall be made, as determined by the Secretary, including upon the 
return of the lent securities to the taxpayer.''.
    (d) Securities.--Section 1058 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsections:
    ``(d) Securities.--For purposes of this section, the term 
`securities' has the meaning given such term by section 1236(c), except 
that such term includes any digital asset (as defined in section 9801 
of title 31, United States Code) and, with respect to a digital asset, 
does not require a call option.
    ``(e) Income.--An amount equal to the income which would otherwise 
accrue to the lender but for a lending transaction under this section 
shall be included in gross income of the lender.''.
    (e) Rule of Construction.--Nothing in this section shall be 
construed to create any inference with respect to the classification of 
any digital asset as security under the Securities Act of 1933 (15 
U.S.C. 77a et seq.) or the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.).
    (f) Rulemaking Authority.--The Secretary of the Treasury (or the 
Secretary's delegate) may adopt rules to implement this section, 
including the application of this section to forks, airdrops, and 
similar subsidiary value.
    (g) Effective Date.--The amendments made by this section shall 
apply to sales and exchanges after December 31, 2022.

SEC. 206. IMPLEMENTING EFFECTIVE IRS GUIDANCE.

    (a) In General.--Not later than 1 year after the date of the 
enactment of this Act, the Secretary of the Treasury (or the 
Secretary's delegate) shall adopt guidance relating to the following:
            (1) Classification of forks, airdrops, and similar 
        subsidiary value as taxable, contingent upon the affirmative 
        claim and disposition of the subsidiary value by a taxpayer. 
        Such guidance shall also permit a taxpayer to provide 
        notification through an annual return or other appropriate 
        means to the Internal Revenue Service relating to claim and 
        disposition of, or disclaimer of, subsidiary value.
            (2) Merchant acceptance of digital assets and the tax 
        treatment of payments and receipts, consistent with the 
        amendments made by section 80603 of the Infrastructure 
        Investment and Jobs Act, as amended by section 203.
            (3) Treatment of digital asset mining and staking, 
        including mining and staking rewards, in which income is not 
        realized until disposition of the assets produced or received 
        in connection with such activity, in accordance with section 
        451(l) of the Internal Revenue Code of 1986 (as added by this 
        Act).
            (4) Classification of charitable contributions greater than 
        $5,000 of digital assets which are traded on established 
        financial markets as contributions of readily valued property 
        not requiring a qualified appraisal for purposes of section 
        170(f)(11)(A) of the Internal Revenue Code of 1986, as amended 
        by this Act.
            (5) Characterization of payment stablecoins (as defined in 
        section 9801 of title 31, United States Code) as indebtedness.
    (b) Effective Date.--The guidance adopted under this section shall 
be applicable on a prospective basis for taxable years beginning after 
December 31, 2023.

SEC. 207. ANALYSIS OF RETIREMENT INVESTING IN DIGITAL ASSETS.

    (a) Not later than March 1, 2023, the Comptroller General of the 
United States shall conduct a study and provide a report to the 
entities specified in subsection (b) regarding the following issues 
relating to retirement investing in digital assets:
            (1) Potential benefits to diversification and return of an 
        investor's retirement portfolio.
            (2) Appropriate asset allocations, including among other 
        alternative investments.
            (3) Consumer education, financial literacy and investment 
        advisor training relating to digital assets.
            (4) Risk.
            (5) Legal and operational barriers to effective retirement 
        investing in digital assets.
            (6) Any other topic determined to be material by the 
        Comptroller General relating to retirement investing in digital 
        assets.
    (b) The Comptroller General shall provide the report required by 
subsection (a) to the following:
            (1) The Committee on Banking, Housing, and Urban Affairs of 
        the Senate.
            (2) The Committee on Finance of the Senate.
            (3) The Committee on Health, Education, Labor, and Pensions 
        of the Senate.
            (4) The Committee on Financial Services of the House of 
        Representatives.
            (5) The Committee on Ways and Means of the House of 
        Representatives.
            (6) The Committee on Education and Labor of the House of 
        Representatives.
            (7) The Secretary of the Treasury.
            (8) The Secretary of Labor.

SEC. 208. DIGITAL ASSET MINING AND STAKING.

    (a) In General.--Section 451 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(l) Deferral of Income Recognition for Digital Asset 
Activities.--In the case of a taxpayer who conducts digital asset 
mining or staking activities, the amount of income relating to such 
activities shall not be included in the gross income of the taxpayer 
until the taxable year of the disposition of the assets produced or 
received in connection with the mining or staking activities.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2022.

SEC. 209. CONFORMING AMENDMENTS.

    (a) Charitable Contributions.--
            (1) In general.--Subclause (I) of section 170(f)(11)(A)(ii) 
        of the Internal Revenue Code of 1986 is amended by inserting 
        ``, digital assets (as defined in section 9801 of title 31, 
        United States Code)'' after ``6050L(a)(2)(B))''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to taxable years beginning after December 31, 2022.
    (b) Other Conforming Amendments.--
            (1) In general.--Title 31, United States Code, is amended--
                    (A) in section 5312(a)(2)--
                            (i) by redesignating subparagraphs (A) 
                        through (Z) as clauses (i) through (xxvi), 
                        respectively;
                            (ii) in the matter preceding clause (i), as 
                        so designated, by striking ```institution' 
                        means--'' and inserting ```institution'--
                    ``(A) means--'';
                            (iii) in clause (xxvi), as so designated, 
                        by striking the period at the end and inserting 
                        ``; and''; and
                            (iv) by adding at the end the following:
                    ``(B) does not include a decentralized autonomous 
                organization, as defined in section 7701(a) of the 
                Internal Revenue Code of 1986.''; and
                    (B) in section 5336(a)(11)(B)(2)--
                            (i) by redesignating clause (xxv) as clause 
                        (xxvi); and
                            (ii) by adding after clause (xxv) the 
                        following:
                            ``(xxv) A decentralized autonomous 
                        organization, as defined in section 7701(a) of 
                        the Internal Revenue Code of 1986; and''.
            (2) Anti-money laundering act of 2020.--Section 6110(a) of 
        the Anti-Money Laundering Act of 2020 (division F of Public Law 
        116-283) is amended by striking paragraph (1) and inserting the 
        following:
                    ``(A) by redesignating clauses (xxv) and (xxvi) as 
                clauses (xxvi) and (xxvii), respectively, and adjust 
                the margins accordingly; and
                    ``(B) by inserting after clause (xxiv) the 
                following:
                    ```(Y) a person engaged in the trade of 
                antiquities, including an advisor, consultant, or any 
                other person who engages as a business in the 
                solicitation or the sale of antiquities, subject to 
                regulations prescribed by the Secretary;'.''.

              TITLE III--RESPONSIBLE SECURITIES INNOVATION

SEC. 301. SECURITIES OFFERINGS INVOLVING CERTAIN INTANGIBLE ASSETS.

    Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
seq.) is amended by adding at the end the following:

``SEC. 41. SECURITIES OFFERINGS INVOLVING CERTAIN INTANGIBLE ASSETS.

    ``(a) Definitions.--In this section:
            ``(1) Ancillary asset.--
                    ``(A) In general.--The term `ancillary asset' means 
                an intangible, fungible asset that is offered, sold, or 
                otherwise provided to a person in connection with the 
                purchase and sale of a security through an arrangement 
                or scheme that constitutes an investment contract, as 
                that term is used in section 2(a)(1) of the Securities 
                Act of 1933 (15 U.S.C. 77b(a)(1)).
                    ``(B) Exclusion.--The term `ancillary asset' does 
                not include an asset that provides the holder of the 
                asset with any of the following rights in a business 
                entity:
                            ``(i) A debt or equity interest in that 
                        entity.
                            ``(ii) Liquidation rights with respect to 
                        that entity.
                            ``(iii) An entitlement to an interest or 
                        dividend payment from that entity.
                            ``(iv) A profit or revenue share in that 
                        entity solely from the entrepreneurial or 
                        managerial efforts of others.
                            ``(v) Any other financial interest in that 
                        entity.
            ``(2) Foreign private issuer.--The term `foreign private 
        issuer' means a foreign issuer, other than a foreign 
        government, except that the term does not include a foreign 
        issuer that, as of the last business day of the most recently 
        completed fiscal quarter of the issuer, satisfies the following 
        conditions:
                    ``(A) More than 50 percent of the outstanding 
                voting securities of the issuer are directly or 
                indirectly owned by residents of the United States.
                    ``(B) Any of the following:
                            ``(i) The majority of the executive 
                        officers or directors of the issuer are 
                        citizens or residents of the United States.
                            ``(ii) More than 50 percent of the assets 
                        of the issuer are located in the United States.
                            ``(iii) The business of the issuer is 
                        principally administered in the United States.
    ``(b) Disclosure Requirements.--
            ``(1) Initial compliance with specified periodic disclosure 
        requirements.--Subject to paragraphs (4) and (5), an issuer 
        engaged in business in or affecting interstate commerce, or 
        that is organized outside of the United States and is not a 
        foreign private issuer, that offers, sells, or otherwise 
        provides a security through an arrangement or scheme that 
        constitutes an investment contract, as that term is used in 
        section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 
        77b(a)(1)), and that provides or proposes to provide any holder 
        of the security with an ancillary asset, shall be subject to 
        the periodic disclosure requirements under subsection (c) for 
        the 1-year period beginning on the date that is 180 days after 
        the first date on which the security is offered, sold, or 
        otherwise provided by the issuer, if--
                    ``(A) the average daily aggregate value of all 
                ancillary assets offered, sold, or otherwise provided 
                by the issuer in relation to the offer, sale, or 
                provision of the security in all spot markets open to 
                the public in the United States (based on the knowledge 
                of the issuer after due inquiry) is greater than 
                $5,000,000 for the 180-day period immediately 
                succeeding the date of that first offer, sale, or 
                provision; and
                    ``(B) during the 180-day period described in 
                subparagraph (A), the issuer, or any person owning not 
                less than 10 percent of any class of equity securities 
                of the issuer, engaged in entrepreneurial or managerial 
                efforts that primarily determined the value of the 
                ancillary asset.
            ``(2) Ongoing compliance with specified periodic disclosure 
        requirements.--Subject to paragraphs (4) and (5), an issuer 
        that is engaged in business in or affecting interstate 
        commerce, or that is organized outside of the United States and 
        is not a foreign private issuer, that offers, sells, or 
        otherwise provides a security through an arrangement or scheme 
        that constitutes an investment contract, as that term is used 
        in section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 
        77b(a)(1)), and that provides the holder of the security with 
        an ancillary asset in connection with the acquisition of the 
        security, shall be subject to the periodic disclosure 
        requirements under subsection (c) for a given fiscal year of 
        that issuer, if, in the immediately preceding fiscal year of 
        the issuer (or any portion thereof)--
                    ``(A) the average daily aggregate value of all 
                trading in the ancillary asset in all spot markets open 
                to the public in the United States was greater than 
                $5,000,000, based on the knowledge of the issuer after 
                due inquiry; and
                    ``(B) the issuer, or any person owning not less 
                than 10 percent of any class of equity securities of 
                the issuer, engaged in entrepreneurial or managerial 
                efforts that primarily determined the value of the 
                ancillary asset.
            ``(3) Transition rule.--Subject to paragraphs (4) and (5), 
        an issuer that is engaged in business in or affecting 
        interstate commerce, or that is organized outside of the United 
        States and is not a foreign private issuer, that offers, sells, 
        or otherwise provides a security through an arrangement or 
        scheme that constitutes an investment contract, as that term is 
        used in section 2(a)(1) of the Securities Act of 1933 (15 
        U.S.C. 77b(a)(1)), and that provides the holder of the security 
        with an ancillary asset before January 1, 2023, in connection 
        with the acquisition of the security shall be subject to the 
        periodic disclosure requirements under subsection (c) beginning 
        in the first fiscal year of the issuer that begins on or after 
        that date, if, in the immediately preceding fiscal year of the 
        issuer--
                    ``(A) the average daily aggregate value of trading 
                in the ancillary asset in all spot markets open to the 
                public for which trading volume is generally available 
                was greater than $5,000,000, based on the knowledge of 
                the issuer after due inquiry; and
                    ``(B) the issuer, or any person owning not less 
                than 10 percent of any class of equity securities of 
                the issuer, engaged in entrepreneurial or managerial 
                efforts that primarily determined the value of the 
                ancillary asset.
            ``(4) Treatment of ancillary assets.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, if an issuer issues a security 
                through an arrangement or scheme that constitutes an 
                investment contract, as that term is used in section 
                2(a)(1) of the Securities Act of 1933 (15 U.S.C. 
                77b(a)(1)), is subject to paragraph (1), (2), or (3), 
                and is in compliance with the periodic disclosure 
                requirements under subsection (c), an ancillary asset 
                provided directly or indirectly by the issuer shall be 
                presumed--
                            ``(i) to be a commodity, consistent with 
                        section 2(c)(2)(F) of the Commodity Exchange 
                        Act (7 U.S.C. 2(c)(2)(F)); and
                            ``(ii) not to be a security under--
                                    ``(I) section 3(a);
                                    ``(II) such section 2(a)(1);
                                    ``(III) section 2(a) of the 
                                Investment Company Act of 1940 (15 
                                U.S.C. 80a-2(a));
                                    ``(IV) section 202(a) of the 
                                Investment Advisers Act of 1940 (15 
                                U.S.C. 80b-2(a)); or
                                    ``(V) any applicable provision of 
                                State law.
                    ``(B) Other persons.--A person who is not an 
                issuer, an entity controlled by an issuer (including a 
                person that acquires an ancillary asset from such an 
                issuer for the purpose of resale or distribution of the 
                ancillary asset), or a person acting at the direction 
                or on the behalf of an issuer shall be not required to 
                treat an ancillary asset provided by an issuer as a 
                security under this Act or any provision of law 
                described in subparagraph (A)(ii).
                    ``(C) Exception.--
                            ``(i) In general.--Subparagraph (A) shall 
                        not apply to an ancillary asset if a court of 
                        the United States of competent jurisdiction, 
                        after an appropriate proceeding, issues an 
                        order finding that there is not a substantial 
                        basis for the presumption that the ancillary 
                        asset is a commodity and not a security under 
                        subparagraph (A).
                            ``(ii) Rules of construction.--Nothing in 
                        this subparagraph shall be construed to 
                        preclude the Commission from entering into a 
                        settlement agreement relating to violations or 
                        alleged violations of this section. Compliance 
                        under this section shall not be used in any 
                        administrative or judicial proceeding that an 
                        ancillary asset is a security.
            ``(5) Calculation.--For the purposes of paragraphs (1), 
        (2), and (3), the calculation of daily aggregate value shall be 
        based on data disclosed by spot markets or otherwise available 
        to the public for inspection.
    ``(c) Specified Periodic Disclosure Requirements.--If an issuer is 
subject to paragraph (1), (2), or (3) of subsection (b), the issuer 
shall furnish, or cause the relevant affiliate to furnish, to the 
Commission, on a semi-annual basis, information that the Commission 
may, by rule, require relating to the issuer and any relevant ancillary 
asset, as necessary or appropriate in the public interest or for the 
protection of investors, which shall be exclusively comprised of the 
following:
            ``(1) Basic corporate information regarding the issuer, 
        including the following:
                    ``(A) The experience of the issuer in developing 
                assets similar to the ancillary asset.
                    ``(B) If the issuer has previously provided 
                ancillary assets to purchasers of securities, 
                information on the subsequent history of those 
                previously provided ancillary assets, including price 
                history, if the information is publicly available.
                    ``(C) The activities that the issuer has taken in 
                the relevant disclosure period, and is projecting to 
                take in the 1-year period following the submission of 
                the disclosure, with respect to promoting the use, 
                value, or resale of the ancillary asset (including any 
                activity to facilitate the creation or maintenance of a 
                trading market for the ancillary asset and any network 
                or system that utilizes the ancillary asset).
                    ``(D) The anticipated cost of the activities of the 
                issuer in subparagraph (C) and whether the issuer has 
                unencumbered, liquid funds equal to that amount.
                    ``(E) To the extent the ancillary asset involves 
                the use of a particular technology, the experience of 
                the issuer with the use of that technology.
                    ``(F) The backgrounds of the board of directors (or 
                equivalent body), senior management, and key employees 
                of the issuer, the experience or functions of whom are 
                material to the value of the ancillary asset, as well 
                as any personnel changes relating to the issuer during 
                the period covered by the disclosure.
                    ``(G) A description of the assets and liabilities 
                of the issuer, to the extent material to the value of 
                the ancillary asset.
                    ``(H) A description of any legal proceedings in 
                which the issuer is engaged (including inquiries by 
                governmental agencies into the activities of the 
                issuer), to the extent material to the value of the 
                ancillary asset.
                    ``(I) Risk factors relating to the impact of the 
                issuer on, or unique knowledge relating to, the value 
                of the ancillary asset.
                    ``(J) Information relating to ownership of the 
                ancillary asset by--
                            ``(i) persons owning not less than 10 
                        percent of any class of equity security of the 
                        issuer; and
                            ``(ii) the management of the issuer.
                    ``(K) Information relating to transactions 
                involving the ancillary asset by the issuer with 
                related persons, promoters, and control persons.
                    ``(L) Recent sales or similar dispositions of 
                ancillary assets by the issuer and affiliates of the 
                issuer.
                    ``(M) Purchases or similar dispositions of 
                ancillary assets by the issuer and affiliates of the 
                issuer.
                    ``(N) A going concern statement from the chief 
                financial officer of the issuer or equivalent official, 
                signed under penalty of perjury, stating whether the 
                issuer maintains the financial resources to continue 
                business as a going concern for the 1-year period 
                following the submission of the disclosure, absent a 
                material change in circumstances.
            ``(2) Information relating to the ancillary asset, 
        including the following:
                    ``(A) A general description of the ancillary asset, 
                including the standard unit of measure with respect to 
                the ancillary asset, the intended or known 
                functionality and uses of the ancillary asset, the 
                market for the ancillary asset, other assets or 
                services that may compete with the ancillary asset, and 
                the total supply of the ancillary asset or the manner 
                and rate of the ongoing production or creation of the 
                ancillary asset.
                    ``(B) If ancillary assets have been offered, sold, 
                or otherwise provided by the issuer to investors, 
                intermediaries, or resellers, a description of the 
                amount of assets offered, sold, or provided, the terms 
                of each such transaction, and any contractual or other 
                restrictions on the resale of the assets by 
                intermediaries.
                    ``(C) If ancillary assets were distributed without 
                charge, a description of each distribution, including 
                the identity of any recipient that received more than 5 
                percent of the total amount of the ancillary assets in 
                any such distribution.
                    ``(D) The amount of ancillary assets owned by the 
                issuer.
                    ``(E) For the 1-year period following the 
                submission of the disclosure, a description of the 
                plans of the issuer to support (or to cease supporting) 
                the use or development of the ancillary asset, 
                including markets for the ancillary asset and each 
                platform or system that uses the ancillary asset.
                    ``(F) Each third party not affiliated with the 
                issuer, the activities of which may have a material 
                impact on the value of the ancillary asset.
                    ``(G) Risk factors known to the issuer that may 
                limit demand for, or interest in, the ancillary asset.
                    ``(H) The names and locations of the markets in 
                which the ancillary asset is known by the issuer to be 
                available for sale or purchase.
                    ``(I) To the extent available to the issuer, the 
                average daily price for a constant unit of value of the 
                ancillary asset during the relevant reporting period, 
                as well as the 12-month high and low prices for the 
                ancillary asset.
                    ``(J) If applicable, information relating to any 
                external audit of the code and functionality of the 
                ancillary asset, including the entity performing the 
                audit and the experience of the entity in conducting 
                similar audits.
                    ``(K) If applicable, any third-party valuation 
                report or economic analysis regarding the ancillary 
                asset or the projected market of the ancillary asset, 
                which shall include the entity performing the valuation 
                or analysis and the experience of the entity in 
                conducting similar reports or analyses.
                    ``(L) If the ancillary asset is intangible, 
                information relating to custody by the owner of the 
                ancillary asset or a third party.
                    ``(M) Information on intellectual property rights 
                claimed or disputed relating to the ancillary asset.
                    ``(N) A description of the technology underlying 
                the ancillary asset.
                    ``(O) Any material tax considerations applicable to 
                owning, storing, using, or trading the ancillary asset.
                    ``(P) Any material legal or regulatory 
                considerations applicable to owning, storing, using, or 
                trading the ancillary asset, including any legal 
                proceeding that may impact the value of the ancillary 
                asset.
                    ``(Q) Any other material factor or information that 
                may impact the value of the ancillary asset and about 
                which the issuer is reasonably aware.
    ``(d) Application to Successor Entities and Certain Affiliates.--
            ``(1) In general.--If an issuer would otherwise be subject 
        to specified periodic disclosure requirements under subsection 
        (c) and is no longer in operation, any successor entity that 
        directly or indirectly received not less than 50 percent of the 
        proceeds raised by the sale of the related securities of that 
        issuer, and that is engaged in entrepreneurial or managerial 
        efforts that primarily determine the value of the applicable 
        ancillary asset, shall furnish, or cause to be furnished, to 
        the Commission the information required under that subsection.
            ``(2) Certain affiliates.--If an entity controlled by an 
        issuer is subject to specified periodic disclosure requirements 
        under subsection (c) and is engaged in entrepreneurial or 
        managerial efforts that primarily determine the value of an 
        ancillary asset, the entity may furnish to the Commission the 
        information required under that subsection.
    ``(e) Voluntary Disclosure.--An issuer that is not subject to the 
specified periodic disclosure requirements under subsection (c) and 
that offers or sells a security through an arrangement or scheme that 
constitutes an investment contract, as that term is used in section 
2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)), and that 
provides the holder of that security with an ancillary asset in 
connection with the acquisition of the security may voluntarily furnish 
to the Commission the information required under that subsection if the 
issuer believes that it is reasonably likely that the issuer will 
become subject to those requirements in the future.
    ``(f) Exemptions.--The Commission may, by order, exempt an 
ancillary asset from the specified periodic disclosure requirements 
under subsection (c) if the Commission determines that the public 
policy goals of disclosure and consumer protection are not satisfied by 
requiring disclosures relating to an ancillary asset.
    ``(g) Rule of Construction.--If an issuer fails to comply with a 
provision of this section, an ancillary asset provided by the issuer 
shall not be presumed to be a security under a provision of law 
described in subsection (b)(4)(A)(ii), solely because of such failure.
    ``(h) Rules.--The Commission may adopt rules and guidance to 
implement this section, consistent with the statutory intent of this 
section.''.

SEC. 302. TERMINATION OF SPECIFIED PERIODIC DISCLOSURE REQUIREMENTS.

    Section 41 of the Securities Exchange Act of 1934, as added by 
section 301 of this Act, is amended by adding at the end the following:
    ``(i) Termination of Specified Periodic Disclosure Requirements.--
            ``(1) In general.--The obligation of an issuer to furnish 
        the information required under subsection (c) shall terminate 
        on the date that is 90 days, or such shorter period as the 
        Commission may determine, after the date on which the issuer 
        files a certification described in paragraph (2).
            ``(2) Certification.--
                    ``(A) In general.--A certification filed under 
                paragraph (1) shall be supported by reasonable 
                evidence, based on the knowledge of the issuer filing 
                the certification, after due inquiry, that--
                            ``(i) the average daily aggregate value of 
                        all trading in the applicable ancillary asset 
                        in all spot markets open to the public in the 
                        United States in the 12-month period preceding 
                        the date on which the certification is filed 
                        was not greater than $5,000,000; or
                            ``(ii) during the 12-month period preceding 
                        the date on which the certification is filed, 
                        neither the applicable issuer, nor any entity 
                        controlled by the applicable issuer, engaged in 
                        entrepreneurial or managerial efforts that 
                        primarily determined the value of the ancillary 
                        asset.
                    ``(B) Denial.--
                            ``(i) In general.--Subject to subparagraph 
                        (C)(ii), the Commission may, by majority vote 
                        and after notice and opportunity for hearing, 
                        deny a certification filed under paragraph (1) 
                        if the Commission finds that the certification 
                        is not supported by substantial evidence.
                            ``(ii) Effect.--The denial, under clause 
                        (i), of a certification filed under paragraph 
                        (1)--
                                    ``(I) shall terminate the 
                                certification so filed; and
                                    ``(II) shall not prevent the 
                                applicable issuer from filing another 
                                certification under paragraph (1), if 
                                the re-filed certification is filed not 
                                earlier than 180 days after the date on 
                                which the original certification is 
                                denied.
                    ``(C) Pending status.--
                            ``(i) In general.--Termination of the 
                        disclosure requirements described in paragraph 
                        (1) applicable to an issuer that has filed a 
                        certification under that paragraph shall be 
                        deferred pending review by the Commission of 
                        the evidence supporting the certification.
                            ``(ii) Effect of delay.--If, as of the date 
                        that is 90 days after receiving a certification 
                        filed under paragraph (1), the Commission has 
                        not requested additional evidence with respect 
                        to the certification from the applicable 
                        issuer, the disclosure obligations that are the 
                        subject of the certification shall 
                        terminate.''.

SEC. 303. GUIDANCE RELATING TO SATISFACTORY CONTROL LOCATION.

    Not later than 180 days after the date of the enactment of this 
Act, the Securities and Exchange Commission (referred to in this title 
as the ``Commission'') shall issue guidance relating to section 
240.15c3-3 of title 17, Code of Federal Regulations, or any successor 
regulation, providing that the requirement to designate a satisfactory 
control location for a digital asset that is, or may represent 
ownership of, a security may be satisfied by protecting the digital 
asset through commercially reasonable cybersecurity practices to 
maintain control of sufficient private key material to transfer control 
of the digital asset to another person, or to cause another person to 
obtain control of the digital asset, including by means of a smart 
contract that generates private key material without the involvement of 
a natural person.

SEC. 304. CUSTODY AND CUSTOMER PROTECTION RULES.

    (a) In General.--
            (1) Modernization of existing rules and adoption of new 
        rules.--Not later than 18 months after the date of enactment of 
        this Act, the Commission shall--
                    (A) complete the multi-year study of the Commission 
                with respect to the modernization of the rules of the 
                Commission relating to customer protection (section 
                240.15c3-3 of title 17, Code of Federal Regulations) 
                and custody of securities, digital assets, and client 
                funds (section 275.206(4)-2 of title 17, Code of 
                Federal Regulations); and
                    (B) consistent with the results of the study 
                described in subparagraph (A), adopt final rules 
                relating to the issues described in paragraph (2).
            (2) Contents.--The final rules adopted under paragraph 
        (1)(B) shall address the following concepts:
                    (A) Investor protection and education with respect 
                to digital assets.
                    (B) Digital assets, distributed ledger technology, 
                and use of collaborative custody or multi-signature 
                arrangements, including distribution of private key 
                material and resulting obligations.
                    (C) Changes in market structure and asset 
                characteristics, including disuse of physical 
                securities and assets and appropriate custodial methods 
                for electronically native assets.
                    (D) Reduction of regulatory burden.
                    (E) Use of technology to facilitate regulatory 
                compliance and risk management.
                    (F) Parity of State- and nationally chartered 
                banks, as defined in section 202(a) of the Investment 
                Advisers Act of 1940 (15 U.S.C. 80b-2(a)), with respect 
                to asset custody in a manner consistent with that Act 
                (15 U.S.C. 80b-1 et seq.) and other existing law.
                    (G) Standards under which an issuer of an 
                unregistered digital asset that is, or may represent 
                ownership of, a security is not required to utilize a 
                registered transfer agent.
                    (H) Specification of the digital assets which 
                constitute client funds under section 275.206(4)-2 of 
                title 17, Code of Federal Regulations.
    (b) Digital Assets and Securities.--Not later than 270 days after 
the date of enactment of this Act, the Commission shall adopt final 
guidance permitting, for the purposes of section 240.15c3-3(b) of title 
17, Code of Federal Regulations, a broker or a dealer to perform, 
within the same legal entity, both trading and custodial activities 
relating to fully paid and excess margin digital assets, including 
virtual currency and digital assets that are securities or may 
represent ownership of securities, in addition to traditional 
securities, client funds, and other assets permitted by the Commission 
to be within the control of a broker or dealer.

              TITLE IV--RESPONSIBLE COMMODITIES INNOVATION

SEC. 401. DEFINITIONS.

    Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended--
            (1) in paragraph (9), by striking ``and frozen concentrated 
        orange juice'' and inserting ``frozen concentrated orange 
        juice, and a digital asset (consistent with section 
        2(c)(2)(F))'';
            (2) by inserting after paragraph (15) the following:
            ``(15A) Digital asset.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `digital asset' has the 
                meaning given the term in section 9801 of title 31, 
                United States Code.
                    ``(B) Exclusion.--The term `digital asset' does not 
                include an asset that provides the holder of the asset 
                with any of the following rights in a business entity:
                            ``(i) A debt or equity interest in that 
                        entity.
                            ``(ii) Liquidation rights with respect to 
                        that entity.
                            ``(iii) An entitlement to an interest or 
                        dividend payment from that entity.
                            ``(iv) A profit or revenue share in that 
                        entity derived solely from the entrepreneurial 
                        or managerial efforts of others.
                            ``(v) Any other financial interest in that 
                        entity.
            ``(15B) Digital asset exchange.--The term `digital asset 
        exchange' means a trading facility that lists for trading at 
        least 1 digital asset.'';
            (3) in paragraph (28)(A)(i)--
                    (A) in subclause (I)--
                            (i) in item (aa)--
                                    (I) in subitem (EE), by striking 
                                ``or'' at the end; and
                                    (II) by adding at the end the 
                                following:

                                                    ``(GG) the purchase 
                                                or sale of a digital 
                                                asset that is traded on 
                                                or subject to the rules 
                                                of a registered 
                                                entity;'';

                            (ii) in item (bb), by striking ``and'' and 
                        inserting ``or''; and
                            (iii) by adding at the end the following:
                                            ``(cc) acting as a 
                                        counterparty to any cash or 
                                        spot agreement, contract, or 
                                        transaction involving a digital 
                                        asset with a person who is not 
                                        an eligible contract 
                                        participant, unless the 
                                        activity is--

                                                    ``(AA) conducted in 
                                                compliance with the 
                                                laws of the State in 
                                                which the activity 
                                                occurs;

                                                    ``(BB) subject to 
                                                regulation by another 
                                                Federal authority; or

                                                    ``(CC) separately 
                                                regulated under this 
                                                Act; and''; and

                    (B) in subclause (II), by striking ``items (aa) or 
                (bb)'' and inserting ``item (aa), (bb), or (cc)'';
            (4) by inserting after paragraph (39) the following:
            ``(39A) Registered digital asset exchange.--The term 
        `registered digital asset exchange' means a digital asset 
        exchange registered under section 5i.''; and
            (5) in paragraph (40)--
                    (A) in subparagraph (E), by striking ``and'' at the 
                end;
                    (B) by redesignating subparagraph (F) as 
                subparagraph (G); and
                    (C) by inserting after subparagraph (E) the 
                following:
                    ``(F) a registered digital asset exchange; and''.

SEC. 402. REPORTING AND RECORDKEEPING.

    Section 4g of the Commodity Exchange Act (7 U.S.C. 6g) is amended--
            (1) in subsection (a), by inserting ``digital assets or'' 
        before ``commodities''; and
            (2) in subsection (d), in the second sentence, by striking 
        ``commodity futures.'' and inserting ``commodities.''.

SEC. 403. CFTC JURISDICTION OVER DIGITAL ASSET TRANSACTIONS.

    (a) Commission Jurisdiction Over Retail Digital Asset 
Transactions.--
            (1) In general.--Section 2(c)(2) of the Commodity Exchange 
        Act (7 U.S.C. 2(c)(2)) is amended--
                    (A) in subparagraph (D)(ii)--
                            (i) in subclause (III), in the matter 
                        preceding item (aa), by inserting ``of a 
                        commodity, other than a digital asset,'' before 
                        ``that'';
                            (ii) by redesignating subclauses (IV) and 
                        (V) as subclauses (V) and (VI), respectively; 
                        and
                            (iii) by inserting after subclause (III) 
                        the following:
                                    ``(IV) a contract of sale of a 
                                digital asset that--
                                            ``(aa) results in actual 
                                        delivery within 2 days or such 
                                        other period as the Commission 
                                        may determine by rule based 
                                        upon the typical commercial 
                                        practice in cash or spot 
                                        markets for the digital asset 
                                        involved; or
                                            ``(bb) is executed on or 
                                        subject to the rules of a 
                                        registered digital asset 
                                        exchange or with a registered 
                                        futures commission merchant;''; 
                                        and
                    (B) by adding at the end the following:
                    ``(F) Commission jurisdiction over digital asset 
                transactions.--
                            ``(i) In general.--
                                    ``(I) Jurisdiction.--Subject to 
                                sections 6d and 12(e) and section 403 
                                of the Commodity Futures Modernization 
                                Act of 2000 (7 U.S.C. 27a), the 
                                Commission shall have exclusive 
                                jurisdiction over any agreement, 
                                contract, or transaction involving a 
                                contract of sale of a digital asset in 
                                interstate commerce, including 
                                ancillary assets (consistent with 
                                section 41(b)(4) of the Securities 
                                Exchange Act of 1934), except that 
                                specified periodic reporting 
                                requirements made by an issuer which 
                                provided the holder of the security 
                                with an ancillary asset under that 
                                section, and the security that 
                                constitutes an investment contract 
                                (within the meaning of section 2(a)(1) 
                                of the Securities Act of 1933 (15 
                                U.S.C. 77b(a)(1))), shall remain within 
                                the jurisdiction of the Securities and 
                                Exchange Commission.
                                    ``(II) Fungibility requirement.--
                                The Commission shall only exercise 
                                jurisdiction over an agreement, 
                                contract, or transaction involving a 
                                contract of sale of a digital asset 
                                that is fungible, which shall not 
                                include digital collectibles and other 
                                unique digital assets.
                            ``(ii) Withholding of rulemaking authority 
                        over certain transactions.--Notwithstanding 
                        clause (i), this subparagraph shall not be 
                        interpreted to permit the Commission to issue 
                        any rule regarding any agreement, contract, or 
                        transaction that is not offered, solicited, 
                        traded, facilitated, executed, cleared, 
                        reported, or otherwise dealt in--
                                    ``(I) on or subject to the rules of 
                                a registered entity; or
                                    ``(II) by any other entity 
                                registered by the Commission.
                            ``(iii) Limitation.--Clause (i) shall not 
                        apply to custodial activities with respect to a 
                        digital asset of an entity supervised or 
                        regulated by a State or other Federal 
                        regulatory agency.''.
            (2) Conforming amendment.--Section 2(a)(1)(A) of the 
        Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)) is amended, in the 
        first sentence, by striking ``section 19 of this Act'' and 
        inserting ``subsection (c)(2)(F) or section 19''.
    (b) Segregation of Digital Assets.--Section 4d of the Commodity 
Exchange Act (7 U.S.C. 6d) is amended by adding at the end the 
following:
    ``(i) Segregation of Digital Assets.--
            ``(1) Holding of customer assets.--
                    ``(A) In general.--Each futures commission merchant 
                shall hold customer money, assets, and property in a 
                manner to minimize the customer's risk of loss of, or 
                unreasonable delay in the access to, the money, assets, 
                and property.
                    ``(B) Custodian.--A futures commission merchant 
                shall hold the property of a customer of the futures 
                commission merchant with a licensed, chartered, or 
                registered entity subject to regulation by 1 of the 
                following agencies:
                            ``(i) The Commission.
                            ``(ii) The Securities and Exchange 
                        Commission.
                            ``(iii) An appropriate Federal banking 
                        agency (as defined in section 3 of the Federal 
                        Deposit Insurance Act (12 U.S.C. 1813)).
                            ``(iv) A State bank supervisor (as defined 
                        in that section).
                            ``(v) An appropriate foreign governmental 
                        authority in the home country of the custodian.
            ``(2) Segregation of funds.--
                    ``(A) Definition of digital asset customer.--In 
                this paragraph, the term `digital asset customer' means 
                a customer involved in a cash or spot, leveraged, 
                margined, or financed digital asset transaction in 
                which the futures commission merchant is acting as the 
                counterparty.
                    ``(B) Requirements.--
                            ``(i) In general.--A futures commission 
                        merchant shall treat and deal with all money, 
                        assets, and property of any digital asset 
                        customer received as belonging to the customer.
                            ``(ii) Commingling prohibited.--Money, 
                        assets, and property of a digital asset 
                        customer described in clause (i)--
                                    ``(I) shall be separately accounted 
                                for; and
                                    ``(II) shall not be--
                                            ``(aa) commingled with the 
                                        funds of the futures commission 
                                        merchant; or
                                            ``(bb) used 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.
                    ``(C) Exceptions.--
                            ``(i) Use of funds.--
                                    ``(I) In general.--Notwithstanding 
                                subparagraph (B), money, assets, and 
                                property of a digital asset customer 
                                may, for convenience, be commingled and 
                                deposited in the same account or 
                                accounts with an entity described in 
                                paragraph (1)(B).
                                    ``(II) Withdrawal.--Notwithstanding 
                                subparagraph (B), the share of the 
                                money, assets, and property described 
                                in subclause (I) as in the normal 
                                course of business is necessary to 
                                margin, guarantee, secure, transfer, 
                                adjust, or settle a digital asset 
                                transaction with a registered entity 
                                may be withdrawn and applied to those 
                                purposes, including the payment of 
                                commissions, brokerage, interest, 
                                taxes, storage, and other charges, 
                                lawfully accruing in connection with 
                                the digital asset transaction.
                            ``(ii) Commission action.--Notwithstanding 
                        subparagraph (B), in accordance with such terms 
                        and conditions as the Commission may prescribe 
                        by rule or order, any money, assets, or 
                        property of a digital asset customer may be 
                        commingled and deposited in customer accounts 
                        with any other money, assets, or property 
                        received by the futures commission merchant and 
                        required by the Commission to be separately 
                        accounted for and treated and dealt with as 
                        belonging to the digital asset customer.
                    ``(D) Permitted investments.--Money of a digital 
                asset customer may be invested--
                            ``(i) in--
                                    ``(I) obligations of the United 
                                States;
                                    ``(II) general obligations of any 
                                State or of any political subdivision 
                                of a State;
                                    ``(III) obligations fully 
                                guaranteed as to principal and interest 
                                by the United States; or
                                    ``(IV) any other investment that 
                                the Commission may by rule prescribe; 
                                and
                            ``(ii) in accordance with such rules and 
                        subject to such conditions as the Commission 
                        may prescribe.
                    ``(E) Prohibition.--It shall be unlawful for any 
                person, including any derivatives clearing organization 
                or depository institution, that has received any money, 
                assets, or property for deposit in a separate account 
                or accounts as required by subparagraph (B) to hold, 
                dispose of, or use any of the money, assets, or 
                property that belongs to the depositing futures 
                commission merchant or any person other than the 
                digital asset customer of the futures commission 
                merchant.
            ``(3) Customer right to opt out.--
                    ``(A) In general.--A customer shall have the right 
                to waive any requirement under this subsection by 
                affirmatively electing, in writing to the futures 
                commission merchant, to waive the requirement.
                    ``(B) Limitations.--The Commission may, by rule, 
                establish notice and disclosure requirements, 
                segregation requirements, investment limitations, and 
                other rules relating to the waiving of any requirement 
                under this subsection that are reasonably necessary to 
                protect customers, including eligible contract 
                participants, non-eligible contract participants, and 
                any other class of customers.''.
    (c) Limitation on Futures Commission Merchants Acting as a 
Counterparty in Digital Asset Transactions.--Section 4d of the 
Commodity Exchange Act (7 U.S.C. 6d) (as amended by subsection (b)) is 
amended by adding at the end the following:
    ``(j) Limitation on Futures Commission Merchants Acting as a 
Counterparty in Digital Asset Transactions.--A registered futures 
commission merchant shall not act as a counterparty in any agreement, 
contract, or transaction involving a digital asset that has not been 
listed for trading on a registered digital asset exchange.''.
    (d) Common Provisions Applicable to Registered Entities.--Section 
5c of the Commodity Exchange Act (7 U.S.C. 7a-2) is amended--
            (1) in subsection (a)(1), by striking ``5(d) and 5b(c)(2)'' 
        and inserting ``5(d), 5b(c)(2), and 5i(c)'';
            (2) in subsection (b), by inserting ``registered digital 
        asset exchange,'' before ``derivatives'' each place it appears; 
        and
            (3) in subsection (c)--
                    (A) in paragraph (2), by inserting ``or 
                participants'' before ``(in a'';
                    (B) in paragraph (4)(B), by striking ``1a(10)'' and 
                inserting ``1a(9)''; and
                    (C) in paragraph (5), by adding at the end the 
                following:
                    ``(D) Special rules for the listing of certain 
                digital assets.--
                            ``(i) In general.--In the case of listing 
                        for trading a digital asset that has not 
                        previously been listed for trading on another 
                        registered entity--
                                    ``(I) paragraphs (2) and (3) shall 
                                apply as if the listing were a rule; 
                                and
                                    ``(II) paragraph (2) shall be 
                                applied by substituting `20 business 
                                days' for `10 business days'.
                            ``(ii) Transitional extension.--During the 
                        1-year period beginning on the date of the 
                        registration of the first digital asset 
                        exchange, the Commission shall have an 
                        additional 20 business days to review any 
                        certification under clause (i).
                            ``(iii) Consideration of comments.--In 
                        conducting a review under clause (i), the 
                        Commission shall consider any comments provided 
                        by the Securities and Exchange Commission with 
                        respect to the legal classification of a 
                        digital asset.''.

SEC. 404. REGISTRATION OF DIGITAL ASSET EXCHANGES.

    (a) In General.--The Commodity Exchange Act (7 U.S.C. 1 et seq.) is 
amended by inserting after section 5h the following:

``SEC. 5I. REGISTRATION OF DIGITAL ASSET EXCHANGES.

    ``(a) Definition of Customer.--In this section, the term `customer' 
means any person that maintains an account for the trading of digital 
assets directly with a registered digital asset exchange (other than a 
person that is owned or controlled, directly or indirectly, by the 
registered digital asset exchange) on behalf of the person or any other 
person.
    ``(b) Registration.--
            ``(1) In general.--Any trading facility that offers or 
        seeks to offer a market in digital assets may register with the 
        Commission as a digital asset exchange by submitting to the 
        Commission an application in such form and containing such 
        information as the Commission may require for the purpose of 
        making the determinations required for approval under 
        subsections (d) and (f).
            ``(2) Deemed registration.--A registered designated 
        contract market or registered swap execution facility that 
        fulfills the requirements of this section may elect to be 
        considered a registered digital asset exchange, in such form 
        and manner as the Commission shall prescribe.
            ``(3) Additional registration.--A registered digital asset 
        exchange shall be registered with the Secretary of the Treasury 
        as a money services business.
    ``(c) Trading.--
            ``(1) In general.--A registered digital asset exchange may 
        make available for trading any digital asset that is not 
        readily susceptible to manipulation, subject to this 
        subsection.
            ``(2) Rules governing margined or leveraged trading.--The 
        Commission may make, promulgate, and enforce such additional 
        rules governing margined, leveraged, or financed transactions 
        as are reasonably necessary to protect market participants and 
        promote the orderly settlement of transactions with respect 
        to--
                    ``(A) disclosure;
                    ``(B) recordkeeping;
                    ``(C) capital, margin, and other financial 
                resources;
                    ``(D) reporting;
                    ``(E) business conduct;
                    ``(F) documentation; and
                    ``(G) such other matters as the Commission 
                determines to be necessary.
            ``(3) Prohibition on trading derivatives products.--
        Registration as a digital asset exchange shall not permit a 
        trading facility to offer any contract of sale of a commodity 
        for future delivery, option, or swap for trading without also 
        being registered as a designated contract market or swap 
        execution facility.
    ``(d) Core Principles for Digital Asset Exchanges.--
            ``(1) Compliance with core principles.--
                    ``(A) In general.--To be registered, and maintain 
                registration, as a digital asset exchange, the 
                registered digital asset exchange shall comply with--
                            ``(i) the core principles described in this 
                        subsection; and
                            ``(ii) any requirement that the Commission 
                        may impose by rule pursuant to section 8a(5).
                    ``(B) Reasonable discretion of digital asset 
                exchange.--Unless otherwise determined by the 
                Commission by rule, a registered digital asset exchange 
                described in subparagraph (A) shall have reasonable 
                discretion in establishing the manner in which the 
                registered digital asset exchange complies with the 
                core principles described in this subsection.
            ``(2) Compliance with rules.--A registered digital asset 
        exchange shall--
                    ``(A) establish and enforce compliance with 1 or 
                more rules of the registered digital asset exchange, 
                including--
                            ``(i) the terms and conditions of the 
                        trades traded or processed on or through the 
                        registered digital asset exchange; and
                            ``(ii) any limitation on access to the 
                        registered digital asset exchange;
                    ``(B) establish and enforce compliance with 
                trading, trade processing, and participation rules that 
                will deter abuses and have the capacity to detect, 
                investigate, and enforce violations of those rules, 
                including means--
                            ``(i) to provide market participants with 
                        impartial access to the market; and
                            ``(ii) to capture information that may be 
                        used in establishing whether rule violations 
                        have occurred; and
                    ``(C) establish rules governing the operation of 
                the registered digital asset exchange, including rules 
                specifying trading procedures to be used in entering 
                and executing orders traded or posted on the registered 
                digital asset exchange.
            ``(3) Digital assets not readily susceptible to 
        manipulation.--
                    ``(A) In general.--A registered digital asset 
                exchange shall permit trading only in assets that are 
                not readily susceptible to manipulation.
                    ``(B) Listing restrictions.--A registered digital 
                asset exchange shall not permit trading in a digital 
                asset if it is reasonably likely that--
                            ``(i) the transaction history of the 
                        digital asset can be fraudulently altered by 
                        any person or group of persons acting 
                        collectively; or
                            ``(ii) the functionality or operation of 
                        the digital asset can be materially altered by 
                        any person or group of persons under common 
                        control.
                    ``(C) Considerations.--In assessing a digital asset 
                under this paragraph, a registered digital asset 
                exchange shall consider--
                            ``(i) the purpose and use of the digital 
                        asset;
                            ``(ii) the creation or release process of 
                        the digital asset;
                            ``(iii) the consensus mechanism of the 
                        digital asset;
                            ``(iv) the governance structure of the 
                        digital asset;
                            ``(v) the participation and distribution of 
                        the digital asset;
                            ``(vi) the current and proposed 
                        functionality of the digital asset;
                            ``(vii) the legal classification of the 
                        digital asset; and
                            ``(viii) any other factor required by the 
                        Commission.
            ``(4) Treatment of customer assets.--
                    ``(A) Required standards and procedures.--A 
                registered digital asset exchange shall establish 
                standards and procedures that are designed to protect 
                and ensure the safety of customer money, assets, and 
                property.
                    ``(B) Holding of customer assets.--
                            ``(i) In general.--A registered digital 
                        asset exchange shall hold customer money, 
                        assets, and property in a manner to minimize 
                        the customer's risk of loss of, or unreasonable 
                        delay in the access to, the money, assets, and 
                        property.
                            ``(ii) Segregation of funds.--
                                    ``(I) In general.--A registered 
                                digital asset exchange shall treat and 
                                deal with all money, assets, and 
                                property of any customer received as 
                                belonging to the customer.
                                    ``(II) Commingling prohibited.--
                                Money, assets, and property of a 
                                customer described in subclause (I)--
                                            ``(aa) shall be separately 
                                        accounted for; and
                                            ``(bb) shall not be--

                                                    ``(AA) commingled 
                                                with the funds of the 
                                                registered digital 
                                                asset exchange; or

                                                    ``(BB) used 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.

                            ``(iii) Exceptions.--
                                    ``(I) Use of funds.--
                                            ``(aa) In general.--
                                        Notwithstanding clause (ii), 
                                        money, assets, and property of 
                                        customers of a registered 
                                        digital asset exchange may, for 
                                        convenience, be commingled and 
                                        deposited with an entity 
                                        described in section 
                                        4d(i)(1)(B).
                                            ``(bb) Withdrawal.--
                                        Notwithstanding clause (ii), 
                                        the share of the money, assets, 
                                        and property described in item 
                                        (aa) as in the normal course of 
                                        business is necessary to 
                                        margin, guarantee, secure, 
                                        transfer, adjust, or settle a 
                                        digital asset transaction with 
                                        a registered entity may be 
                                        withdrawn and applied to those 
                                        purposes, including the payment 
                                        of commissions, brokerage, 
                                        interest, taxes, storage, and 
                                        other charges, lawfully 
                                        accruing in connection with the 
                                        digital asset transaction.
                                    ``(II) Commission action.--
                                Notwithstanding clause (ii), in 
                                accordance with such terms and 
                                conditions as the Commission may 
                                prescribe by rule or order, any money, 
                                assets, or property of the customers of 
                                a registered digital asset exchange may 
                                be commingled and deposited in customer 
                                accounts with any other money, assets, 
                                or property received by the registered 
                                digital asset exchange and required by 
                                the Commission to be separately 
                                accounted for and treated and dealt 
                                with as belonging to the customer of 
                                the registered digital asset exchange.
                    ``(C) Permitted investments.--Money described in 
                subparagraph (B)(ii)(I) may be invested--
                            ``(i) in--
                                    ``(I) obligations of the United 
                                States;
                                    ``(II) general obligations of any 
                                State or of any political subdivision 
                                of a State;
                                    ``(III) obligations fully 
                                guaranteed as to principal and interest 
                                by the United States; or
                                    ``(IV) any other investment that 
                                the Commission may by rule prescribe; 
                                and
                            ``(ii) in accordance with such rules and 
                        subject to such conditions as the Commission 
                        may prescribe.
                    ``(D) Misuse of customer property.--It shall be 
                unlawful--
                            ``(i) for any registered digital asset 
                        exchange that has received any customer money, 
                        assets, or property for custody to dispose of, 
                        or use any of the money, assets, or property as 
                        belonging to the registered digital asset 
                        exchange; or
                            ``(ii) for any other person, including any 
                        other registered digital asset exchange or 
                        custodian that has received any customer money, 
                        assets, or property for deposit, to hold, 
                        dispose of, or use any of the money, assets, or 
                        property as belonging to--
                                    ``(I) the registered digital asset 
                                exchange that deposited the money, 
                                assets, or property; or
                                    ``(II) any person other than the 
                                customers of the registered digital 
                                asset exchange.
                    ``(E) Customer right to opt out.--
                            ``(i) In general.--A customer shall have 
                        the right to waive any requirement under 
                        subparagraph (B) by affirmatively electing, in 
                        writing to the registered digital asset 
                        exchange, to waive the requirement.
                            ``(ii) Limitations.--The Commission may, by 
                        rule, establish notice and disclosure 
                        requirements, segregation requirements, 
                        investment limitations, and other rules 
                        relating to the waiving of any requirement 
                        under this paragraph that is reasonably 
                        necessary to protect customers, including 
                        eligible contract participants, non-eligible 
                        contract participants, or any other class of 
                        customers.
            ``(5) Monitoring of trading and trade processing.--
                    ``(A) In general.--A registered digital asset 
                exchange shall provide a competitive, open, and 
                efficient market and mechanism for executing 
                transactions that protects the price discovery process 
                of trading on the registered digital asset exchange.
                    ``(B) Protection of markets and market 
                participants.--A registered digital asset exchange 
                shall establish and enforce compliance with rules--
                            ``(i) to protect markets and market 
                        participants from abusive practices committed 
                        by any party, including abusive practices 
                        committed by a party acting as an agent for a 
                        participant; and
                            ``(ii) to promote fair and equitable 
                        trading on the registered digital asset 
                        exchange.
                    ``(C) Procedures and monitoring.--A registered 
                digital asset exchange shall--
                            ``(i) establish and enforce compliance with 
                        rules or terms and conditions defining, or 
                        specifications detailing--
                                    ``(I) trading procedures to be used 
                                in entering and executing orders traded 
                                on or through the facilities of the 
                                registered digital asset exchange; and
                                    ``(II) procedures for trade 
                                processing of digital assets on or 
                                through the facilities of the 
                                registered digital asset exchange; and
                            ``(ii) monitor trading in digital assets to 
                        prevent manipulation, price distortion, and 
                        disruptions of the delivery or cash settlement 
                        process through surveillance, and compliance, 
                        including methods for conducting real-time 
                        monitoring of trading and comprehensive and 
                        accurate trade reconstructions.
            ``(6) Ability to obtain information.--A registered digital 
        asset exchange shall--
                    ``(A) establish and enforce rules that will allow 
                the registered digital asset exchange to obtain any 
                necessary information to perform any of the functions 
                described in this section;
                    ``(B) provide the information to the Commission on 
                request; and
                    ``(C) have the capacity to carry out such 
                international information-sharing agreements as the 
                Commission may require.
            ``(7) Emergency authority.--A registered digital asset 
        exchange shall adopt rules to provide for the exercise of 
        emergency authority, in consultation or cooperation with the 
        Commission or a registered entity, as is necessary and 
        appropriate, including the authority to facilitate the 
        liquidation or transfer of open positions in any digital asset 
        or to suspend or curtail trading in a digital asset.
            ``(8) Reporting requirements.--
                    ``(A) In general.--A registered digital asset 
                exchange shall provide to the Commission information 
                that is determined by the Commission to be necessary to 
                perform any responsibility of the Commission under this 
                Act.
                    ``(B) Timely publication of trading information.--
                            ``(i) In general.--
                                    ``(I) Publication.--A registered 
                                digital asset exchange shall make 
                                public timely information on price, 
                                trading volume, and other trading data 
                                on digital assets to the extent 
                                prescribed by the Commission.
                                    ``(II) Accessibility.--A registered 
                                digital asset exchange may make trading 
                                data freely accessible to the public 
                                under rules established by the 
                                Commission.
                            ``(ii) Capacity of digital asset 
                        exchange.--A registered digital asset exchange 
                        shall be required to have the capacity to 
                        electronically capture and transmit trade 
                        information with respect to transactions 
                        executed on the registered digital asset 
                        exchange.
            ``(9) Recordkeeping and reporting.--
                    ``(A) In general.--A registered digital asset 
                exchange shall--
                            ``(i) maintain records of all activities 
                        relating to the business of the registered 
                        digital asset 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 Commission, such 
                        information as the Commission determines to be 
                        necessary or appropriate for the Commission to 
                        perform the duties of the Commission under this 
                        Act; and
                            ``(iii) keep any records relating to 
                        ancillary assets open to inspection and 
                        examination by the Securities and Exchange 
                        Commission.
                    ``(B) Information-sharing.--Subject to section 8, 
                and on request, the Commission shall share information 
                collected under subparagraph (A) with--
                            ``(i) a self-regulatory organization;
                            ``(ii) the Securities and Exchange 
                        Commission;
                            ``(iii) an appropriate Federal banking 
                        agency (as defined in section 3 of the Federal 
                        Deposit Insurance Act (12 U.S.C. 1813));
                            ``(iv) a State bank supervisor (as defined 
                        in that section);
                            ``(v) a State securities or commodities 
                        regulator;
                            ``(vi) the Financial Stability Oversight 
                        Council;
                            ``(vii) the Department of Justice; and
                            ``(viii) any other person that the 
                        Commission determines to be appropriate, 
                        including--
                                    ``(I) foreign financial supervisors 
                                (including foreign futures 
                                authorities);
                                    ``(II) foreign central banks; and
                                    ``(III) foreign ministries.
                    ``(C) Confidentiality agreement.--Before the 
                Commission may share information with any entity 
                described in subparagraph (B), the Commission shall 
                receive a written agreement from each entity stating 
                that the entity shall abide by the confidentiality 
                requirements described in section 8 relating to the 
                information on digital asset transactions that is 
                provided.
                    ``(D) Providing information.--Each registered 
                digital asset exchange shall provide to the Commission 
                (including any designee of the Commission) 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 registered 
        digital asset 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.--A registered digital asset 
        exchange shall--
                    ``(A) establish and enforce rules to minimize 
                conflicts of interest in the decision-making process of 
                the registered digital asset exchange; and
                    ``(B) establish a process for resolving conflicts 
                of interest described in subparagraph (A).
            ``(12) Financial resources.--
                    ``(A) In general.--A registered digital asset 
                exchange shall have adequate financial, operational, 
                and managerial resources, as determined by the 
                Commission, to discharge each responsibility of the 
                registered digital asset exchange.
                    ``(B) Minimum amount of financial resources.--A 
                registered digital asset exchange shall possess 
                financial resources that, at a minimum, exceed the 
                total amount that would enable the registered digital 
                asset exchange to conduct an orderly wind-down of the 
                activities of the registered digital asset exchange.
                    ``(C) Additional financial resources for leverage 
                trading.--The Commission may require such additional 
                financial resources as are necessary to enable a 
                registered digital asset exchange that offers margined, 
                leveraged, or financed transactions to fulfill the 
                customer obligations of the registered digital asset 
                exchange.
            ``(13) Governance fitness standards.--
                    ``(A) Governance arrangements.--A registered 
                digital asset exchange shall establish governance 
                arrangements that are transparent to fulfill public 
                interest requirements.
                    ``(B) Fitness standards.--A registered digital 
                asset exchange shall establish and enforce appropriate 
                fitness standards for--
                            ``(i) directors;
                            ``(ii) any individual or entity with direct 
                        access to the settlement activities of the 
                        registered digital asset exchange;
                            ``(iii) any individual or entity with 
                        direct access to any custodian affiliated with 
                        the registered digital asset exchange;
                            ``(iv) any entity offering affiliated 
                        services for the registered digital asset 
                        exchange; and
                            ``(v) any party affiliated with any 
                        individual or entity described in clauses (i) 
                        through (iv).
            ``(14) System safeguards.--A registered digital asset 
        exchange shall--
                    ``(A) establish and maintain a program of risk 
                analysis and oversight to identify and minimize sources 
                of operational and security risks, through the 
                development of appropriate controls and procedures and 
                automated systems that--
                            ``(i) are reliable and secure; and
                            ``(ii) have adequate scalable capacity;
                    ``(B) establish and maintain emergency procedures, 
                backup facilities, and a plan for disaster recovery 
                that allow for--
                            ``(i) the timely recovery and resumption of 
                        operations; and
                            ``(ii) the fulfillment of the 
                        responsibilities and obligations of the 
                        registered digital asset exchange; and
                    ``(C) periodically conduct tests to verify that the 
                backup resources of the registered digital asset 
                exchange are sufficient to ensure continued--
                            ``(i) order processing and trade matching;
                            ``(ii) price reporting;
                            ``(iii) market surveillance; and
                            ``(iv) maintenance of a comprehensive and 
                        accurate audit trail.
    ``(e) Appointment of Trustee.--
            ``(1) In general.--If a proceeding under section 5e results 
        in the suspension or revocation of the registration of a 
        digital asset exchange, or if a digital asset exchange 
        withdraws from registration, the Commission, after providing 
        notice to the digital asset exchange, may apply to the district 
        court of the United States for the judicial district in which 
        the digital asset exchange is located for the appointment of a 
        trustee.
            ``(2) Assumption of jurisdiction.--If the Commission 
        applies to a court for appointment of a trustee under paragraph 
        (1)--
                    ``(A) the court may take exclusive jurisdiction 
                over--
                            ``(i) the digital asset exchange; and
                            ``(ii) the records and assets of the 
                        digital asset exchange, wherever those records 
                        and assets are 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 possession and continue 
                to operate or terminate the operations of the digital 
                asset exchange in an orderly manner for the protection 
                of customers, subject to such terms and conditions as 
                the court may prescribe.
    ``(f) Custodian.--A registered digital asset exchange shall deposit 
with an entity described in section 4d(i)(1)(B) each digital asset that 
is--
            ``(1) the property of a customer of the registered digital 
        asset exchange;
            ``(2) required to be held by the registered digital asset 
        exchange under subsection (c)(2) or (d)(12); or
            ``(3) otherwise required by the Commission to be so held to 
        reasonably protect customers or promote the public interest.
    ``(g) Exemptions.--
            ``(1) In general.--To promote responsible economic or 
        financial innovation and fair competition, or protect 
        customers, the Commission may exempt, either unconditionally or 
        on stated terms or conditions or for stated periods, and 
        retroactively, prospectively, or both, a registered digital 
        asset exchange from the requirements of this section, if the 
        Commission determines that--
                    ``(A) the exemption--
                            ``(i) will be consistent with the public 
                        interest and the purposes of this Act; and
                            ``(ii) will not have a material adverse 
                        effect on the ability of the Commission or the 
                        registered digital asset exchange to discharge 
                        duties under this Act; or
                    ``(B) the registered digital asset exchange is 
                subject to comparable, comprehensive regulation by the 
                appropriate government authorities in the home country 
                of the registered digital asset exchange.
            ``(2) Process.--The Commission may grant an exemption under 
        paragraph (1)--
                    ``(A) on the initiative of the Commission; or
                    ``(B) after receiving an application for the 
                exemption by the registered digital asset exchange.
    ``(h) Jurisdiction.--Notwithstanding any other provision of law, 
the Commission shall have exclusive jurisdiction over the regulation 
and all other activities of a registered digital asset exchange.
    ``(i) Implementation.--The Commission may prescribe rules to 
implement this section.''.
    (b) Certain Digital Asset Exchange Functions Not Sufficient To 
Trigger Requirement To Register as Futures Commission Merchant.--
Section 4f(c) of the Commodity Exchange Act (7 U.S.C. 6f(c)) is amended 
by adding at the end the following:
    ``(12) Clarification of Scope of Registration Requirement.--A 
registered digital asset exchange shall not be required to register as 
a futures commission merchant for any activity for which the registered 
digital asset exchange is regulated under section 5i.''.

SEC. 405. VIOLATIONS.

    Section 9 of the Commodity Exchange Act (7 U.S.C. 13) is amended--
            (1) in subsection (a)(2), by striking ``subsection 4c'' and 
        inserting ``section 4c''; and
            (2) in subsection (e)--
                    (A) in paragraph (1), by inserting ``contracts for 
                the sale of digital assets,'' after ``options 
                thereon,''; and
                    (B) in paragraph (2), by inserting ``or contracts 
                for the sale of digital assets'' after ``options 
                thereon''.

SEC. 406. MARKET REPORTS.

    Section 16(a) of the Commodity Exchange Act (7 U.S.C. 20(a)) is 
amended--
            (1) in the first sentence, by striking ``which are the 
        subject of futures contracts,'' and inserting ``under the 
        jurisdiction of the Commission,''; and
            (2) in the second sentence, by striking ``futures 
        markets.'' and inserting ``markets under the jurisdiction of 
        the Commission.''.

SEC. 407. BANKRUPTCY TREATMENT OF DIGITAL ASSETS.

    (a) In General.--Section 20(a) of the Commodity Exchange Act (7 
U.S.C. 24(a)) is amended in paragraphs (1) and (2) by inserting 
``digital assets,'' after ``securities,'' each place it appears.
    (b) Commodity Broker Definition.--Section 101(6) of title 11, 
United States Code, is amended by inserting ``registered digital asset 
exchange, as defined in section 1a of the Commodity Exchange Act,'' 
before ``foreign''.
    (c) Commodities Contracts.--Section 556 of title 11, United States 
Code, is amended by inserting ``a registered digital asset exchange, as 
defined in section 1a of the Commodity Exchange Act,'' before ``a 
contract''.
    (d) Contractual Rights.--Section 561 of title 11, United States 
Code, is amended by inserting ``registered digital asset exchange, as 
defined in section 1a of the Commodity Exchange Act,'' after 
``designated under the Commodity Exchange Act'' each place it appears.
    (e) Definitions.--Section 761 of title 11, United States Code, is 
amended--
            (1) in paragraph (4)--
                    (A) in subparagraph (A), by inserting ``digital 
                asset or a'' before ``commodity'';
                    (B) in subparagraph (I), by striking ``or'' at the 
                end;
                    (C) in subparagraph (J), by adding ``or'' at the 
                end; and
                    (D) by adding at the end the following:
                    ``(K) a contract for the sale of a digital asset by 
                a registered digital asset exchange;''; and
            (2) in paragraph (10)--
                    (A) in the matter preceding subparagraph (A)--
                            (i) by inserting ``a digital asset,'' after 
                        ``a security,''; and
                            (ii) by inserting ``digital asset,'' after 
                        ``cash, security,'';
                    (B) in subparagraph (A)--
                            (i) in clause (vi), by inserting ``a 
                        digital asset,'' after ``a security,''; and
                            (ii) in clause (vii)--
                                    (I) by inserting ``or a digital 
                                asset'' before ``held as property'';
                                    (II) by inserting ``or digital 
                                asset'' after ``such security''; and
                                    (III) by inserting ``or digital 
                                asset'' after ``based on a security''; 
                                and
                    (C) in subparagraph (B)--
                            (i) by striking ``not including property'' 
                        and inserting ``not including--
                            ``(i) property'';
                            (ii) in clause (i), as so designated, by 
                        adding ``and'' at the end; and
                            (iii) by adding at the end the following:
                            ``(ii) money, assets, or property with 
                        respect to which any requirement under 
                        subsection (i) of section 4d of the Commodity 
                        Exchange Act (7 U.S.C. 6d) is waived pursuant 
                        to paragraph (3) of that subsection, or any 
                        requirement under subparagraph (B) of paragraph 
                        (4) of section 5i(d) of that Act is waived 
                        pursuant to subparagraph (E) of that 
                        paragraph;''.
    (f) Voidable Transfers.--Section 764(b)(1) of title 11, United 
States Code, is amended by inserting ``, digital assets'' before ``, or 
other property''.
    (g) Treatment of Customer Property.--Section 766 of title 11, 
United States Code, is amended--
            (1) in subsection (b)(1), by striking ``physical commodity 
        underlying'' and inserting ``commodity underlying'';
            (2) in subsection (c), by inserting ``digital asset,'' 
        before ``or commodity contract'' each place the term appears;
            (3) in subsection (d), by inserting ``digital asset,'' 
        before ``or commodity contract'' each place the term appears;
            (4) in subsection (f)--
                    (A) in striking ``and other property'' and 
                inserting ``digital assets, and other property''; and
                    (B) by striking ``or property'' and inserting ``, 
                digital assets, or property'';
            (5) in subsection (g), by striking ``security or property'' 
        and inserting ``security, digital asset, or property''; and
            (6) in subsection (h)(2), by inserting ``digital assets,'' 
        after ``customer securities,''.

SEC. 408. IDENTIFIED BANKING PRODUCTS.

    Section 206(a) of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) 
is amended--
            (1) in paragraph (5)(B)(ii), by striking ``or'' at the end;
            (2) in paragraph (6), by striking the period at the end and 
        inserting ``; or''; and
            (3) by adding at the end the following:
            ``(7) a payment stablecoin issued by a depository 
        institution under section 722A.''.

SEC. 409. FINANCIAL INSTITUTIONS DEFINITION.

    Section 5312(c)(1) of title 31, United States Code, is amended by 
adding at the end the following:
                    ``(B) A registered digital asset exchange, as 
                defined in section 1a of the Commodity Exchange Act.''.

SEC. 410. OFFSETTING THE COSTS OF DIGITAL ASSET REGULATION.

    The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by 
adding at the end the following:

``SEC. 24. OFFSETTING THE COSTS OF DIGITAL ASSET REGULATION.

    ``(a) Recovery of Certain Costs of Annual Appropriation.--
            ``(1) In general.--Effective beginning October 1, 2023, the 
        Commission may, by rule, collect fees--
                    ``(A) to fund expenses relating to regulation of 
                digital asset cash and spot markets; and
                    ``(B) that are designed to recover the costs to the 
                Federal Government of the annual appropriation to the 
                Commission by Congress.
            ``(2) Registered entities.--Fees under paragraph (1) shall 
        only be imposed--
                    ``(A) on registered entities engaged in cash or 
                spot digital asset activities; and
                    ``(B) in relation to the regulation of those 
                activities under this Act.
            ``(3) Fee rates.--Fees under paragraph (1) shall--
                    ``(A) be strictly related to the cost to the 
                Commission of the regulation of digital asset cash and 
                spot markets;
                    ``(B) be reduced for newly registered entities with 
                less than $100,000,000 in daily trading volume; and
                    ``(C)(i) minimize negative impacts on market 
                liquidity; and
                    ``(ii) maintain the efficiency, competitiveness, 
                and financial integrity of digital asset markets.
            ``(4) Collection of fees.--The Commission shall collect 
        fees under this subsection in such manner and within such time 
        as may be specified by the Commission by rule.
    ``(b) Fee Rate Orders.--
            ``(1) In general.--Not later than 60 days after the date on 
        which a law providing a regular appropriation to the Commission 
        for a fiscal year is enacted, the Commission shall adopt an 
        order setting rates for fees to be collected under subsection 
        (a) for that fiscal year.
            ``(2) Publication.--The Commission shall publish in the 
        Federal Register the order adopted under paragraph (1), 
        including--
                    ``(A) projections on which the fees are based; and
                    ``(B) an explanation of the method used for 
                calculating applicable fee rates.
    ``(c) Deposit of Fees.--
            ``(1) Offsetting collections.--Fees collected under 
        subsection (a) for any fiscal year--
                    ``(A) shall be deposited and credited as offsetting 
                collections to the account providing appropriations to 
                the Commission; and
                    ``(B) shall not be collected or available for 
                obligation for any fiscal year except to the extent 
                provided in advance in appropriation Acts.
            ``(2) General revenues prohibited.--No fees collected under 
        subsection (a) shall be deposited and credited as general 
        revenue of the Treasury.
    ``(d) Lapse of Appropriations.--If a regular appropriation to the 
Commission has not been enacted on the first day of a fiscal year, the 
Commission shall continue to collect fees under this section at the 
rates in effect on September 30 of the preceding fiscal year.
    ``(e) Limitations.--
            ``(1) Leveraged, margined, or financed transactions.--
        Nothing in this section authorizes the imposition of fees on a 
        registered entity relating to leveraged, margined, or financed 
        transactions under this Act, including those activities 
        relating to digital assets.
            ``(2) Other appropriations.--Notwithstanding any other 
        provision of law, the Commission may use appropriations 
        otherwise made available by law to fund expenses relating to 
        the regulation of digital asset cash and spot markets.
    ``(f) Ceiling on Fees.--Unless otherwise provided by law, fees 
collected under this section shall not exceed $30,000,000.
    ``(g) Authorization Required.--The authority under this section to 
impose and collect fees shall only be in effect during a period that a 
legislative authorization of the Commission is in effect, as otherwise 
provided by law.''.

                TITLE V--RESPONSIBLE CONSUMER PROTECTION

SEC. 501. RESPONSIBLE CONSUMER PROTECTION.

    Chapter 98 of title 31, United States Code, as added by section 
101(a) of this Act, is amended by adding at the end the following:
``Sec. 9802. Consumer protection standards for digital assets
    ``(a) In General.--A person or protocol that provides digital asset 
services shall ensure that the scope of permissible transactions that 
may be undertaken with customer digital assets is disclosed clearly in 
a customer agreement.
    ``(b) Notice.--A person who provides digital asset services shall 
provide clear notice to each customer, and require acknowledgment, of 
the following:
            ``(1) Prior to the implementation of any updates, material 
        source code version changes relating to digital assets, except 
        in emergencies, which may include security vulnerabilities.
            ``(2) Whether customer digital assets are segregated from 
        other customer assets and the manner of segregation.
            ``(3) How the assets of the customer would be treated in a 
        bankruptcy or insolvency scenario and the risks of loss.
            ``(4) The time period and manner in which the person is 
        obligated to return the digital asset of the customer upon the 
        request of the customer.
            ``(5) Applicable fees.
            ``(6) The dispute resolution process of the person.
    ``(c) Subsidiary Proceeds.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Subsidiary proceeds.--The term `subsidiary 
                proceeds' includes forks, airdrops, staking, and other 
                gains that accrue to a digital asset through market 
                transactions, use as a financial asset, or being held 
                in custody or safekeeping by a person who provides 
                digital asset services.
                    ``(B) Terms of service.--The term `agreement' 
                includes the standard terms of service of the person 
                who provides digital asset services.
            ``(2) Accrual to customer.--Except as otherwise specified 
        by an agreement with a customer, all ancillary or subsidiary 
        proceeds relating to digital asset services provided to a 
        customer shall accrue to the benefit of the customer in 
        accordance with paragraph (3).
            ``(3) Election.--A person who provides digital asset 
        services may elect not to collect certain subsidiary proceeds 
        if the election is disclosed in an agreement with the customer.
            ``(4) Withdrawal.--A customer may withdraw digital assets 
        in a method that permits the collection of the subsidiary 
        proceeds.
            ``(5) Agreement.--A person who provides digital asset 
        services shall enter into an agreement with a customer, if 
        desired by the customer, regarding the manner in which to 
        invest subsidiary proceeds or other gains attributable to the 
        digital assets of the customer.
    ``(d) Lending Arrangements.--A person who provides digital asset 
services shall ensure any lending arrangements relating to digital 
assets are--
            ``(1) clearly disclosed to customers before any lending 
        services take place;
            ``(2) subject to the affirmative consent of the customer;
            ``(3) fully enforceable as a matter of commercial law;
            ``(4) accompanied by full disclosures of applicable terms 
        and risks, yield, and the manner in which the yield is 
        calculated;
            ``(5) accompanied by appropriate disclosures relating to 
        collateral requirements and policies, including--
                    ``(A) haircuts and overcollateralization 
                requirements;
                    ``(B) collateral the person accepts when calling 
                for additional collateral from a customer, including 
                collateral substitution;
                    ``(C) whether customer collateral is commingled 
                with the collateral of other customers or of the 
                person; and
                    ``(D) how customer collateral is invested, and 
                whether the yield belongs to the customer or to the 
                person;
            ``(6) accompanied by disclosures of mark-to-market and 
        monitoring arrangements, including--
                    ``(A) the frequency of mark-to-market monitoring 
                and how frequently the person will call for additional 
                collateral from a customer;
                    ``(B) the time period in which the customer must 
                supply additional collateral to the person after a 
                collateral call; and
                    ``(C) whether the person permits failures to 
                deliver such collateral, and in the event of a failure 
                to deliver the period of time in which the customer 
                must cure the failure to deliver before the customer's 
                position is closed; and
            ``(7) compliant with all applicable Federal and State laws.
    ``(e) Rehypothecation.--
            ``(1) Definition.--In this subsection, the term 
        `rehypothecation' means the pledging of an asset as collateral 
        for a financial transaction by a person after the pledging of 
        the asset as collateral by a customer of that person.
            ``(2) Rehypothecation.--Before rehypothecating a digital 
        asset, a person who provides digital asset services to a 
        customer shall clearly disclose policies on rehypothecation to 
        customers, including a clear definition of rehypothecation that 
        is accessible to consumers. The person who provides digital 
        asset services to a customer shall obtain affirmative consent 
        and consider the following factors to appropriately mitigate 
        risk relating to rehypothecation:
                    ``(A) The liquidity and volatility of a digital 
                asset.
                    ``(B) Past failures to deliver a particular digital 
                asset.
                    ``(C) Concentration risk.
                    ``(D) Whether an issuer or lender of last resort 
                relating to a digital asset exists, including for 
                virtual currency with a finite supply.
                    ``(E) The capital, leverage and market position of 
                the person.
                    ``(F) The legal obligations of the person to 
                customers and other persons in the market who provide 
                digital asset services.''.

SEC. 502. SOURCE CODE VERSION OF DIGITAL ASSETS.

    Chapter 98 of title 31, United States Code, as amended by section 
501 of this Act, is amended by adding at the end the following:
``Sec. 9803. Source code version of digital assets
    ``(a) In General.--A customer and a person who provides digital 
asset services shall, at the initiation of a contractual relationship, 
agree in writing regarding the source code version the person will use 
for each digital asset and the treatment of each asset under the law, 
including securities and commodities laws and the Uniform Commercial 
Code applicable to the transaction.
    ``(b) Determination.--A person who provides digital asset 
services--
            ``(1) may periodically determine whether to implement a 
        source code version that uses validation rules different than 
        those of the source code version specified in a customer 
        agreement, including in circumstances where it is not possible 
        to predict in advance whether utilization of the different 
        source code version will be in the best interests of the 
        customer;
            ``(2) shall consider the nature of proposed changes to 
        source code versions with potential effects resulting from 
        third-party actors that may create different source code 
        versions resulting in new networks that could create economic 
        value for customers;
            ``(3) shall not be required to support digital assets and 
        source code versions that the person has not entered into an 
        agreement with customers to support; and
            ``(4) shall not capriciously redefine a digital asset or 
        the corresponding source code or alter customer agreements with 
        respect to this subsection.
    ``(c) Standards.--A person who provides digital asset services--
            ``(1) shall adopt and maintain standards for changes to 
        digital asset source code versions that use differing 
        validation rules than those of the source code version 
        specified in the customer agreement, which shall include 
        customer notice and approval, as appropriate based on the 
        circumstances; and
            ``(2) may specify differing standards based on source code 
        changes which occur as the result of emergencies, including 
        security vulnerabilities.''.

SEC. 503. SETTLEMENT FINALITY.

    Chapter 98 of title 31, United States Code, as amended by section 
502 of this Act, is amended by adding at the end the following:
``Sec. 9804. Settlement finality
    ``To promote legal certainty and customer protection, a person who 
provides digital asset services and a customer shall agree on the terms 
of settlement finality for all transactions, including the following:
            ``(1) The conditions under which a digital asset may be 
        deemed fully transferred, provided that these legal conditions 
        may diverge from operational conditions under which digital 
        assets are considered transferred, based on the distributed and 
        probabilistic nature of digital assets.
            ``(2) The exact moment of transfer of a digital asset.
            ``(3) The discharge of any obligations upon transfer of a 
        digital asset.
            ``(4) Conformity to applicable provisions of the Uniform 
        Commercial Code.''.

SEC. 504. NOTICE TO CUSTOMERS; ENFORCEMENT.

    Chapter 98 of title 31, United States Code, as amended by section 
503 of this Act, is amended by adding at the end the following:
``Sec. 9805. Notice to customers; enforcement
    ``(a) In General.--In providing disclosures and carrying out other 
duties under this chapter, a person who provides digital asset services 
in or affecting interstate commerce shall have a duty to provide higher 
standards of customer notice and acknowledgment if there is likely to 
be a material impact on the economic value of the digital asset of a 
customer.
    ``(b) Enforcement of Standards.--The standards under this chapter 
shall be enforced in an appropriate manner, commensurate with other 
customer protection standards--
            ``(1) in the case of a digital asset intermediary, by the 
        Federal or State licensing, registration, or chartering 
        authority of the intermediary; and
            ``(2) in the case of a depository institution or other 
        financial institution, by the appropriate State or Federal 
        banking supervisor.''.

SEC. 505. RIGHT TO INDIVIDUAL MANAGEMENT OF DIGITAL ASSETS.

    Chapter 98 of title 31, United States Code, as amended by section 
504 of this Act, is amended by adding at the end the following:
``Sec. 9806. Right to individual management of digital assets
    ``(a) In General.--Except as otherwise required by law, no person 
shall be required to use an intermediary for the safekeeping of digital 
assets legally owned, and possessed or controlled, by that person.
    ``(b) Rule of Construction.--This section shall not be construed 
to--
            ``(1) permit a person to engage in market activity for 
        which authorization is required under Federal or State law; or
            ``(2) restrict a person from freely entering into an 
        agreement for digital asset services with a third party.''.

SEC. 506. TECHNICAL AND CONFORMING AMENDMENTS.

    The table of sections of chapter 98, as added by section 101(a) of 
this Act, is amended by adding at the end the following:

``9802. Consumer protection standards for digital assets.
``9803. Source code version of digital assets.
``9804. Settlement finality.
``9805. Notice to customers; enforcement.
``9806. Right to individual management of digital assets.''.

               TITLE VI--RESPONSIBLE PAYMENTS INNOVATION

SEC. 601. ISSUANCE OF PAYMENT STABLECOINS.

    Subtitle C of title VII of the Gramm-Leach-Bliley Act (Public Law 
106-102; 113 Stat. 1470) is amended by adding at the end the following:

``SEC. 722A. ISSUANCE OF PAYMENT STABLECOINS.

    ``(a) In General.--A depository institution may issue, redeem, and 
conduct all incidental activities relating to payment stablecoins in 
accordance with this section.
    ``(b) Required Payment Stablecoin Assets.--A depository institution 
shall maintain high-quality liquid assets under this section equal to 
not less than 100 percent of the face amount of the liabilities of the 
institution on payment stablecoins issued by the institution. In the 
case of an insured depository institution described in subsection 
(m)(1)(A) that engages in on-balance sheet lending activities, assets 
under this subsection shall equal not less than 100 percent of the face 
amount of the liabilities of the institution on payment stablecoins 
issued by the institution, with the assets held in balances at a 
Federal Reserve bank (which may include a segregated balance account), 
or, in the case of foreign withdrawable reserves, at a foreign central 
bank, in a special, custodial, or trust account, other off-balance 
sheet account, or in another equivalent manner that ensures the 
segregation of the assets in the event of receivership. An insured 
depository institution may segregate the issuance and management of 
payment stablecoins into a separate depository institution affiliate 
under the same holding company structure. Eligible high-quality liquid 
assets under this section shall be comprised of the following:
            ``(1) United States coins and currency and any other 
        instrument that is legal tender, as defined in section 5103 of 
        title 31, United States Code.
            ``(2) Demand deposits at a depository institution, except 
        that deposits in an insured depository institution shall not 
        exceed the limit of deposit or share insurance available for 
        that account, which may include pass through insurance, or 
        shall be maintained in a special, custodial, or trust account 
        or other off-balance sheet account held by the insured 
        depository institution.
            ``(3) Balances held at a Federal Reserve bank, which may be 
        held in a master account or segregated balance account.
            ``(4) Foreign withdrawable reserves, as defined in section 
        249.3 of title 12, Code of Federal Regulations, consistent with 
        any foreign unit of account in which the payment stablecoin is 
        denominated or pegged.
            ``(5) A security that is issued by, or unconditionally 
        guaranteed as to the timely payment of principal and interest 
        by, the Department of the Treasury, with an original maturity 
        of 1 year or less.
            ``(6) A reserve repurchase agreement relating to a security 
        described in paragraph (5).
            ``(7) Any other high-quality, liquid asset determined to be 
        consistent with safe and sound banking practices, as determined 
        by the appropriate Federal banking agency or State bank 
        supervisor.
    ``(c) Disclosures.--Not later than 10 business days after the end 
of each month, a depository institution shall disclose, in a publicly 
accessible manner, a summary description of the assets backing the 
payment stablecoin, the value of the assets, and the number of 
outstanding payment stablecoins, as of the last day of the month. Such 
explanation shall be filed with the appropriate Federal banking agency 
or State bank supervisor under penalty of perjury by the chief 
financial officer of the institution. The depository institution shall 
also report on the summary description any instances in which the 
institution failed to comply with any requirement of subsection (b). As 
applicable, the appropriate Federal banking agency or State bank 
supervisor shall, as part of a regular examination of the depository 
institution, at the frequency otherwise required by law, verify the 
composition of the assets and the accuracy of the summary descriptions 
made under this subsection and reports under subsection (d).
    ``(d) Call Report.--As applicable, the appropriate Federal banking 
agency or State bank supervisor shall require a depository institution 
that issues a payment stablecoin to report, in detail, on the 
composition of the assets in each periodic report of condition, or in 
an alternative format approved by the Federal Financial Institutions 
Examination Council, at the frequency otherwise required by law.
    ``(e) Permission.--A depository institution shall, as applicable, 
obtain permission from the appropriate Federal banking agency or State 
bank supervisor, with an application submitted not less than 6 months 
before intended issuance of the payment stablecoin, but which may be 
submitted as part of a charter application. As part of an application 
under this section, a depository institution shall develop a tailored 
recovery and resolution plan, consistent with the standards adopted 
under subsection (k)(1)(F), that would permit the orderly resumption of 
a safe and sound operation or the orderly wind-down of operations in 
the event of distress, including the redemption of all outstanding 
payment stablecoins. The application shall also contain a draft 
customer agreement, flow of funds explanation, a robust information 
technology plan and operational design of the payment stablecoin. As 
applicable, the appropriate Federal banking agency or State bank 
supervisor shall render a decision on the application within 4 months 
of the date of filing, and shall approve the application unless--
            ``(1) the payment stablecoin activities are not likely to 
        be able to operate in a safe and sound manner;
            ``(2) the depository institution does not have the required 
        resources and expertise to manage the operation of the payment 
        stablecoin, commensurate with the size and scale of projected 
        operations; or
            ``(3) the depository institution does not have required 
        policies and procedures relating to material areas of the 
        operation of the payment stablecoin activities.
    ``(f) Redemption of Payment Stablecoins.--Upon the demand of a 
customer, a depository institution shall redeem an outstanding payment 
stablecoin at par in the coins, currency, or other instruments that are 
legal tender, as defined in section 5103 of title 31, United States 
Code, or the similar laws of the jurisdiction of the unit of account in 
which the payment stablecoin is denominated or to which the value of 
the payment stablecoin is pegged. A depository institution may redeem a 
payment stablecoin issued by another depository institution at par, 
upon demand. The Board of Governors of the Federal Reserve System, 
through the Federal Reserve banks, shall provide for the clearing and 
settlement of payment stablecoin liabilities among depository 
institutions under this section and shall ensure competitive equality 
in all clearing, settlement and related services. A depository 
institution shall also assess its ability to fulfill large redemptions 
without placing downward pressure on the market value of the payment 
stablecoin.
    ``(g) Collateral Availability in the Capital Markets.--The 
appropriate Federal banking agencies, in consultation with State bank 
supervisors, the Securities and Exchange Commission, and Commodity 
Futures Trading Commission, shall monitor use of the high-quality 
liquid assets authorized under subsection (b) and the impact on 
collateral availability and the efficient functioning of the capital 
markets.
    ``(h) Receivership Priority.--In the event of the receivership of a 
depository institution that has issued a payment stablecoin under this 
section, a person that has a valid claim on a payment stablecoin issued 
by that institution shall have priority over all other claims on the 
institution with respect to any required payment stablecoin assets, 
including claims with respect to insured deposits, other than 
administrative costs incurred by the appropriate Federal banking agency 
or State bank supervisor, as applicable, relating to the receivership 
of the institution, if applicable. Consistent with subsection (f), a 
depository institution that redeems a payment stablecoin issued by a 
depository institution in receivership shall be considered to have a 
valid claim, with corresponding priority under this subsection, on a 
payment stablecoin issued by the institution in receivership.
    ``(i) Incidental Activities.--A depository institution may conduct 
all incidental activities relating to the issuance and redemption of 
payment stablecoins, which shall include the following:
            ``(1) Management of required payment stablecoin assets in 
        accordance with subsection (b).
            ``(2) Making a market in payment stablecoins.
            ``(3) Custodial services.
            ``(4) Settlement and clearing.
            ``(5) Post-trade services.
            ``(6) All other activities consistent with a safe and sound 
        operation, as determined by the appropriate Federal banking 
        agency or State bank supervisor.
    ``(j) Applicability of Gramm-Leach-Bliley Data Privacy 
Provisions.--Title V of the Gramm-Leach-Bliley Act (12 U.S.C. 6801 et 
seq.) shall apply to the payment stablecoin activities of a depository 
institution under this section.
    ``(k) Rules.--
            ``(1) In general.--The appropriate Federal banking 
        agencies, in consultation with State bank supervisors, shall 
        adopt rules to implement this section, including--
                    ``(A) capital treatment for depository institutions 
                described in subsection (m)(1) in accordance with 
                paragraph (2);
                    ``(B) liquidity, leverage, and interest rate risk;
                    ``(C) third-party service provider activities--
                            ``(i) including custodial wallet providers; 
                        and
                            ``(ii) not including licensing or capital 
                        requirements for third-party service providers;
                    ``(D) management practices with respect to required 
                payment stablecoin assets;
                    ``(E) appropriate operational, compliance, and 
                information technology risk management;
                    ``(F) tailored recovery and resolution standards 
                relating to payment stablecoins; and
                    ``(G) any other material topic.
            ``(2) Significant differences.--In accordance with section 
        5169(c)(3)(A) of the Revised Statutes, in determining capital 
        and leverage requirements applicable to a depository 
        institution that has no material assets other than required 
        payment stablecoin assets under this section--
                    ``(A) the depository institution shall not be 
                subject to section 171 of the Financial Stability Act 
                of 2010 (12 U.S.C. 5371); and
                    ``(B) the appropriate Federal banking agencies 
                shall take into account the significant differences 
                between the risks of the assets of the institution and 
                those of depository institutions with assets that 
                consist primarily of commercial or consumer loans.
    ``(l) Non-Depository Institution Payment Stablecoin Issuers.--
Nothing in this section shall be construed to prohibit an entity 
operating under a State or Federal charter or license that is not a 
depository institution from issuing and redeeming a payment stablecoin 
and conducting all activities related to the management of such payment 
stablecoin consistent with a safe and sound operation, as determined by 
the appropriate regulator of the entity. The entity shall--
            ``(1) be subject to the requirements of subsections (b) and 
        (c); and
            ``(2) redeem an outstanding payment stablecoin at par in 
        the coins, currency, or other instruments that are legal 
        tender, as defined in section 5103, or the similar laws of the 
        jurisdiction of the unit of account in which the payment 
        stablecoin is denominated or to which the value of the payment 
        stablecoin is pegged.
    ``(m) Definitions.--In this section:
            ``(1) Depository institution.--The term `depository 
        institution' has the meaning given the term in section 19(b)(1) 
        of the Federal Reserve Act (12 U.S.C. 461(b)(1)) and includes--
                    ``(A) an insured depository institution; or
                    ``(B) a depository institution operating under 
                subsection (c) of section 5169 of the Revised Statutes 
                (12 U.S.C. 27), or a substantially similar State law, 
                which is exclusively engaged in issuing payment 
                stablecoins, providing safekeeping, trust or custodial 
                services, or activities incidental to the foregoing.
            ``(2) Payment stablecoin.--The term `payment stablecoin' 
        has the meaning given the term in section 9801 of title 31, 
        United States Code.
            ``(3) Segregated balance account.--The term `segregated 
        balance account' includes an account of a depository 
        institution with a Federal Reserve bank or a foreign central 
        bank to which only required payment stablecoin assets are 
        credited.''.

SEC. 602. SANCTIONS COMPLIANCE RESPONSIBILITIES OF PAYMENT STABLECOIN 
              ISSUERS.

    Not later than 120 days after the date of the enactment of this 
Act, the Secretary of the Treasury shall adopt final guidance 
clarifying the sanctions compliance responsibilities and liability of 
an issuer of a payment stablecoin with respect to downstream 
transactions relating to the stablecoin that take place after the 
stablecoin is first provided to a customer of the issuer.

SEC. 603. USE OF THE OFFICIAL DIGITAL CURRENCY OF THE PEOPLE'S REPUBLIC 
              OF CHINA ON GOVERNMENT DEVICES.

    (a) Definitions.--In this section--
            (1) the term ``digital yuan'' means the official central 
        bank digital currency of the People's Republic of China;
            (2) the term ``executive agency'' has the meaning given 
        that term in section 133 of title 41, United States Code; and
            (3) the term ``information technology'' has the meaning 
        given that term in section 11101 of title 40, United States 
        Code.
    (b) Use of Digital Yuan.--Not later than 60 days after the date of 
enactment of this Act, the Director of the Office of Management and 
Budget, in consultation with the Administrator of General Services, the 
Director of the Cybersecurity and Infrastructure Security Agency, the 
Director of National Intelligence, and the Secretary of Defense, and 
consistent with the information security requirements under subchapter 
II of chapter 35 of title 44, United States Code, shall develop 
standards and guidelines for executive agencies which require adequate 
security measures for use of the digital yuan on Government information 
technology devices.

SEC. 604. CERTIFICATE OF AUTHORITY TO COMMENCE BANKING.

    Section 5169 of the Revised Statutes (12 U.S.C. 27) is amended--
            (1) in subsection (a), in the third sentence, by striking 
        ``to those of a trust company and activities related thereto.'' 
        and inserting the following: ``to--
            ``(1) those of a trust company and fiduciary activities 
        related thereto; or
            ``(2) those of a depository institution required to 
        maintain assets valued at not less than 100 percent of the 
        deposits of the institution, for the purposes of issuing a 
        payment stablecoin (as defined in section 9801 of title 31, 
        United States Code) and activities related thereto consistent 
        with subsection (c) of this section and without the requirement 
        to maintain deposit insurance under the Federal Deposit 
        Insurance Act (12 U.S.C. 1811 et seq.).''; and
            (2) by adding at the end the following:
    ``(c)(1) Notwithstanding any other provision of law, a National 
Bank Association described in subsection (a) may not engage in maturity 
transformation or facilitate consumer lending through third parties.
    ``(2) Restrictions on affiliate transactions applicable for insured 
depository institutions shall apply to such depository institutions.
    ``(3) The Comptroller of the Currency, in close consultation with 
the Board of Governors of the Federal Reserve System and State bank 
supervisors, shall develop the following:
            ``(A) A simplified capital framework based on the 
        following:
                    ``(i) Payment system risk.
                    ``(ii) The greater of--
                            ``(I) all projected costs of receivership; 
                        or
                            ``(II) 3 years of projected operating 
                        expenses.
            ``(B) Appropriate standards for the depository institution 
        to develop a community contribution plan, which may include 
        consumer education, financial literacy, charitable donations, 
        volunteerism, job training and internships or similar 
        involvement.
            ``(C) A tailored recovery and resolution plan that would 
        permit the orderly resumption of a safe and sound operation or 
        the orderly wind-down of operations relating to a payment 
        stablecoin in the event of distress.
            ``(D) Tailored holding company supervision, as specified by 
        section 15 of the Bank Holding Company Act of 1956.
            ``(4) In designing the simplified capital framework 
        required by paragraph (3)(A), the Comptroller of the Currency--
                    ``(A) shall not subject depository institutions to 
                the standards of section 171 of the Financial Stability 
                Act of 2010 (12 U.S.C. 5371); and
                    ``(B) shall take into account the significant 
                differences between the risks of the assets of the 
                institution and those of depository institutions with 
                assets that consist primarily of commercial or consumer 
                loans.
    ``(d) The Comptroller of the Currency may promulgate rules to carry 
out this section.''.

SEC. 605. HOLDING COMPANY SUPERVISION OF COVERED DEPOSITORY 
              INSTITUTIONS.

    The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is 
amended--
            (1) in section 2(c) (12 U.S.C. 1841(c)), by striking 
        paragraph (2) and by inserting the following:
            ``(2) Exceptions.--The term `bank' does not include a 
        covered depository institution subject to tailored holding 
        company supervision under section 15.''; and
            (2) by adding at the end the following:

``SEC. 15. TAILORED HOLDING COMPANY SUPERVISION FOR COVERED DEPOSITORY 
              INSTITUTIONS.

    ``(a) Definitions.--In this section:
            ``(1) Appropriate banking supervisor.--The term 
        `appropriate banking supervisor' means the Comptroller of the 
        Currency, a State bank supervisor, in the case of a State 
        member bank, the Board, or in the case of an insured bank, the 
        Federal Deposit Insurance Corporation, as applicable.
            ``(2) Controlling interest.--The term `controlling 
        interest' means a circumstance when a person, directly or 
        indirectly, or acting through or in concert with 1 or more 
        persons--
                    ``(A) owns, controls, or has the power to vote 25 
                percent or more of any class of voting securities of a 
                covered depository institution;
                    ``(B) controls in any manner the election of a 
                majority of the directors of the covered depository 
                institution; or
                    ``(C) has the power to exercise a controlling 
                influence over the management or policies of the 
                covered depository institution.
            ``(3) Covered depository institution.--The term `covered 
        depository institution' means a depository institution 
        operating under subsection (c) of section 5169 of the Revised 
        Statutes (12 U.S.C. 27), or a substantially similar State law, 
        other than a bank, as defined in section 2 of the Bank Holding 
        Company Act of 1956 (12 U.S.C. 1841), or an insured depository 
        institution, as defined in section 3 of the Federal Deposit 
        Insurance Act (12 U.S.C. 1813), which is exclusively engaged in 
        issuing payment stablecoins, providing safekeeping, trust or 
        custodial services, or activities incidental to the foregoing.
    ``(b) Controlling Interest.--A person with a controlling interest 
in a covered depository institution shall--
            ``(1) submit annual audited financial statements and other 
        information as otherwise reasonably required by the appropriate 
        banking supervisor; and
            ``(2) provide a description of all affiliated or parent 
        entities and their relationships with the institution, 
        including annual updates.
    ``(c) Tax Allocation Agreement.--The appropriate banking supervisor 
may require a legal entity with a controlling interest in a covered 
depository institution to execute a tax allocation agreement with the 
institution that--
            ``(1) expressly states that an agency relationship exists 
        between the person and the institution with respect to tax 
        assets generated by the institution, and that the assets are 
        held in trust by the person for the benefit of the institution 
        and will be promptly remitted to the institution; and
            ``(2) may provide that the amount and timing of any 
        payments or refunds to the institution by the person should be 
        no less favorable than if the institution were a separate 
        taxpayer.
    ``(d) Prohibition on Controlling Interests.--A person that is a 
commercial firm, as defined in section 602 of the Bank and Savings 
Association Holding Company and Depository Institution Regulatory 
Improvements Act of 2010 (12 U.S.C. 1815 note), may not obtain a 
controlling interest in a covered depository institution.
    ``(e) Public Interest.--If the appropriate banking supervisor finds 
that it is in the public interest and has reasonable cause to believe 
it is necessary to protect the customers of a covered depository 
institution, the supervisor may--
            ``(1) conduct an examination of a legal entity with a 
        controlling interest in a covered depository institution or 
        otherwise require information from the person; and
            ``(2) require a person with a controlling interest in a 
        covered depository institution to divest or sever their 
        relationship with the institution, if necessary to maintain 
        safety and soundness.''.

SEC. 606. IMPLEMENTATION RULES TO PRESERVE ADEQUATE COMPETITION IN 
              PAYMENT STABLECOINS.

    (a) In General.--The application of a non-depository trust company 
or the holder of a State license that only persons engaged in digital 
asset activities may obtain, which was chartered or issued under the 
laws of a State or the National Bank Act before the date of enactment 
of this Act, to receive a charter as a depository institution and to 
operate under subsection (c) of section 5169 of the Revised Statutes 
(12 U.S.C. 27), as added by section 604 of this Act, shall be decided 
upon by the Comptroller of the Currency before an application for a 
charter to operate under that section from another entity that is filed 
on or after the date of enactment of this Act.
    (b) Application.--The application of a covered depository 
institution, as defined in section 15(a) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1853(a)), chartered before the date of enactment 
of this Act to become a State member bank in the Federal Reserve System 
or for access to Federal Reserve services under section 11A of the 
Federal Reserve Act (12 U.S.C. 248a) shall be decided upon by the Board 
of Governors of the Federal Reserve System, or a Federal Reserve bank, 
as applicable, before any application to become a State member bank or 
for Federal Reserve services from any other entity which seeks to 
operate as a covered depository institution and which is filed on or 
after the date of enactment of this Act.
    (c) Decision.--The applications described in subsections (a) and 
(b) of this section shall be decided upon by the appropriate Federal 
banking agency (as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813)) or Federal Reserve bank, as applicable, 
before an insured depository institution in operation before the 
enactment date of this Act may issue a payment stablecoin in accordance 
with section 722A of the Gramm-Leach-Bliley Act, as added by section 
601 of this Act.

SEC. 607. FINANCIAL CRIMES ENFORCEMENT NETWORK INNOVATION LABORATORY.

    Section 310 of title 31, United States Code, is amended by adding 
at the end the following:
    ``(m) Innovation Laboratory.--
            ``(1) In general.--There is established within the 
        Financial Crimes Enforcement Network an Innovation Laboratory 
        to promote regulatory dialogue, data sharing between the 
        Financial Crimes Enforcement Network and financial companies, 
        and an assessment of potential changes in law, rules, or 
        policies to facilitate the appropriate supervision of financial 
        technology and the laws under the jurisdiction of the agency.
            ``(2) Chief innovation officer.--The innovation officer 
        appointed under section 6208 of the Anti-Money Laundering Act 
        of 2020 (31 U.S.C. 5311 note) by the Director of the Financial 
        Crimes Enforcement Network shall manage the Innovation 
        Laboratory.
            ``(3) Duties.--The Innovation Laboratory, as appropriate, 
        shall study changes in financial technology and make 
        recommendations to Congress, the Secretary, and the Director 
        for appropriate changes in laws, rules, or policies that can 
        more effectively facilitate the supervision of financial 
        technology with respect to the laws under the jurisdiction of 
        the Financial Crimes Enforcement Network, including digital 
        assets, distributed ledger technology and decentralized 
        finance.
            ``(4) Pilot projects.--The Innovation Laboratory, as 
        appropriate, shall conduct pilot projects with financial 
        companies to more effectively facilitate the supervision of 
        financial technology, consistent with applicable law.''.

               TITLE VII--RESPONSIBLE BANKING INNOVATION

SEC. 701. STUDY ON USE OF DISTRIBUTED LEDGER TECHNOLOGY FOR REDUCTION 
              OF RISK IN DEPOSITORY INSTITUTIONS.

    Not later than 180 days after the date of enactment of this Act, 
the Board of Governors of the Federal Reserve System shall complete a 
study and submit to the Committee on Banking, Housing, and Urban 
Affairs of the Senate and the Committee on Financial Services of the 
House of Representatives a report regarding the manner in which 
distributed ledger technology may reduce risk for depository 
institutions, as defined in section 19(b)(1) of the Federal Reserve Act 
(12 U.S.C. 461(b)(1)), including settlement risk, operational risk and 
capital requirements.

SEC. 702. ELIGIBILITY FOR FEDERAL RESERVE SERVICES TO DEPOSITORY 
              INSTITUTIONS.

    (a) Findings.--Congress finds the following:
            (1) Final settlement of transactions in central bank money 
        reduces risk in the financial system, including through the 
        reduction of counterparty exposure.
            (2) Digital assets settle with finality in seconds or 
        minutes, whereas traditional financial transactions may take 
        days to settle.
            (3) This mismatch in the settlement window of digital 
        assets and traditional financial assets creates risk in the 
        economy that may be reduced through the ability of depository 
        institutions to simultaneously conduct digital asset 
        transactions and settle, with finality, the United States 
        dollar component of these transactions.
            (4) The Federal Reserve Act specifies that a depository 
        institution, as defined in section 19(b)(1) of that Act (12 
        U.S.C. 461(b)(1)), upon receiving a charter from the Office of 
        the Comptroller of the Currency, National Credit Union 
        Administration or State bank supervisor, is required to be made 
        available services from Federal Reserve banks under section 11A 
        of the Federal Reserve Act (12 U.S.C. 248a), including currency 
        and coin services, wire transfer services, automated 
        clearinghouse services and settlement services.
            (5) Numerous Federal courts have found that the provision 
        of services to depository institutions under section 11A of the 
        Federal Reserve Act (12 U.S.C. 248a) is a ministerial duty 
        imposed by Congress with respect to all depository 
        institutions.
            (6) The Board of Governors of the Federal Reserve System 
        has long interpreted the Federal Reserve Act to mean that the 
        Federal Reserve banks must provide services to all depository 
        institutions, noting that it has a duty ``to ensure the 
        provision of payment services to all depository institutions on 
        an equitable basis, and to do so in an atmosphere of 
        competitive fairness''.
            (7) The Federal Reserve banks have, on occasion, provided 
        services to non-depository, non-insured institutions without 
        appropriate statutory authority.
            (8) Certain novel legal positions that conflict with or 
        frustrate these precedents are not in the best traditions of 
        the Federal Reserve Act, our dual banking system, and the 
        imperatives of Congress.
            (9) The statutory independence of the Board of Governors 
        and the Federal Reserve banks under the Constitution of the 
        United States is properly rooted in absolute fidelity to the 
        laws enacted by Congress.
            (10) It is appropriate for Congress to reaffirm its 
        existing statutory intent to ensure that all depository 
        institutions may access services under the Federal Reserve Act 
        ``on an equitable basis, and to do so in an atmosphere of 
        competitive fairness''.
    (b) Pricing of Services.--Section 11A of the Federal Reserve Act 
(12 U.S.C. 248a) is amended by adding at the end the following:
    ``(f) A Federal Reserve bank shall provide a segregated balance 
account to a depository institution upon the request of any institution 
that receives services under this section.''.
    (c) Deposits; Exchange and Collection; Member and Nonmember Banks 
or Other Depository Institutions; Charges.--Section 13 of the Federal 
Reserve Act (12 U.S.C. 342) is amended to read as follows:
    ``Any Federal Reserve bank shall receive from any of its member 
banks or other depository institutions, and from the United States, 
deposits of current funds in lawful money, national-bank notes, Federal 
reserve notes, or checks, and drafts, payable upon presentation or 
other items, and also, for collection, maturing notes and bills; or, 
solely for purposes of exchange or of collection, shall receive from 
other Federal Reserve banks deposits of current funds in lawful money, 
national-bank notes, or checks upon other Federal Reserve banks, and 
checks and drafts, payable upon presentation within its district or 
other items, and maturing notes and bills payable within its district; 
or, solely for the purposes of exchange or of collection, shall receive 
from any nonmember bank or trust company or other depository 
institution deposits of current funds in lawful money, national-bank 
notes, Federal reserve notes, checks and drafts payable upon 
presentation or other items, or maturing notes and bills: Provided, 
Such nonmember bank or trust company or other depository institutions 
maintains with the Federal Reserve bank of its district a balance in 
such amount as the Board determines taking into account items in 
transit, services provided by the Federal Reserve bank, and other 
factors as the Board may deem appropriate: Provided further, That 
nothing in this or any other section of this Act shall be construed as 
prohibiting a member or nonmember bank or other depository institution 
from making reasonable charges, to be determined and regulated by the 
Board of Governors, but in no case to exceed 10 cents per $100 or 
fraction thereof, based on the total of checks and drafts presented at 
any one time, for collection or payment of checks and drafts and 
remission therefor by exchange or otherwise; but no such charges shall 
be made against the Federal Reserve banks.''.

SEC. 703. ROUTING TRANSIT NUMBER ISSUANCE.

    Not later than 2 years after the date of enactment of this Act, the 
Board of Governors of the Federal Reserve System shall assume 
responsibility for issuing routing transit numbers to depository 
institutions for all purposes relating to the clearing of transactions 
and the services required to be made available to all depository 
institutions under section 11A of the Federal Reserve Act (12 U.S.C. 
248a).

SEC. 704. CLARIFYING APPLICATION REVIEW TIMES WITH RESPECT TO THE 
              FEDERAL BANKING AGENCIES.

    Section 343 of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (12 U.S.C. 4807) is amended by striking 
subsection (a) and inserting the following:
    ``(a) Final Action.--
            ``(1) Definition.--In this subsection, the term `completed 
        application'--
                    ``(A) means the information requested by the 
                Federal banking agency at the outset of an application 
                through application forms or similar means; and
                    ``(B) does not include supplemental information 
                requested by the agency after filing of an application.
            ``(2) Action.--Each Federal banking agency, including 
        Federal Reserve banks, shall take final action on any 
        application to the agency before the end of the 1-year period 
        beginning on the date on which a completed application is 
        received by the agency.
    ``(b) Report.--Each Federal banking agency, including the Federal 
Reserve banks, shall annually report to Congress a list of the 
applications that have been pending for 9 months or longer since the 
date of the initial application filed by an applicant. Such list--
            ``(1) shall disclose the reason why the application has not 
        yet been approved or denied by the Federal banking agency; and
            ``(2) shall not contain confidential supervisory 
        information.''.

SEC. 705. EXAMINATION STANDARDS FOR DIGITAL ASSET ACTIVITIES.

    (a) In General.--Not later than 18 months after the date of 
enactment of this Act, the Federal Financial Institutions Examination 
Council, in consultation with the Financial Crimes Enforcement Network, 
shall publish final guidance and examiner handbooks for depository 
institutions, as defined in section 19(b)(1) of the Federal Reserve Act 
(12 U.S.C. 461(b)(1)), on the following topics related to digital 
assets:
            (1) Anti-money laundering, customer identification, 
        beneficial ownership, and sanctions compliance, including with 
        respect to payment stablecoin activities and subsidiary value 
        (as defined in section 9802(c) of title 31, United States 
        Code).
            (2) Custody.
            (3) Fiduciary and capital markets activities.
            (4) Information technology standards.
            (5) Payment system risk.
            (6) Consumer protection.
    (b) Final Guidance.--Not later than 18 months after the date of 
enactment of this Act, Securities and Exchange Commission and Commodity 
Futures Trading Commission, in consultation with the Financial Crimes 
Enforcement Network, shall publish final guidance and examiner 
handbooks relating to digital asset intermediaries regarding the topics 
described in paragraphs (1) and (4) of subsection (a).

SEC. 706. ASSET CUSTODY FOR DEPOSITORY INSTITUTIONS AND CERTAIN OTHER 
              ENTITIES.

    (a) Findings.--Congress finds the following:
            (1) The laws surrounding custody of financial assets is 
        largely customary, uncodified, and poorly understood.
            (2) Lack of uniformity amongst various jurisdictions' laws 
        relating to custody has largely not been addressed by 
        regulators, can contribute to risk, and is producing 
        uncertainty for innovators.
            (3) Codifying basic principles around custody of financial 
        assets will reduce systemic risk, clearly define the rights and 
        duties of both custodian and customer, and contribute to a more 
        uniform and effective banking system.
    (b) Definition.--In this section, the term ``custody'' means the 
safekeeping, servicing and management of customer financial assets, 
including currency, securities and commodities, on an off-balance sheet 
basis.
    (c) Custody.--
            (1) In general.--Except as provided in paragraph (2), 
        custody of financial assets is accomplished by a bailment and 
        established by a written customer agreement. Custody shall not 
        be a fiduciary or trust activity unless the custodian is 
        providing substantial discretionary services with respect to an 
        account, including through investment advice or investment 
        discretion, and the custodian owes a customer a higher standard 
        of care or duty with respect to the customer of that account.
            (2) Exception.--A custodian and customer may establish a 
        legal relationship other than a bailment pursuant to a written 
        customer agreement.
    (d) Proper Documentation.--A custodial account shall be properly 
documented in a customer agreement, with a clearly defined legal 
relationship between the custodian and customer. Custodial assets shall 
be properly identified and segregated from the assets of the custodian, 
with proper documentation of asset segregation.
    (e) Not Assets or Liabilities.--Assets properly held in a custodial 
account under this section are not assets or liabilities of the 
custodian and shall be maintained on an off-balance sheet basis, 
including for the purpose of accounting treatment for the custodian and 
the customers of the custodian, notwithstanding the form in which the 
assets are maintained.
    (f) Applicability.--This section shall apply to depository 
institutions, as defined in section 19(b)(1) of the Federal Reserve Act 
(12 U.S.C. 461(b)(1)), and non-depository trust companies chartered 
under section 5169 of the Revised Statutes (12 U.S.C. 27).

SEC. 707. REPUTATION RISK; REQUIREMENTS FOR ACCOUNT TERMINATION 
              REQUESTS AND ORDERS.

    (a) Reputation Risk.--An appropriate Federal banking agency may not 
formally or informally request or order a depository institution to 
terminate a specific customer account or group of customer accounts 
unless the agency has a valid reason for such request or order, 
consistent with subsections (b) and (c).
    (b) No Restriction.--An appropriate Federal banking agency shall 
not restrict or discourage a depository institution from entering into 
or maintaining a banking relationship with a specific customer or group 
of customers based on reputation risk, including through the 
examinations and ratings of the depository institution.
    (c) Treatment of National Security Threats.--If an appropriate 
Federal banking agency believes a specific customer or group of 
customers is, or acting as a conduit for, an entity which--
            (1) poses a threat to national security;
            (2) is involved in terrorist financing;
            (3) is an agency of the Government of Iran, North Korea, 
        Syria, or any country listed from time to time on the State 
        Sponsors of Terrorism list;
            (4) is located in, or is subject to the jurisdiction of, 
        any country specified in paragraph (3); or
            (5) does business with any entity described in paragraph 
        (3) or (4), unless the appropriate Federal banking agency 
        determines that the customer or group of customers has used due 
        diligence to avoid doing business with that entity, such belief 
        shall satisfy the requirement under subsection (a).
    (d) Notice Requirement.--
            (1) In general.--If an appropriate Federal banking agency 
        formally requests or orders a depository institution to 
        terminate a specific customer account or a group of customer 
        accounts, the agency shall--
                    (A) provide such request or order to the 
                institution in writing; and
                    (B) accompany such request or order with a written 
                justification for why such termination is needed, 
                including any specific laws or rules the agency 
                believes are being violated by the customer or group of 
                customers.
            (2) Justification requirement.--Consistent with subsection 
        (b), the justification described in paragraph (1)(B) may not be 
        based on reputation risk to the depository institution.
    (e) Customer Notice.--
            (1) Notice required.--Except as provided under paragraph 
        (2) or as otherwise prohibited from being disclosed by law, if 
        an appropriate Federal banking agency orders a depository 
        institution to terminate a specific customer account or a group 
        of customer accounts, the depository institution shall inform 
        the specific customer or group of customers of the 
        justification for the customer's account termination described 
        under subsection (b).
            (2) Notice prohibited.--
                    (A) Notice prohibited in cases of national 
                security.--If an appropriate Federal banking agency 
                requests or orders a depository institution to 
                terminate a specific customer account or a group of 
                customer accounts based on a belief that the customer 
                or customers pose a threat to national security, or are 
                otherwise described under subsection (a)(2), neither 
                the depository institution nor the appropriate Federal 
                banking agency may inform the customer or customers of 
                the justification for the customer's account 
                termination.
                    (B) Notice prohibited in other cases.--If an 
                appropriate Federal banking agency determines that the 
                notice required under paragraph (1) may interfere with 
                an authorized criminal investigation, neither the 
                depository institution nor the appropriate Federal 
                banking agency may inform the specific customer or 
                group of customers of the justification for the 
                customer's account termination.
    (f) Reporting Requirement.--Each appropriate Federal banking agency 
shall issue an annual report to Congress stating--
            (1) the aggregate number of specific customer accounts that 
        the agency requested or ordered a depository institution to 
        terminate during the previous year; and
            (2) the legal authority on which the agency relied in 
        making such requests and orders and the frequency on which the 
        agency relied on each such authority.
    (g) Definitions.--In this section:
            (1) Appropriate federal banking agency.--The term 
        ``appropriate Federal banking agency'' means--
                    (A) the appropriate Federal banking agency, as 
                defined in section 3 of the Federal Deposit Insurance 
                Act (12 U.S.C. 1813); and
                    (B) the National Credit Union Administration, in 
                the case of an insured credit union.
            (2) Depository institution.--The term ``depository 
        institution'' has the meaning given the term in section 
        19(b)(1) of the Federal Reserve Act (12 U.S.C. 461(b)(1)(A)).

SEC. 708. CONFORMING AMENDMENTS.

    (a) Federal Deposit Insurance Act.--Section 12 of the Federal 
Deposit Insurance Act (12 U.S.C. 1822) is amended by adding at the end 
the following:
    ``(g) Appointment of Receiver.--
            ``(1) Definition.--In this subsection, the term `covered 
        depository institution' has the meaning given the term in 
        section 15(a) of the Bank Holding Company Act of 1956.
            ``(2) Appointment.--The Corporation may be appointed as 
        receiver of a covered depository institution, as defined in 
        section 15(a) of the Bank Holding Company Act of 1956.
            ``(3) Premiums.--A covered depository institution may not 
        be charged deposit insurance premiums for the purpose of this 
        subsection, but the Corporation may use the capital of the 
        covered depository institution to fund the costs of the 
        receivership.
            ``(4) Rules.--The Corporation may promulgate rules to carry 
        out this subsection, which shall--
                    ``(A) be substantially consistent with the rules 
                for receivership of an insured depository institution; 
                and
                    ``(B) account for the limited activities, capital, 
                and the required tailored recovery and resolution plan 
                of the covered depository institution.''.
    (b) Federal Reserve Act.--The Federal Reserve Act (12 U.S.C. 221 et 
seq.) is amended--
            (1) in section 19(b)(1)(A) (12 U.S.C. 461(b)(1)(A))--
                    (A) in clause (vi), by striking ``and'' at the end;
                    (B) in clause (vii), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
                            ``(viii) a covered depository institution, 
                        as defined in section 15(a) of the Bank Holding 
                        Company Act of 1956.''; and
            (2) in the first undesignated paragraph of section 9 (12 
        U.S.C. 321), in the first sentence, by inserting ``, covered 
        depository institutions, as defined in section 15(a) of the 
        Bank Holding Company Act of 1956 (12 U.S.C. 1853(a)),'' after 
        ``Plan banks''.

            TITLE VIII--RESPONSIBLE INTERAGENCY COORDINATION

SEC. 801. TIMELINE FOR INTERPRETIVE GUIDANCE ISSUED BY FEDERAL 
              FINANCIAL AGENCIES.

    (a) In General.--Title 31, United States Code, is amended by adding 
after chapter 98, as added by section 101(a) of this Act, the 
following:

           ``CHAPTER 99--RESPONSIBLE INTERAGENCY COORDINATION

``Sec.
``9901. Timeline for interpretive guidance issues by Federal financial 
                            agencies.
``9902. Interstate sandbox activities.
``Sec. 9901. Timeline for interpretive guidance issues by Federal 
              financial agencies
    ``(a) In General.--In this section:
            ``(1) Federal financial regulator.--The term `Federal 
        financial regulator' means--
                    ``(A) Board of Governors of the Federal Reserve 
                System and the Federal Reserve banks;
                    ``(B) Commodity Futures Trading Commission;
                    ``(C) Department of the Treasury;
                    ``(D) Federal Deposit Insurance Corporation;
                    ``(E) Federal Housing Finance Agency;
                    ``(F) National Credit Union Administration;
                    ``(G) Office of the Comptroller of the Currency;
                    ``(H) Consumer Financial Protection Bureau; and
                    ``(I) Securities and Exchange Commission.
            ``(2) Requesting person.--The term `requesting person'--
                    ``(A) means any entity that is required to be 
                chartered, licensed, supervised or registered by that 
                agency; and
                    ``(B) includes State agencies and self-regulatory 
                organizations.
    ``(b) Response.--Not later than 180 days after filing a written 
request for individualized interpretive guidance with respect to the 
application of a statute, rule or policy under the jurisdiction of a 
Federal financial regulator, the agency shall provide a final, complete 
and written response to the requesting person. This subsection shall 
not apply to requests for guidance that the Federal financial regulator 
determine lack substance.
    ``(c) Other Matters.--With respect to matters delegated or 
otherwise under the jurisdiction of self-regulatory organizations, 
including national securities exchanges, boards of trade, and similar 
entities, the self-regulatory organization shall be subject to the same 
requirements as a Federal financial regulator under this section.''.

SEC. 802. INTERSTATE SANDBOX ACTIVITIES.

    (a) In General.--Chapter 99 of title 31, United States Code, as 
added by section 701 of this Act, is amended by adding at the end the 
following:
``Sec. 9902. Interstate sandbox activities
    ``(a) Definitions.--In this section:
            ``(1) Federal financial regulator.--The term `Federal 
        financial regulator' means the Federal agency described in 
        section 9901(a)(1) that would typically exercise jurisdiction 
        over the product or service made available in the State 
        financial regulatory sandbox, or the Department of the 
        Treasury, in the case of a matter only within the jurisdiction 
        of a State.
            ``(2) Financial company.--The term `financial company' 
        means a business entity primarily engaged in activities that 
        are financial in nature, as described in section 4(k)(4) of the 
        Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)(4)).
            ``(3) Host state.--The term `host State' means a State in 
        which a financial company is not operating in the State 
        financial regulatory sandbox of that State.
            ``(4) Innovative.--The term `innovative' means new or 
        emerging technology, or new uses of existing technology, that--
                    ``(A) provides a financial product, service, 
                business model, or delivery mechanism to the public; 
                and
                    ``(B) has no substantially comparable, widely 
                available analogue in common use in the United States.
            ``(5) State financial regulator.--The term `State financial 
        regulator' includes State agencies that regulate, supervise, or 
        license banks, trust companies, credit unions, consumer credit, 
        consumer protection, money transmission, securities, 
        commodities, and similar areas.
            ``(6) State financial regulatory sandbox.--The term `State 
        financial regulator sandbox' means a program created under 
        State law that allows a financial company to make an innovative 
        financial product or service available to customers within that 
        State during a defined period in order to permit regulatory 
        dialogue, data sharing amongst regulators and financial 
        companies, and to promote an assessment of potential changes in 
        law, rule, or policy to facilitate the appropriate supervision 
        of financial technology.
    ``(b) Business Conducted.--Upon joint approval under subsection 
(d), a financial company in good standing in a State financial 
regulatory sandbox and operating for not less than 6 months in that 
sandbox program, may do business across State lines under the standards 
of this section. If approved, the State financial regulator and the 
Federal financial regulator may agree upon reasonable adjustments to 
the number of customers that may be served, increased bonding or 
collateral requirements, and similar conditions which may be 
appropriate for conducting business nationally.
    ``(c) State Sandbox Requirements.--A State financial regulatory 
sandbox shall contain the following components for financial companies 
to be eligible to do business across State lines under this section:
            ``(1) A limited sandbox period of not more than 24 months.
            ``(2) Consumer protection requirements, which may include 
        disclosures, bonding, insurance requirements, and financial 
        literacy programs for specified consumers.
            ``(3) Authority to conduct examinations of the financial 
        company.
            ``(4) A background investigation of the financial company 
        and its officers, directors, members, managers and key 
        employees, prior to commencing business.
    ``(d) Decision.--Upon submission of an application by a financial 
company to conduct business across State lines under subsection (b), 
the State financial regulator and Federal financial regulator shall 
jointly issue a decision within 120 days with respect to that 
application, irrespective of any supplemental information with respect 
to the application that may be requested after initial filing. The 
Federal financial regulator shall have the authority to conduct a joint 
examination of any financial company doing business under this section.
    ``(e) Factors.--The State financial regulator and Federal financial 
regulator shall consider the following factors in rendering a decision 
on the application:
            ``(1) Whether the product or service offered may be offered 
        in a safe and sound manner across State lines.
            ``(2) Whether the management and capital of the financial 
        company is commensurate with the scale of the company.
            ``(3) Risk management plans of the financial company.
            ``(4) Conduct of the financial company to date in the State 
        regulatory sandbox, and any past regulatory actions, including 
        actions against officers, directors, members, managers and key 
        employees.
            ``(5) Plans for consumer education and financial literacy, 
        including partnerships with local educational institutions and 
        community colleges to provide financial literacy classes or 
        resources.
            ``(6) Other factors determined by the State and Federal 
        financial regulators to be material.
    ``(f) Election.--A host State may elect not to permit financial 
companies operating under this section to do business in their State 
through issuance of an executive order by the Governor of that State.
    ``(g) Innovative.--A product or service made available under this 
section through a State financial regulatory sandbox shall be 
innovative.
    ``(h) Rules of Construction.--This section shall not be construed 
to extend to permit--
            ``(1) a financial company to engage in any activities for 
        which a charter, license, registration or for which permission 
        would be required under Federal or State law but for the 
        innovative financial product or service being offered by the 
        company, except to the extent the financial company would be 
        required to obtain a charter, license or other authorization 
        required in a host State;
            ``(2) failure to comply with any applicable portion of 
        State law required by the State financial regulatory sandbox, 
        or failure to comply with any applicable portion of Federal 
        law, unless authorized on a limited basis by the Federal 
        financial regulator to achieve the purposes of this section and 
        the State financial regulatory sandbox; or
            ``(3) lending activities in excess of the maximum statutory 
        rate of interest permissible in a State.''.
    (b) Technical and Conforming Amendment.--The table of contents for 
subtitle VI of title 31, United States Code, as amended by section 
101(b) of this Act, is amended by adding at the end the following:

``99. Responsible interagency coordination..................    9901''.

SEC. 803. STATE MONEY TRANSMISSION COORDINATION RELATING TO DIGITAL 
              ASSETS.

    (a) In General.--In order to increase uniformity, reduce regulatory 
burden, and enhance consumer protection, the States, through the 
Conference of State Bank Supervisors and the Money Transmission 
Regulators Association, shall, not later than 2 years after the date of 
enactment of this Act, ensure uniform treatment of digital assets for 
the purposes of State money transmission laws on the following matters:
            (1) Whether digital assets are subject to money 
        transmission licensing requirements, as appropriate, which 
        shall include the exchange of digital assets for legal tender.
            (2) Treatment of payment stablecoins.
            (3) Non-applicability to persons or software that engage in 
        validation of transactions, non-custodial wallet providers, or 
        software or hardware development.
            (4) Tangible net worth and permissible investment 
        requirements.
            (5) Disclosures, reporting, and recordkeeping.
            (6) Common examination and examiner training standards, 
        including common customer identification, anti-money 
        laundering, and sanctions best practices developed in 
        consultation with the Financial Crimes Enforcement Network and 
        the Office of Foreign Assets Control.
    (b) Regulations.--If the Director of the Bureau of Consumer 
Financial Protection determines that a State does not have the 
requirements of subsection (a) in effect by law (including regulations) 
that are substantively consistent with the requirements of the several 
States on the date that is 2 years after the date of enactment of this 
section, the Director shall adopt rules applicable to that State that 
achieve the purposes of subsection (a) and that are consistent with the 
standards adopted in the States that have the requirements of 
subsection (a) in effect. The Director may extend the deadline under 
this section for not more than 1 year if a State has shown a good faith 
effort towards implementation. The Director may promulgate regulations 
to monitor State compliance with this subsection.

SEC. 804. INFORMATION SHARING AMONG FEDERAL AND STATE FINANCIAL 
              REGULATORS.

    Subtitle C of title VII of the Gramm-Leach-Bliley Act (Public Law 
106-102; 113 Stat. 1470), as amended by section 601 of this Act, is 
amended by adding at the end the following:

``SEC. 722B. INFORMATION SHARING AMONG FEDERAL AND STATE FINANCIAL 
              REGULATORS.

    ``(a) Confidentiality.--Notwithstanding any other provision of law, 
any requirement under Federal or State law regarding the privacy or 
confidentiality of any information or materials exchanged among 
financial regulators and any privilege arising under Federal or State 
law (including the rules of any Federal or State court) with respect to 
such information or material, shall continue to apply to such 
information or material after the information or material has been 
disclosed to any State or Federal financial regulator.
    ``(b) Non-Applicability of Certain Requirements.--Information or 
material that is subject to privilege or confidentiality under 
subsection (a) shall not be subject to--
            ``(1) disclosure under any Federal or State law governing 
        the disclosure to the public of information held by an officer 
        or an agency of the Federal Government or the respective State; 
        or
            ``(2) subpoena or discovery, or admission into evidence, in 
        any private civil action or administrative process, unless with 
        respect to any privilege held by the Nationwide Mortgage 
        Licensing System and Registry or the Director with respect to 
        such information or material, the person to whom such 
        information or material pertains waives that privilege, in 
        whole or in part, based on the discretion of such person.
    ``(c) Coordination With Other Law.--Any State or Federal law, 
including any State open records law, relating to the disclosure of 
confidential supervisory information or any information or material 
described in subsection (a) that is inconsistent with subsection (a) 
shall be superseded by the requirements of such provision to the extent 
the State or Federal law provides less confidentiality or a weaker 
privilege.
    ``(d) Conference of State Bank Supervisors.--The Conference of 
State Bank Supervisors shall be considered the agent of the State 
financial regulators for the purposes of sharing information under this 
provision.
    ``(e) Definition.--In this section, the term `financial regulator' 
means--
            ``(1) the Board of Governors of the Federal Reserve System 
        and the Federal Reserve banks;
            ``(2) the Commodity Futures Trading Commission;
            ``(3) the Department of the Treasury, including the 
        Financial Crimes Enforcement Network and the Office of Foreign 
        Assets Control;
            ``(4) the Federal Deposit Insurance Corporation;
            ``(5) the Federal Housing Finance Agency;
            ``(6) the National Credit Union Administration;
            ``(7) the Office of the Comptroller of the Currency;
            ``(8) the Bureau of Consumer Financial Protection;
            ``(9) the Securities and Exchange Commission; and
            ``(10) State agencies that regulate, supervise, or license 
        banks, trust companies, credit unions, consumer credit, 
        consumer protection, money transmission, securities, 
        commodities, and similar areas.''.

SEC. 805. ANALYSIS OF DECENTRALIZED FINANCE MARKETS AND TECHNOLOGIES.

    Not later than 1 year after the date of enactment of this Act, the 
Secretary of the Treasury, in consultation with the Commodity Futures 
Trading Commission, Securities and Exchange Commission, and private 
sector developers and participants in decentralized protocols, digital 
assets, and digital asset exchanges, shall--
            (1) analyze the market position of decentralized finance 
        technologies with respect to digital assets; and
            (2) submit to the Committee on Banking, Housing, and Urban 
        Affairs and the Committee on Agriculture, Nutrition, and 
        Forestry of the Senate and the Committee on Financial Services 
        and the Committee on Agriculture of the House of 
        Representatives a report on--
                    (A) current development and use of decentralized 
                finance protocols in the United States and other 
                countries;
                    (B) opportunities, benefits, and challenges 
                relating to decentralized finance protocols and self-
                custody of digital assets;
                    (C) a comparison of operational friction, fees, 
                liquidity and trading opportunities in decentralized 
                finance protocols, digital asset markets, and 
                traditional markets;
                    (D) transparency, prevention of manipulation, and 
                customer protection;
                    (E) cybersecurity and resiliency; and
                    (F) ensuring the accuracy of information regarding 
                the underlying smart contracts of a decentralized 
                finance protocol and the transactions facilitated by 
                such contracts, as the information appears on a website 
                or other similar means relating to the protocol.

SEC. 806. ANALYSIS OF ENERGY CONSUMPTION IN DIGITAL ASSET MARKETS.

    (a) In General.--Each year, the Federal Energy Regulatory 
Commission, in consultation with the Commodity Futures Trading 
Commission and Securities and Exchange Commission, shall analyze the 
following topics with respect to digital asset markets:
            (1) Energy consumption for mining and staking of digital 
        asset transactions.
            (2) The effect of energy consumption described in paragraph 
        (1) on national, regional, and local energy prices.
            (3) The effects of mining and staking of digital asset 
        transactions on baseload power levels.
            (4) The use of renewable energy sources, including use of 
        nonrenewable sources that would otherwise be wasted, and a 
        comparison of digital asset market energy consumption with the 
        financial services industry and economy as a whole.
            (5) The sources and reliability of the data used under this 
        subsection.
            (6) A process for regulated entities to make information 
        publicly available regarding energy consumption, including 
        sources of energy and amount, and, if appropriate, 
        recommendations to Congress to establish such a process.
    (b) Report.--Not later than December 31 of each year, the Federal 
Energy Regulatory Commission shall submit to the Committee on Energy 
and Natural Resources and the Committee on Environment and Public Works 
of the Senate and the Committee on Energy and Commerce and the 
Committee on Natural Resources of the House of Representatives a report 
containing the analysis required by subsection (a).

SEC. 807. ANALYSIS OF SELF-REGULATION AND REGISTERED DIGITAL ASSET 
              ASSOCIATIONS.

    (a) In General.--Not later than 180 days after the date of 
enactment of this Act, the Commodity Futures Trading Commission and 
Securities and Exchange Commission, in consultation with digital asset 
intermediaries, as defined in section 9801 of title 31, United States 
Code, as added by section 101 of this Act, and standard-setting 
associations representing the digital asset industry, shall conduct a 
study and submit to the Committee on Banking, Housing, and Urban 
Affairs and the Committee on Agriculture, Nutrition, and Forestry of 
the Senate and the Committee on Financial Services and the Committee on 
Agriculture of the House of Representatives a report setting forth 
principles for self-regulation for digital asset markets and a proposal 
for the establishment of registered digital asset associations for 
digital asset markets based on delegated authority from the Commodity 
Futures Trading Commission and Securities and Exchange Commission to 
facilitate innovative, efficient, and orderly markets for digital 
assets in accordance with this Act, and the amendments made by this 
Act, including--
            (1) standard setting, corporate transparency requirements, 
        and rulemaking relating to digital asset market conduct;
            (2) regular consultation between the Commodity Futures 
        Trading Commission and Securities and Exchange Commission with 
        respect to rules governing digital asset market conduct and the 
        governance of registered digital asset associations;
            (3) appropriate investigatory and disciplinary powers of 
        registered digital asset associations and registered digital 
        asset exchanges, respectively;
            (4) the authority of digital asset intermediaries to 
        conduct activities relating to traditional assets;
            (5) consumer education and financial literacy;
            (6) professional accreditation and education;
            (7) market surveillance and oversight, including use of 
        technology to facilitate shared trade practices and market 
        surveillance;
            (8) risk-based examination authority;
            (9) dispute resolution and arbitration;
            (10) membership of registered digital asset association 
        members in other self-regulatory organizations and mutual 
        recognition and acceptance of rules and examination reports 
        amongst self-regulatory organizations;
            (11) voluntary and compulsory membership structures;
            (12) the initial determination of the legal classification 
        of a digital asset by a registered digital asset association, 
        subject to oversight by the Commodity Futures Trading 
        Commission and Securities and Exchange Commission; and
            (13) the funding of registered digital asset associations 
        based on fees.
    (b) Interim Rule.--Not later than August 1, 2022, the Commodity 
Futures Trading Commission and Securities and Exchange Commission shall 
jointly adopt an interim final rule specifying the scope of the study 
under subsection (a), including topics of discussion and questions for 
digital asset intermediaries and associations representing the digital 
asset industry, and setting forth not fewer than 3 public meetings for 
staff of the Commodity Futures Trading Commission and the Securities 
and Exchange Commission to receive public comment. The interim final 
rule shall establish a comment period of not less than 120 days prior 
to publication of the report under subsection (a) and contain draft 
legislative text for the creation of registered digital asset 
associations by Congress.

SEC. 808. CYBERSECURITY STANDARDS FOR DIGITAL ASSET INTERMEDIARIES.

    (a) Definition.--In this section, the term ``digital asset 
intermediary'' has the meaning given the term in section 9801 of title 
31, United States Code, as added by section 101 of this Act.
    (b) Requirement.--Not later than 18 months after the date of 
enactment of this Act, the Commodity Futures Trading Commission and the 
Securities and Exchange Commission, in consultation with the Secretary 
of the Treasury and the Director of the National Institute of Standards 
and Technology, shall develop comprehensive, principles-based guidance 
relating to cybersecurity for digital asset intermediaries that account 
for, with respect to such a digital asset intermediary--
            (1) the internal governance, and organizational culture, of 
        the cybersecurity program of the digital asset intermediary;
            (2) security operations of the digital asset intermediary, 
        including threat identification, incident response, and 
        mitigation;
            (3) risk identification and measurement by the digital 
        asset intermediary;
            (4) the mitigation of risk by the digital asset 
        intermediary, including policies of the digital asset 
        intermediary, controls implemented by the digital asset 
        intermediary, change management with respect to the digital 
        asset intermediary, and the supply chain integrity of the 
        digital asset intermediary;
            (5) assurance provided by, and testing conducted by, the 
        digital asset intermediary, including penetration testing and 
        independent audits so conducted; and
            (6) the potential for digital asset intermediaries to be 
        used to facilitate illicit activities, including sanctions 
        avoidance.

SEC. 809. ADVISORY COMMITTEE ON FINANCIAL INNOVATION.

    (a) Establishment.--There is established the Advisory Committee on 
Financial Innovation (in this section referred to as the 
``Committee'').
    (b) Membership.--
            (1) Composition.--The Committee shall be composed of 10 
        members, as follows:
                    (A) 2 members appointed by the President from the 
                financial technology industry.
                    (B) 4 members appointed by the President with 
                specializations in consumer protection, consumer 
                education, financial literacy, or financial inclusion.
                    (C) A commissioner from the Securities and Exchange 
                Commission, as designated by the Chair of the 
                Commission.
                    (D) A commissioner from the Commodity Futures 
                Trading Commission, as designated by the Chair of the 
                Commission.
                    (E) A member of the Board of Governors of the 
                Federal Reserve System, as designated by the Chair of 
                the Board.
                    (F) A State financial regulator, as jointly 
                designated by the National Association of State 
                Securities Administrators and the Conference of State 
                Bank Supervisors.
            (2) Political affiliation.--Not more than 4 of the members 
        of the Committee shall be from the same political party.
            (3) Appointment date.--The appointments of the members of 
        the Committee shall be made not later than 60 days after the 
        date of enactment of this Act.
            (4) Period of appointment; vacancies.--
                    (A) In general.--A member of the Committee shall be 
                appointed for a term of 4 years.
                    (B) Vacancies.--A vacancy in the Committee--
                            (i) shall not affect the powers of the 
                        Committee; and
                            (ii) shall be filled in the same manner as 
                        the original appointment.
            (5) Meetings.--
                    (A) Initial meeting.--Not later than 60 days after 
                the date on which all members of the Committee have 
                been appointed, the Committee shall hold its first 
                meeting.
                    (B) Frequency.--The Committee shall meet at the 
                call of the Chair.
                    (C) Quorum.--A majority of the members of the 
                Committee shall constitute a quorum, but a lesser 
                number of members may hold hearings.
            (6) Chairperson.--The members described in subparagraphs 
        (C) and (D) of paragraph (1) shall alternate, on a yearly 
        basis, as Chairperson of the Committee, with the member 
        described in such subparagraph (D) serving as the Chair for the 
        1-year period following establishment of the Committee.
    (c) Duties.--
            (1) Matters studied.--The matters studied by the Committee 
        shall include--
                    (A) digital assets;
                    (B) consumer education and financial literacy;
                    (C) market structure in the securities and 
                commodities markets;
                    (D) banking, payments and settlement;
                    (E) consumer credit;
                    (F) financial inclusion, including reducing the 
                cost of financial services for all people of the United 
                States and promoting access to those services;
                    (G) efficiency in the financial system;
                    (H) reduction of systemic risk;
                    (I) competition in financial services; and
                    (J) the State-Federal partnership in financial 
                services regulation.
            (2) Report.--On an annual basis, or as otherwise determined 
        necessary by the Chair of the Committee, the Committee shall 
        report to the President and to Congress on, and provide 
        recommendations for legislation, regulation, and supervision 
        relating to innovation in, the matters studied under paragraph 
        (1).
    (d) Powers.--
            (1) Hearings.--The Committee shall hold not less than 2 
        hearings per calendar year to hear from interested parties and 
        to discuss the work of the Committee.
            (2) Information from federal agencies.--
                    (A) In general.--The Committee may secure directly 
                from a Federal department or agency such information as 
                the Committee considers necessary to carry out this 
                section.
                    (B) Furnishing information.--On request of the 
                Chair of the Committee, the head of the department or 
                agency shall furnish the information to the Committee.
            (3) Postal services.--The Committee may use the United 
        States mails in the same manner and under the same conditions 
        as other departments and agencies of the Federal Government.
    (e) Compensation.--
            (1) In general.--All members of the Committee shall serve 
        without compensation in addition to that received for their 
        services as officers or employees of the United States, and all 
        other members of the Committee shall serve without 
        compensation.
            (2) Travel expenses.--Each member of the Committee may be 
        allowed travel expenses, including per diem in lieu of 
        subsistence, in accordance with sections 5702 and 5703 of title 
        5, United States Code, while away from their homes or regular 
        places of business in performance of services for the Council.
    (f) Staff.--
            (1) In general.--The Chair of the Committee may, without 
        regard to the civil service laws (including regulations), 
        appoint and terminate an executive director and such other 
        additional personnel as may be necessary to enable the 
        Committee to perform its duties, except that the employment of 
        an executive director shall be subject to confirmation by the 
        Committee.
            (2) Compensation.--The Chair of the Committee may fix the 
        compensation of the executive director and other personnel 
        without regard to chapter 51 and subchapter III of chapter 53 
        of title 5, United States Code, relating to classification of 
        positions and General Schedule pay rates, except that the rate 
        of pay for the executive director and other personnel may not 
        exceed the rate payable for level V of the Executive Schedule 
        under section 5316 of that title.
    (g) Detail of Government Employees.--A Federal Government employee 
may be detailed to the Committee without reimbursement, and such detail 
shall be without interruption or loss of civil service status or 
privilege.
    (h) Procurement of Temporary and Intermittent Services.--The Chair 
of the Committee may procure temporary and intermittent services under 
section 3109(b) of title 5, United States Code, at rates for 
individuals that do not exceed the daily equivalent of the annual rate 
of basic pay prescribed for level V of the Executive Schedule under 
section 5316 of that title.
    (i) Termination.--Section 14 of the Federal Advisory Committee Act 
(5 U.S.C. App.) shall not apply to the Committee.
    (j) Authorization of Appropriations.--There is authorized to be 
appropriated to the Committee to carry out this section $2,000,000 for 
fiscal year 2023, to remain available through fiscal year 2024.
                                 <all>