Digital Commodities Consumer Protection Act of 2022
Bill: S.4760 | Sponsor: Sen. Stabenow, Debbie (D-MI)
Policy area: Finance and Financial Sector

Summary:
Digital Commodities Consumer Protection Act of 2022
This bill grants exclusive jurisdiction to the Commodity Futures Trading Commission over activity involving digital commodities as specified by the bill.
The bill defines digital commodities as fungible digital forms of personal property that can be transferred person-to-person without an intermediary. Excluded from this definition are securities, interests in physical commodities, and U.S.-backed digital currencies. The commission does not have jurisdiction over digital commodities used solely for the purchase or sale of a good or service.
Digital commodity platforms (including brokers, custodians, dealers, and trading facilities) must register with the commission and comply with risk management and good governance procedures. The bill also sets forth recordkeeping requirements, conflict of interest standards, and other consumer protections.

To amend the Commodity Exchange Act to provide the Commodity Futures 
 Trading Commission jurisdiction to oversee the spot digital commodity 
                    market, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Digital Commodities Consumer 
Protection Act of 2022''.

SEC. 2. DEFINITIONS.

    (a) In General.--Section 1a of the Commodity Exchange Act (7 U.S.C. 
1a) is amended--
            (1) by redesignating paragraphs (3) through (15) and 
        paragraphs (16) through (51) as paragraphs (5) through (17) and 
        paragraphs (25) through (60), respectively;
            (2) by inserting after paragraph (2) the following:
            ``(3) Associated person of a digital commodity broker.--
                    ``(A) In general.--The term `associated person of a 
                digital commodity broker' means a person who is 
                associated with a digital commodity broker as a 
                partner, officer, employee, or agent (or any person 
                occupying a similar status or performing similar 
                functions) in any capacity that involves--
                            ``(i) the solicitation or acceptance of a 
                        digital commodity trade; or
                            ``(ii) the supervision of any person 
                        engaged in the solicitation or acceptance of a 
                        digital commodity trade.
                    ``(B) Exclusion.--The term `associated person of a 
                digital commodity broker' does not include any person 
                associated with a digital commodity broker the 
                functions of which are solely clerical or ministerial.
            ``(4) Associated person of a digital commodity dealer.--
                    ``(A) In general.--The term `associated person of a 
                digital commodity dealer' means a person who is 
                associated with a digital commodity dealer as a 
                partner, officer, employee, or agent (or any person 
                occupying a similar status or performing similar 
                functions) in any capacity that involves--
                            ``(i) the solicitation or acceptance of a 
                        digital commodity trade; or
                            ``(ii) the supervision of any person 
                        engaged in the solicitation or acceptance of a 
                        digital commodity trade.
                    ``(B) Exclusion.--The term `associated person of a 
                digital commodity dealer' does not include any person 
                associated with a digital commodity dealer the 
                functions of which are solely clerical or 
                ministerial.'';
            (3) in paragraph (11) (as so redesignated), by striking 
        ``and frozen concentrated orange juice'' and inserting ``frozen 
        concentrated orange juice, and digital commodities,'';
            (4) in paragraph (12)(A) (as so redesignated)--
                    (A) by redesignating clauses (iii) and (iv) as 
                clauses (iv) and (v), respectively; and
                    (B) by inserting after clause (ii) the following:
                            ``(iii) digital commodity;'';
            (5) in paragraph (13)(A)(i) (as so redesignated)--
                    (A) by redesignating subclauses (III) and (IV) as 
                subclauses (IV) and (V), respectively; and
                    (B) by inserting after subclause (II) the 
                following:
                                    ``(III) digital commodity;'';
            (6) in paragraph (14)(A)(i) (as so redesignated)--
                    (A) in subclause (II), by adding a semicolon at the 
                end;
                    (B) by redesignating subclauses (III) and (IV) as 
                subclauses (IV) and (V), respectively; and
                    (C) by inserting after subclause (II) the 
                following:
                                    ``(III) a digital commodity;'';
            (7) by inserting after paragraph (17) (as so redesignated) 
        the following:
            ``(18) Digital commodity.--
                    ``(A) In general.--The term `digital commodity' 
                means a fungible digital form of personal property that 
                can be possessed and transferred person-to-person 
                without necessary reliance on an intermediary.
                    ``(B) Inclusions.--The term `digital commodity' 
                includes property commonly known as cryptocurrency or 
                virtual currency, such as Bitcoin and Ether.
                    ``(C) Exclusions.--The term `digital commodity' 
                does not include--
                            ``(i) an interest in a physical commodity;
                            ``(ii) a security;
                            ``(iii) a digital form of currency backed 
                        by the full faith and credit of the United 
                        States;
                            ``(iv) except as provided in subparagraph 
                        (D), an instrument regulated by the Commission 
                        pursuant to any provision of this Act other 
                        than section 2(c)(2)(F); or
                            ``(v) any other instrument that the 
                        Commission determines not to be a digital 
                        commodity.
                    ``(D) Exception.--The exclusion described in 
                subparagraph (C)(iv) shall not apply to a commodity 
                transaction that is subject only to Commission 
                antimanipulation, antifraud, or false reporting 
                authority.
            ``(19) Digital commodity broker.--
                    ``(A) In general.--The term `digital commodity 
                broker' means a person that is engaged, as an 
                identifiable business, in--
                            ``(i) soliciting or accepting orders on 
                        behalf of another person for a digital 
                        commodity trade;
                            ``(ii) accepting digital commodities from 
                        another person for the purpose of entering into 
                        digital commodity trades;
                            ``(iii) arranging digital commodity trades 
                        on behalf of another person; or
                            ``(iv) a similar activity, as determined by 
                        the Commission.
                    ``(B) Exclusion.--The term `digital commodity 
                broker' does not include a person solely because that 
                person validates digital commodity transactions.
            ``(20) Digital commodity custodian.--
                    ``(A) In general.--The term `digital commodity 
                custodian' means a person that, as an identifiable 
                business, maintains possession, custody, or control 
                over digital commodities on behalf of another person.
                    ``(B) Exclusions.--The term `digital commodity 
                custodian' does not include--
                            ``(i) an insured depository institution (as 
                        defined in section 3 of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813)); or
                            ``(ii) an insured credit union (as defined 
                        in section 101 of the Federal Credit Union Act 
                        (12 U.S.C. 1752)).
            ``(21) Digital commodity dealer.--
                    ``(A) In general.--The term `digital commodity 
                dealer' means a person that--
                            ``(i) has an identifiable business of 
                        dealing in a digital commodity as principal for 
                        its own account;
                            ``(ii) makes a market in a digital 
                        commodity;
                            ``(iii) holds itself out as a dealer in a 
                        digital commodity;
                            ``(iv) has as an identifiable business of 
                        buying or selling digital commodities for 
                        conversion into other digital commodities, 
                        currency, or other consideration;
                            ``(v) has as an identifiable business of 
                        accepting digital commodities from another 
                        person (referred to in this clause as a 
                        `depositor') with an obligation to return the 
                        digital commodities, consideration linked to 
                        the digital commodities, or both to the 
                        depositor; or
                            ``(vi) engages in a similar activity, as 
                        determined by the Commission.
                    ``(B) Exclusion.--The term `digital commodity 
                dealer' does not include a person solely because that 
                person validates digital commodity transactions.
            ``(22) Digital commodity platform.--
                    ``(A) In general.--The term `digital commodity 
                platform' means a person that is 1 or more of the 
                following:
                            ``(i) A digital commodity broker.
                            ``(ii) A digital commodity custodian.
                            ``(iii) A digital commodity dealer.
                            ``(iv) A digital commodity trading 
                        facility.
                    ``(B) Category.--The term `category', with respect 
                to a digital commodity platform, means 1 or more 
                categories described in clauses (i) through (iv) of 
                subparagraph (A) of that digital commodity platform.
            ``(23) Digital commodity trade.--
                    ``(A) In general.--The term `digital commodity 
                trade' means a purchase or sale of a digital commodity 
                in exchange for--
                            ``(i) another digital commodity; or
                            ``(ii) any other consideration.
                    ``(B) Inclusions.--The term `digital commodity 
                trade' includes--
                            ``(i) an offer to enter into a purchase or 
                        sale described in subparagraph (A); and
                            ``(ii) a loan of a digital commodity, an 
                        offer to enter into a loan of a digital 
                        commodity, or a similar activity, as determined 
                        by the Commission.
                    ``(C) Exclusion.--Except as provided in 
                subparagraph (D), the term `digital commodity trade' 
                excludes a transaction regulated by the Commission 
                pursuant to any provision of this Act except section 
                2(c)(2)(F).
                    ``(D) Exception.--The exclusion described in 
                subparagraph (C) shall not apply to a commodity 
                transaction that is subject only to Commission 
                antimanipulation, antifraud, or false reporting 
                authority.
            ``(24) Digital commodity trading facility.--
                    ``(A) In general.--The term `digital commodity 
                trading facility' means a trading facility that 
                facilitates the execution or trading of digital 
                commodity trades between persons.
                    ``(B) Exclusion.--The term `digital commodity 
                trading facility' does not include a person solely 
                because that person validates digital commodity 
                transactions.'';
            (8) in paragraph (43) (as so redesignated)--
                    (A) in the paragraph heading, by striking ``; 
                member of a derivatives transaction execution 
                facility'';
                    (B) in the matter preceding subparagraph (A), by 
                striking ``entity or derivatives transaction execution 
                facility,'' and inserting ``entity,'';
                    (C) in subparagraph (A), by striking ``entity'' and 
                all that follows through the semicolon and inserting 
                ``entity;''; and
                    (D) in subparagraph (B), by striking ``entity'' and 
                all that follows through the period at the end and 
                inserting ``entity.''; and
            (9) in paragraph (49) (as so redesignated)--
                    (A) by redesignating subparagraphs (E) and (F) as 
                subparagraphs (F) and (G), respectively; and
                    (B) by inserting after subparagraph (D) the 
                following:
                    ``(E) a digital commodity trading facility 
                registered under section 5i;''.
    (b) Conforming Amendments.--
            (1) Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) 
        is amended--
                    (A) in paragraph (26)(A) (as redesignated by 
                subsection (a)(1)), in the matter preceding clause (i), 
                by striking ``(18)(A)'' and inserting ``(27)(A)''; and
                    (B) in paragraph (27)(A)(vii)(III)(aa) (as 
                redesignated by subsection (a)(1)), by striking 
                ``(17)(A)'' and inserting ``(26)(A)''.
            (2) Section 4(c)(1)(A)(i)(I) of the Commodity Exchange Act 
        (7 U.S.C. 6(c)(1)(A)(i)(I)) is amended by striking ``paragraphs 
        (2), (3), (4), (5), and (7), paragraph (18)(A)(vii)(III), 
        paragraphs (23), (24), (31), (32), (38), (39), (41), (42), 
        (46), (47), (48), and (49) of section 1a'' and inserting 
        ``paragraphs (2), (5), (6), (7), (9), (27)(A)(vii)(III), (32), 
        (33), (40), (41), (47), (48), (50), (51), (55), (56), (57), and 
        (58) of section 1a''.
            (3) Section 4q(a)(1) of the Commodity Exchange Act (7 
        U.S.C. 6q(a)(1)) is amended by striking ``1a(9)'' and inserting 
        ``1a(11)''.
            (4) Section 4s of the Commodity Exchange Act (7 U.S.C. 6s) 
        is amended--
                    (A) in subsection (f)(1)(D), by striking 
                ``1a(47)(A)(v)'' and inserting ``1a(56)(A)(v)''; and
                    (B) in subsection (h)(5)(A)(i), in the matter 
                preceding subclause (I), by striking ``1a(18)'' and 
                inserting ``1a(27)(A)''.
            (5) Section 4t(b)(1)(C) of the Commodity Exchange Act (7 
        U.S.C. 6t(b)(1)(C)) is amended by striking ``1a(47)(A)(v)),'' 
        and inserting ``1a(56)(A)(v)),''.
            (6) Section 5 of the Commodity Exchange Act (7 U.S.C. 7) is 
        amended--
                    (A) in subsection (d)(23), by striking 
                ``1a(47)(A)(v)'' and inserting ``1a(56)(A)(v)''; and
                    (B) in subsection (e)(1), by striking ``1a(9)'' and 
                inserting ``1a(11)''.
            (7) Section 5b(k)(3)(A) of the Commodity Exchange Act (7 
        U.S.C. 7a-1(k)(3)(A)) is amended by striking ``1a(47)(A)(v))'' 
        and inserting ``1a(56)(A)(v))''.
            (8) Section 5c(c)(4)(B) of the Commodity Exchange Act (7 
        U.S.C. 7a-2(c)(4)(B)) is amended by striking ``1a(10)'' and 
        inserting ``1a(11)''.
            (9) Section 5h(f)(10)(A)(iii) of the Commodity Exchange Act 
        (7 U.S.C. 7b-3(f)(10)(A)(iii)) is amended by striking 
        ``1a(47)(A)(v)'' and inserting ``1a(56)(A)(v)''.
            (10) Section 21(f)(4)(C) of the Commodity Exchange Act (7 
        U.S.C. 24a(f)(4)(C)) is amended by striking ``1a(48)'' and 
        inserting ``1a(57)''.
            (11) Section 403 of the Legal Certainty for Bank Products 
        Act of 2000 (7 U.S.C. 27a) is amended--
                    (A) in subsection (a)(2), by striking 
                ``1a(47)(A)(v)'' and inserting ``1a(56)(A)(v)''; and
                    (B) in subsection (b)(1), by striking ``1a(47)'' 
                and inserting ``1a''.
            (12) Section 5(e) of the Securities Act of 1933 (15 U.S.C. 
        77e(e)) is amended by striking ``section 1a(18) of the 
        Commodity Exchange Act (7 U.S.C. 1a(18))'' and inserting 
        ``section 1a of the Commodity Exchange Act (7 U.S.C. 1a)''.
            (13) Section 3C(g)(3)(A)(v) of the Securities Exchange Act 
        of 1934 (15 U.S.C. 78c-3(g)(3)(A)(v)) is amended by striking 
        ``section 1a(10) of the Commodity Exchange Act;'' and inserting 
        ``section 1a of the Commodity Exchange Act (7 U.S.C. 1a);''.
            (14) Section 6(g)(5)(B)(i) of the Securities Exchange Act 
        of 1934 (15 U.S.C. 78f(g)(5)(B)(i)) is amended--
                    (A) in subclause (I), by striking ``section 
                1a(18)(B)(ii) of the Commodity Exchange Act'' and 
                inserting ``subparagraph (B)(ii) of section 1a(27) of 
                the Commodity Exchange Act (7 U.S.C. 1a(27))''; and
                    (B) in subclause (II), by striking ``such section 
                1a(18))'' and inserting ``that section)''.
            (15) Section 712(a)(8) of the Dodd-Frank Wall Street Reform 
        and Consumer Protection Act (15 U.S.C. 8302(a)(8)) is amended 
        by striking ``section 1a(47)(D) of the Commodity Exchange Act 
        (7 U.S.C. 1a(47)(D))'' and inserting ``section 1a(56)(D) of the 
        Commodity Exchange Act (7 U.S.C. 1a(56)(D))''.
            (16) Section 752(a) of the Dodd-Frank Wall Street Reform 
        and Consumer Protection Act (15 U.S.C. 8325(a)) is amended by 
        striking ``section 1a(39) of the Commodity Exchange Act),'' and 
        inserting ``section 1a of the Commodity Exchange Act (7 U.S.C. 
        1a)),''.

SEC. 3. COMMISSION JURISDICTION OVER DIGITAL COMMODITY TRADES.

    Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended--
            (1) in subsection (a)(1)(A), in the first sentence, by 
        striking ``section 19 of this Act'' and inserting ``subsection 
        (c)(2)(F) or section 19''; and
            (2) in subsection (c)(2), by adding at the end the 
        following:
                    ``(F) Commission jurisdiction over digital 
                commodity trades.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), this Act applies to, and the 
                        Commission shall have exclusive jurisdiction 
                        over, any account, agreement, contract, or 
                        transaction involving a digital commodity 
                        trade.
                            ``(ii) Exception.--Nothing in this Act 
                        applies to, and the Commission shall not have 
                        jurisdiction over, any digital commodity 
                        transaction by a merchant or consumer that uses 
                        a digital commodity solely for the purchase or 
                        sale of a good or service.
                            ``(iii) Prohibition on certain trading 
                        practices.--Sections 4b, 4c, and 6(c) shall 
                        apply to any digital commodity trade as if the 
                        digital commodity trade were a contract of sale 
                        of a commodity for future delivery.''.

SEC. 4. DIGITAL COMMODITY PLATFORMS.

    The Commodity Exchange Act is amended by inserting after section 5h 
(7 U.S.C. 7b-3) the following:

``SEC. 5I. DIGITAL COMMODITY PLATFORMS.

    ``(a) Registration.--
            ``(1) Requirement.--It shall be unlawful for any person to 
        act as any category of digital commodity platform unless the 
        person is registered under this section as that category of 
        digital commodity platform.
            ``(2) Applications.--A person desiring to register as any 
        category of digital commodity platform shall submit to the 
        Commission an application in such form and containing such 
        information as the Commission may require for the purpose of 
        determining whether the applicant is in compliance with 
        subsection (b) and the other requirements of this Act.
            ``(3) Multiple registrations.--As appropriate to further 
        the purposes of this Act and avoid duplicative or unnecessary 
        requirements, and taking into consideration potential conflicts 
        of interest or other risks, the Commission may prescribe rules 
        or regulations permitting, or may otherwise authorize--
                    ``(A) registration by a person in more than 1 
                category of digital commodity platform;
                    ``(B) a registered entity, a swap dealer, or a 
                futures commission merchant registered under this Act 
                to register under this section in 1 or more categories 
                of digital commodity platform; and
                    ``(C) exemptions or additional requirements 
                applicable to persons with multiple registrations under 
                this Act.
    ``(b) Core Principles for Digital Commodity Platforms.--
            ``(1) Compliance with core principles.--
                    ``(A) In general.--To be registered, and maintain 
                registration, as a digital commodity platform, the 
                digital commodity platform shall comply with--
                            ``(i) the core principles described in this 
                        subsection; and
                            ``(ii) any requirement that the Commission 
                        may impose by rule or regulation.
                    ``(B) Reasonable discretion of digital commodity 
                platform.--Unless otherwise determined by the 
                Commission by rule or regulation, a digital commodity 
                platform described in subparagraph (A) shall have 
                reasonable discretion in establishing the manner in 
                which the digital commodity platform complies with the 
                core principles described in this subsection.
            ``(2) Core principles applicable to digital commodity 
        trading facilities.--
                    ``(A) Compliance with rules.--A digital commodity 
                trading facility shall--
                            ``(i) establish and enforce compliance with 
                        any rule of the digital commodity trading 
                        facility, including--
                                    ``(I) the terms and conditions of 
                                the transactions in digital commodities 
                                traded or processed on or through the 
                                digital commodity trading facility; and
                                    ``(II) any limitation on access to 
                                the digital commodity trading facility;
                            ``(ii) establish and enforce trading, trade 
                        processing, and participation rules that will 
                        deter abuses and have the capacity to detect, 
                        investigate, and enforce 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
                            ``(iii) establish rules governing the 
                        operation of the digital commodity trading 
                        facility.
                    ``(B) Digital commodity transactions not readily 
                susceptible to manipulation.--A digital commodity 
                trading facility shall permit trading only in 
                transactions in digital commodities that are not 
                readily susceptible to manipulation.
                    ``(C) Monitoring of trading and trade processing.--
                            ``(i) Markets and mechanisms.--
                                    ``(I) In general.--A digital 
                                commodity trading facility shall 
                                provide a competitive, open, and 
                                efficient market and mechanism for 
                                executing transactions that protects 
                                the price discovery process of trading 
                                on the digital commodity trading 
                                facility.
                                    ``(II) Centralized market.--A 
                                digital commodity trading facility 
                                shall provide a centralized market for 
                                executing transactions.
                            ``(ii) Protection of markets and market 
                        participants.--A digital commodity trading 
                        facility shall establish and enforce 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 digital 
                                commodity trading facility.
                            ``(iii) Procedures and monitoring.--A 
                        digital commodity trading facility shall--
                                    ``(I) establish and enforce rules 
                                or terms and conditions defining, or 
                                specifications detailing--
                                            ``(aa) trading procedures 
                                        to be used in entering and 
                                        executing orders traded on or 
                                        through the facilities of the 
                                        digital commodity trading 
                                        facility; and
                                            ``(bb) procedures for trade 
                                        processing of digital 
                                        commodities on or through the 
                                        facilities of the digital 
                                        commodity trading facility; and
                                    ``(II) monitor trading in digital 
                                commodities to prevent manipulation, 
                                price distortion, and disruptions of 
                                the delivery or settlement process 
                                through surveillance, compliance, and 
                                disciplinary practices and procedures, 
                                including investigations, sanctions, 
                                and methods for conducting real-time 
                                monitoring of trading and comprehensive 
                                and accurate trade reconstructions.
                    ``(D) Ability to obtain information.--A digital 
                commodity trading facility shall--
                            ``(i) establish and enforce rules that will 
                        allow the digital commodity trading facility to 
                        obtain any necessary information to perform any 
                        of the functions described in this section;
                            ``(ii) provide the information to the 
                        Commission on request; and
                            ``(iii) have the capacity to carry out such 
                        international information-sharing agreements as 
                        the Commission may require.
                    ``(E) Financial integrity of transactions.--A 
                digital commodity trading facility shall establish and 
                enforce rules and procedures for ensuring the financial 
                integrity of digital commodity trades entered on or 
                through the facilities of the digital commodity trading 
                facility.
                    ``(F) Emergency authority.--A digital commodity 
                trading facility shall adopt rules to provide for the 
                exercise of emergency authority, in consultation or 
                cooperation with the Commission, as is necessary and 
                appropriate, including the authority to liquidate or 
                transfer open positions in any digital commodity or to 
                suspend or curtail trading in a digital commodity.
                    ``(G) Timely publication of trading information.--
                            ``(i) In general.--A digital commodity 
                        trading facility shall make public timely 
                        information on price, trading volume, and other 
                        trading data on digital commodities to the 
                        extent prescribed by the Commission.
                            ``(ii) Capacity of digital commodity 
                        trading facility.--A digital commodity trading 
                        facility shall be required to have the capacity 
                        to electronically capture and transmit trade 
                        information with respect to transactions 
                        executed on the digital commodity trading 
                        facility.
                    ``(H) Availability of general information.--A 
                digital commodity trading facility shall make available 
                to market authorities, market participants, and the 
                public accurate information concerning--
                            ``(i) the terms and conditions of the 
                        contracts for transactions in digital 
                        commodities;
                            ``(ii) the rules and mechanisms for 
                        executing digital commodity trades on or 
                        through the facilities of the digital commodity 
                        trading facility; and
                            ``(iii) the rules and specifications 
                        describing the operation of the electronic 
                        matching platform or trade execution facility 
                        of the digital commodity trading facility.
                    ``(I) Disciplinary procedures.--A digital commodity 
                trading facility shall establish and enforce--
                            ``(i) disciplinary procedures that 
                        authorize the digital commodity trading 
                        facility to discipline, suspend, or expel 
                        market participants that violate the rules of 
                        the digital commodity trading facility; or
                            ``(ii) similar methods for performing the 
                        functions described in clause (i), including 
                        delegation to third parties.
                    ``(J) Dispute resolution.--A digital commodity 
                trading facility shall establish and enforce rules 
                regarding, and provide facilities for alternative 
                dispute resolution, as appropriate, for, market 
                participants and market intermediaries.
            ``(3) Core principles applicable to digital commodity 
        dealers and digital commodity brokers.--
                    ``(A) Execution.--A digital commodity dealer or 
                digital commodity broker--
                            ``(i) shall establish prices fairly and 
                        objectively;
                            ``(ii) shall disclose the basis for those 
                        prices; and
                            ``(iii) shall not disrupt market 
                        functioning or hinder the price discovery 
                        process.
                    ``(B) Daily trading records.--
                            ``(i) In general.--A digital commodity 
                        dealer or digital commodity broker shall keep 
                        full, complete, and systematic records 
                        (including all pertinent data and memoranda) of 
                        all transactions relating to its business of 
                        dealing or brokerage in digital commodity 
                        transactions.
                            ``(ii) Included communications.--A digital 
                        commodity dealer or digital commodity broker 
                        shall keep all oral and written communications 
                        provided or received concerning quotes, 
                        solicitations, bids, offers, instructions, 
                        trading, and prices that lead to the execution 
                        of a transaction in a digital commodity.
                    ``(C) Business conduct standards.--A digital 
                commodity dealer or digital commodity broker shall 
                conform with such business conduct standards as may be 
                prescribed by the Commission by rule or regulation that 
                relate to--
                            ``(i) fraud, manipulation, and other 
                        abusive practices involving digital commodity 
                        trades (including digital commodity trades that 
                        are offered but not entered into);
                            ``(ii) diligent supervision of the business 
                        of the digital commodity dealer or digital 
                        commodity broker; and
                            ``(iii) such other matters as the 
                        Commission determines to be appropriate.
                    ``(D) Duties.--A digital commodity dealer or 
                digital commodity broker shall comply with the 
                following requirements:
                            ``(i) Risk management procedures.--The 
                        digital commodity dealer or digital commodity 
                        broker shall establish robust and professional 
                        risk management systems adequate for managing 
                        the day-to-day business of the digital 
                        commodity dealer or digital commodity broker.
                            ``(ii) Disclosure of general information.--
                        The digital commodity dealer or digital 
                        commodity broker shall disclose to the 
                        Commission, as applicable, information 
                        concerning--
                                    ``(I) terms and conditions of its 
                                digital commodity trades;
                                    ``(II) trading operations, 
                                mechanisms, and practices;
                                    ``(III) financial integrity 
                                protections relating to transactions in 
                                digital commodity trades; and
                                    ``(IV) other information relevant 
                                to its digital commodity trades.
                    ``(E) Ability to obtain information.--A digital 
                commodity dealer or digital commodity broker shall--
                            ``(i) establish and enforce internal 
                        systems and procedures to obtain any necessary 
                        information to perform any of the functions 
                        described in this section; and
                            ``(ii) provide the information described in 
                        clause (i) to the Commission on request.
            ``(4) Core principles applicable to all digital commodity 
        platforms.--
                    ``(A) Recordkeeping and reporting.--A digital 
                commodity platform shall--
                            ``(i)(I) maintain records of all activities 
                        relating to the business of the digital 
                        commodity platform, including a complete audit 
                        trail, in a form and manner acceptable to the 
                        Commission for a period of 5 years; and
                            ``(II) keep the records described in 
                        subclause (I) open to inspection by the 
                        Commission;
                            ``(ii) provide 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) make such reports as are required 
                        by the Commission relating to the transactions 
                        and positions of the customers of the digital 
                        commodity platform.
                    ``(B) Antitrust considerations.--Unless necessary 
                or appropriate to achieve the purposes of this Act, a 
                digital commodity platform shall not--
                            ``(i) adopt any rules or take any actions 
                        that result in any unreasonable restraint of 
                        trade; or
                            ``(ii) impose any material anticompetitive 
                        burden on trading or custody.
                    ``(C) Conflicts of interest.--The Commission shall 
                require conflict of interest systems and procedures 
                that--
                            ``(i) establish structural and 
                        institutional safeguards--
                                    ``(I) to minimize conflicts of 
                                interest that might potentially bias 
                                the judgment or supervision of a 
                                digital commodity platform and 
                                contravene the core principles of fair 
                                and equitable trading and the business 
                                conduct standards described in this 
                                Act, including conflicts arising out of 
                                transactions or arrangements with 
                                affiliates (including affiliates acting 
                                as issuers, market-makers, or 
                                custodians); and
                                    ``(II) which may include, as the 
                                Commission determines to be 
                                appropriate, information partitions and 
                                the legal separation of different 
                                categories of digital commodity 
                                platforms;
                            ``(ii) establish a process for resolving 
                        conflicts of interest described in clause (i);
                            ``(iii) require disclosure by a digital 
                        commodity platform of any material incentives 
                        or conflicts of interest that the digital 
                        commodity platform is unable to resolve; and
                            ``(iv) address such other issues as the 
                        Commission determines to be appropriate.
                    ``(D) Financial resources.--
                            ``(i) In general.--A digital commodity 
                        platform shall have adequate financial, 
                        operational, and managerial resources to 
                        discharge each responsibility of the digital 
                        commodity platform.
                            ``(ii) Financial resources for margin 
                        trading.--The Commission shall require such 
                        additional financial resources as are necessary 
                        to enable a digital commodity platform to 
                        fulfill obligations of the digital commodity 
                        platform arising from margined, leveraged, or 
                        financed transactions.
                    ``(E) System safeguards.--A digital commodity 
                platform shall--
                            ``(i) establish and maintain a program of 
                        risk analysis and oversight to identify and 
                        minimize sources of operational risk (including 
                        cybersecurity risk), through the development of 
                        appropriate controls and procedures, and 
                        automated systems, that--
                                    ``(I) are reliable and secure; and
                                    ``(II) have adequate scalable 
                                capacity;
                            ``(ii) 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 
                                digital commodity platform; and
                            ``(iii) periodically conduct tests to 
                        verify that the backup resources of the digital 
                        commodity platform 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.
                    ``(F) Designation of chief compliance officer.--
                            ``(i) In general.--A digital commodity 
                        platform shall designate an individual to serve 
                        as a chief compliance officer (referred to in 
                        this paragraph as a `chief compliance 
                        officer').
                            ``(ii) Duties.--A chief compliance officer 
                        shall--
                                    ``(I) report directly to the board 
                                or to the senior officer of the digital 
                                commodity platform;
                                    ``(II) review compliance with the 
                                core principles described in this 
                                subsection;
                                    ``(III) in consultation with the 
                                board of the digital commodity 
                                platform, a body performing a function 
                                similar to that of a board, or the 
                                senior officer of the digital commodity 
                                platform, resolve any conflicts of 
                                interest that may arise;
                                    ``(IV) be responsible for 
                                establishing and administering the 
                                policies and procedures required to be 
                                established pursuant to this section;
                                    ``(V) ensure compliance with this 
                                Act and the rules and regulations 
                                issued under this Act, including rules 
                                prescribed by the Commission pursuant 
                                to this section; and
                                    ``(VI) establish procedures for the 
                                remediation of noncompliance issues 
                                found during compliance office reviews, 
                                look backs, internal or external audit 
                                findings, self-reported errors, or 
                                through validated complaints.
                            ``(iii) Requirements for procedures.--In 
                        establishing procedures under clause (ii)(VI), 
                        a chief compliance officer shall design the 
                        procedures to establish the handling, 
                        management response, remediation, retesting, 
                        and closing of noncompliance issues.
                            ``(iv) Annual reports.--
                                    ``(I) In general.--In accordance 
                                with rules prescribed by the 
                                Commission, a chief compliance officer 
                                shall annually prepare and sign a 
                                report that contains a description of--
                                            ``(aa) the compliance of 
                                        the digital commodity platform 
                                        with this Act; and
                                            ``(bb) the policies and 
                                        procedures, including the code 
                                        of ethics and conflict of 
                                        interest policies, of the 
                                        digital commodity platform.
                                    ``(II) Requirements.--A chief 
                                compliance officer shall--
                                            ``(aa) submit each report 
                                        described in subclause (I) with 
                                        the appropriate financial 
                                        report of the digital commodity 
                                        platform that is required to be 
                                        submitted to the Commission 
                                        pursuant to this section; and
                                            ``(bb) include in the 
                                        report a certification that, 
                                        under penalty of law, the 
                                        report is accurate and 
                                        complete.
                    ``(G) Governance; fitness standards.--
                            ``(i) Governance arrangements.--A digital 
                        commodity platform shall establish governance 
                        arrangements that are transparent to fulfill 
                        public interest requirements.
                            ``(ii) Fitness standards.--A digital 
                        commodity platform shall establish and enforce 
                        appropriate fitness standards for--
                                    ``(I) directors; and
                                    ``(II) any entity offering 
                                affiliated services for the digital 
                                commodity platform.
                    ``(H) Treatment of customer assets.--
                            ``(i) In general.--A digital commodity 
                        platform shall hold customer property 
                        (including digital commodities) in a manner 
                        that minimizes the risk of loss of, or 
                        unreasonable delay in access to, the customer 
                        property.
                            ``(ii) Segregation of funds.--
                                    ``(I) In general.--A digital 
                                commodity platform shall treat and deal 
                                with all customer property that is 
                                received by the digital commodity 
                                platform as belonging to the customer.
                                    ``(II) Commingling prohibited.--
                                Customer property described in 
                                subclause (I)--
                                            ``(aa) shall be separately 
                                        accounted for; and
                                            ``(bb) shall not be 
                                        commingled with the assets of 
                                        the digital commodity platform.
                            ``(iii) Exceptions.--
                                    ``(I) Use of funds.--
                                Notwithstanding clause (ii), customer 
                                property described in that clause may, 
                                for convenience, be commingled in the 
                                same account or accounts with--
                                            ``(aa) an insured 
                                        depository institution (as 
                                        defined in section 3 of the 
                                        Federal Deposit Insurance Act 
                                        (12 U.S.C. 1813));
                                            ``(bb) an insured credit 
                                        union (as defined in section 
                                        101 of the Federal Credit Union 
                                        Act (12 U.S.C. 1752)); or
                                            ``(cc) a digital commodity 
                                        platform.
                                    ``(II) Withdrawal.--Notwithstanding 
                                clause (ii), such share of the customer 
                                property described in that clause as, 
                                in the normal course of business, is 
                                necessary to margin, guarantee, secure, 
                                transfer, adjust, or settle a digital 
                                commodity transaction with a digital 
                                commodity platform, or with any 
                                customer of a digital commodity 
                                platform, may be withdrawn and applied 
                                to such purposes lawfully accruing in 
                                connection with the digital commodity 
                                transaction, including the payment of 
                                commissions, taxes, and brokerage, 
                                interest, storage, and other charges.
                                    ``(III) Commission action.--
                                Notwithstanding clause (ii)--
                                            ``(aa) the Commission may 
                                        adopt rules or regulations 
                                        permitting the lending of 
                                        digital commodities by a 
                                        digital commodity platform 
                                        holding those digital 
                                        commodities for customers, 
                                        subject to such conditions as 
                                        the Commission may prescribe to 
                                        protect customers and achieve 
                                        the purposes of this Act; and
                                            ``(bb) in accordance with 
                                        such terms and conditions as 
                                        the Commission may prescribe by 
                                        rule, regulation, or order, any 
                                        customer property described in 
                                        that clause may be commingled 
                                        and deposited in customer 
                                        accounts with any other money, 
                                        securities, or property 
                                        received by the digital 
                                        commodity platform and required 
                                        by the Commission to be 
                                        separately accounted for, 
                                        treated, and dealt with as 
                                        belonging to customers.
                            ``(iv) Permitted investments.--
                                    ``(I) In general.--Customer 
                                property described in clause (ii) in 
                                the form of money may be invested in--
                                            ``(aa) obligations of the 
                                        United States;
                                            ``(bb) obligations the 
                                        principal and interest of which 
                                        are fully guaranteed by the 
                                        United States; and
                                            ``(cc) any other investment 
                                        that the Commission may by rule 
                                        or regulation prescribe.
                                    ``(II) Rules and conditions.--
                                Investments under subclause (I) shall 
                                be made in accordance with such rules 
                                and regulations, and subject to such 
                                conditions, as the Commission may 
                                prescribe.
                            ``(v) Prohibition.--It shall be unlawful 
                        for any person, including a digital commodity 
                        platform or a depository institution, that has 
                        received any customer property for deposit in a 
                        separate account or accounts in accordance with 
                        clause (ii) to hold, dispose of, or use that 
                        customer property as belonging to the 
                        depositing digital commodity platform or any 
                        person other than the customers of the digital 
                        commodity platform.
    ``(c) Rules Governing Margined or Leveraged Trading.--The 
Commission may make, promulgate, and enforce such rules governing 
margined, leveraged, or financed digital commodity trades on digital 
commodity platforms as are reasonably necessary to protect the public 
interest and promote the orderly settlement of transactions.
    ``(d) Contract Listings, Rules, and Rule Amendments for Digital 
Commodity Trading Facilities.--
            ``(1) In general.--Subject to the requirements under this 
        subsection, a digital commodity trading facility may--
                    ``(A) list for trading a contract for a digital 
                commodity; and
                    ``(B) approve and implement a new rule or rule 
                amendment.
            ``(2) Certification from digital commodity trading 
        facility.--A digital commodity trading facility that elects to 
        carry out an activity described in subparagraph (A) or (B) of 
        paragraph (1) shall, prior to carrying out that activity, 
        provide to the Commission a written certification that the 
        contract, new rule, or rule amendment, as applicable, complies 
        with this Act (including regulations under this Act).
            ``(3) Effective date of listing, rule, and rule 
        amendment.--Subject to paragraph (4), a listing, rule, or rule 
        amendment described in paragraph (1) shall become effective on 
        the date that is--
                    ``(A) in the case of a listing of a contract that 
                has not previously been listed on any digital commodity 
                trading facility, 30 business days after the date on 
                which the Commission receives the certification (or 
                such shorter period as determined by the Commission by 
                rule or regulation); or
                    ``(B) in any other case, 10 business days after the 
                date on which the Commission receives the certification 
                (or such shorter period as determined by the Commission 
                by rule or regulation).
            ``(4) Stay of certification.--
                    ``(A) In general.--The Commission may stay a 
                certification for a listing, rule, or rule amendment 
                described in paragraph (1) by notifying the digital 
                commodity trading facility that the Commission is 
                staying the certification because there exists--
                            ``(i) a novel or complex issue that 
                        requires additional time to analyze;
                            ``(ii) an inadequate explanation by the 
                        submitting digital commodity trading facility; 
                        or
                            ``(iii) a potential inconsistency with this 
                        Act (including regulations under this Act).
                    ``(B) Duration of stay.--A stay of certification by 
                the Commission under subparagraph (A) shall be for a 
                period of not more than 90 days, beginning on the date 
                of the notification by the Commission under that 
                subparagraph.
                    ``(C) Effective date after stay.--A listing, rule, 
                or rule amendment subject to a stay under subparagraph 
                (A) shall become effective on the expiration of the 
                period described in subparagraph (B), unless the 
                Commission--
                            ``(i) withdraws the stay prior to that 
                        time; or
                            ``(ii) notifies the digital commodity 
                        trading facility during such period that the 
                        Commission objects to the proposed 
                        certification and disapproves a listing, rule, 
                        or rule amendment pursuant to paragraph (5).
                    ``(D) Public comment.--The Commission may provide a 
                public comment period of not less than 30 days, within 
                the period in which a stay is in effect under 
                subparagraph (B), whenever the Commission reviews a 
                listing, rule, or rule amendment pursuant to a 
                notification by the Commission under subparagraph (A).
            ``(5) Disapproval.--
                    ``(A) In general.--The Commission may disapprove a 
                listing, rule, or rule amendment described in paragraph 
                (1) if the Commission determines that the listing, 
                rule, or rule amendment is inconsistent with this Act 
                (including the considerations in subparagraph (B) and 
                regulations under this Act).
                    ``(B) Considerations.--In making a determination 
                described in subparagraph (A) with respect to a listing 
                for a digital commodity, the Commission may consider, 
                among other things--
                            ``(i) whether the operating structure and 
                        system of the digital commodity is secure from 
                        cybersecurity threats, including the 
                        possibility of material alterations by persons 
                        acting collectively;
                            ``(ii) whether the functionality of the 
                        digital commodity will protect holders from 
                        operational failures;
                            ``(iii) with respect to a digital commodity 
                        that purports to have a fixed value--
                                    ``(I) an identification and 
                                description of the issuer of the 
                                digital commodity;
                                    ``(II) the collateral or reserves 
                                backing the digital commodity; and
                                    ``(III) the terms by which the 
                                issuer will redeem the digital 
                                commodity; and
                            ``(iv) whether the digital commodity and 
                        the market for the digital commodity are not 
                        readily susceptible to manipulation.
            ``(6) Prior approval.--
                    ``(A) In general.--A digital commodity trading 
                facility may request that the Commission grant prior 
                approval to the listing of any new contract for a 
                digital commodity.
                    ``(B) Deadline.--If prior approval is requested 
                under subparagraph (A), the Commission shall take final 
                action on the request not later than 90 days after 
                submission of the request, unless the person submitting 
                the request agrees to an extension of the time 
                limitation established under this subparagraph.
                    ``(C) Disapproval.--Paragraphs (4) and (5) shall 
                apply to Commission action on a request under this 
                paragraph.
            ``(7) Delisting; revocation.--After the listing of a 
        contract for a digital commodity has taken effect, the 
        Commission may require the delisting of the contract or 
        disapprove the listing in accordance with paragraph (5).
            ``(8) Disclosures.--
                    ``(A) In general.--The Commission shall require a 
                digital commodity trading facility to disclose to the 
                public, on a timely basis, with respect to a listing 
                described in paragraph (1)(A)--
                            ``(i) the operating structure and system of 
                        the digital commodity; and
                            ``(ii) the trading volume and volatility of 
                        the digital commodity.
                    ``(B) Format.--The Commission shall prescribe rules 
                and regulations for the standardization and 
                simplification of disclosures under subparagraph (A) 
                and subsection (f)(1)(A), including requiring that 
                disclosures--
                            ``(i) are conspicuous;
                            ``(ii) use plain language comprehensible to 
                        customers; and
                            ``(iii) succinctly explain the information 
                        that is required to be communicated to the 
                        customer.
    ``(e) Product Listing for Digital Commodity Brokers and Digital 
Commodity Dealers.--
            ``(1) In general.--A digital commodity broker and a digital 
        commodity dealer may only trade, or arrange a trade, in a 
        contract for a digital commodity that is not readily 
        susceptible to manipulation.
            ``(2) Disclosure, listing, and certification 
        requirements.--A digital commodity broker and a digital 
        commodity dealer may only trade, or arrange for trading, in 
        digital commodities that have met the requirements of 
        subsection (d) (including the listing and disclosure 
        requirements).
    ``(f) Customer Protection.--The Commission shall adopt customer 
protection requirements that--
            ``(1) require disclosure by a digital commodity platform to 
        a customer (other than another digital commodity platform 
        registered under this section) of--
                    ``(A) information about the material risks and 
                characteristics of any applicable digital commodity 
                contracts; and
                    ``(B) any material incentives or conflicts of 
                interest that the digital commodity platform may have 
                in connection with any applicable digital commodity 
                contracts;
            ``(2) establish a duty for a digital commodity platform to 
        communicate in a fair and balanced manner based on principles 
        of fair dealing and good faith;
            ``(3) establish standards governing digital commodity 
        platform marketing and advertising, including testimonials and 
        endorsements; and
            ``(4) establish such other standards and requirements as 
        the Commission may determine are--
                    ``(A) in the public interest;
                    ``(B) appropriate for the protection of customers; 
                or
                    ``(C) otherwise in furtherance of the purposes of 
                this Act.
    ``(g) Examination and Publication of Energy Consumption in Digital 
Commodity Markets.--
            ``(1) In general.--The Commission shall examine, in 
        collaboration with other Federal regulatory agencies as the 
        Commission determines appropriate, the energy consumption and 
        sources of energy used in connection with the creation and 
        transfer of the most widely traded digital commodities.
            ``(2) Report.--Not later than 180 days after the date of 
        enactment of the Digital Commodities Consumer Protection Act of 
        2022, the Commission shall submit to the Committee on 
        Agriculture, Nutrition, and Forestry of the Senate and the 
        Committee on Agriculture of the House of Representatives a 
        report describing--
                    ``(A) an estimate of the energy consumption and 
                sources of energy used in connection with the creation 
                and transfer of the most widely traded digital 
                commodities; and
                    ``(B) the methodology used by the Commission to 
                generate the estimate described in subparagraph (A).
            ``(3) Publication.--Using the methodology described in 
        paragraph (2)(B), the Commission shall publish on the website 
        of the Commission, and periodically update on a timely basis, 
        an estimate of the energy consumption and sources of energy 
        used in connection with the creation and transfer of the most 
        widely traded digital commodities.
    ``(h) Prohibition on Fraud, Deception, and Manipulation.--It shall 
be unlawful for any digital commodity platform to engage in any act, 
practice, or course of business in connection with its business as a 
digital commodity platform that is fraudulent, deceptive, or 
manipulative.
    ``(i) Self-Regulation.--
            ``(1) In general.--A digital commodity broker, digital 
        commodity dealer, or digital commodity custodian shall be a 
        member of a registered futures association, regardless of 
        whether such person is separately registered as a digital 
        commodity trading facility.
            ``(2) Delegation of registration functions.--The Commission 
        may authorize any registered futures association to perform any 
        portion of the registration functions with respect to digital 
        commodity platforms, associated persons of digital commodity 
        brokers, and associated persons of digital commodity dealers--
                    ``(A) in accordance with rules, notwithstanding any 
                other provision of law, adopted by that registered 
                futures association and submitted to the Commission for 
                approval; and
                    ``(B) subject to the provisions of this section 
                applicable to registrations granted by the Commission.
    ``(j) Dual Registration.--A digital commodity platform registered 
under this section may also be registered with the Securities and 
Exchange Commission as an exchange, broker, or dealer (as those terms 
are defined in section 3 of the Securities Exchange Act of 1934 (15 
U.S.C. 78c)) or another trading platform.
    ``(k) Fees for Registration.--
            ``(1) In general.--The Commission shall, in accordance with 
        this subsection, assess and collect fees, which shall be used 
        to recover the annual costs of--
                    ``(A) registering digital commodity platforms;
                    ``(B) conducting oversight of digital commodity 
                trades; and
                    ``(C) carrying out education and outreach under 
                subsection (l).
            ``(2) Determination of fee rates.--In determining fee rates 
        under paragraph (1), the Commission shall consider--
                    ``(A) the volume of business of the digital 
                commodity platform; and
                    ``(B) the category of the digital commodity 
                platform.
            ``(3) Prohibitions.--
                    ``(A) Commission.--The Commission shall not require 
                a digital commodity platform to collect directly from 
                customers a per-transaction fee for each digital 
                commodity trade.
                    ``(B) Digital commodity platforms.--A digital 
                commodity platform shall not impose directly on 
                customers a per-transaction fee for each digital 
                commodity trade to pay the fees under paragraph (1).
            ``(4) Publication.--Not later than 60 days after the date 
        of enactment of an Act making a regular appropriation to the 
        Commission for a fiscal year, the Commission shall publish in 
        the Federal Register a notice of--
                    ``(A) the fee rates determined pursuant to this 
                subsection for that fiscal year; and
                    ``(B) any estimates or projections on which those 
                fee rates are based.
            ``(5) Records and disclosure.--In carrying out this 
        subsection, the Commission shall not be required to comply with 
        section 553 of title 5, United States Code.
            ``(6) No judicial review.--A fee rate prescribed under this 
        subsection shall not be subject to judicial review.
            ``(7) Deposit of fees.--Fees collected pursuant to this 
        subsection for any fiscal year shall be deposited and credited 
        as offsetting collections to the account providing 
        appropriations to the Commission.
            ``(8) Annual adjustment.--For each fiscal year, the 
        Commission shall, by order, determine fee rates pursuant to 
        this subsection that are reasonably likely to produce aggregate 
        fee collections that are equal to the annual appropriation to 
        the Commission by Congress for activities relating to the 
        registration of digital commodity platforms and the oversight 
        of digital commodity trades.
            ``(9) Lapse of appropriation.--If, on the first day of a 
        fiscal year, a regular appropriation to the Commission has not 
        been enacted, the Commission shall continue to collect (as 
        offsetting collections) fees pursuant to this subsection at 
        each of the rates in effect during the preceding fiscal year.
            ``(10) Budget requests.--The Commission shall itemize in 
        each budget submitted to the President or the Office of 
        Management and Budget the estimated annual costs of--
                    ``(A) registering digital commodity platforms;
                    ``(B) conducting oversight of digital commodity 
                trades; and
                    ``(C) carrying out education and outreach under 
                subsection (l).
            ``(11) Limitations.--
                    ``(A) In general.--Fees may only be assessed and 
                imposed pursuant to this subsection on digital 
                commodity platforms regulated by the Commission 
                pursuant to this section.
                    ``(B) Use of fees.--Fees authorized under this 
                subsection are prohibited from funding any Commission 
                activity not directly related to the registration of 
                digital commodity platforms, the oversight of digital 
                commodity trades, and the education and outreach 
                carried out under subsection (l).
    ``(l) Customer Education and Outreach.--The Commission shall 
provide education and outreach to customers participating in digital 
commodity markets.
    ``(m) Inspection.--The Commission may inspect and monitor digital 
commodity platforms, on an ongoing basis, for the purpose of ensuring 
compliance with this Act.
    ``(n) Preemption of State Laws.--
            ``(1) In general.--The registration of a digital commodity 
        platform, an associated person of a digital commodity broker, 
        or an associated person of a digital commodity dealer under 
        this section--
                    ``(A) shall preempt any applicable registration 
                requirements under State laws relating to money 
                transmission, virtual currency, and commodity brokers; 
                and
                    ``(B) shall not affect the applicability of State 
                antifraud laws.
            ``(2) Compliance.--Beginning on the effective date of a 
        registration of a digital commodity platform under this 
        section, the digital commodity platform shall not be required 
        to comply with applicable State law requirements relating to 
        money transmission, virtual currency, and commodity brokerage.
    ``(o) Regulations.--The Commission shall prescribe such rules and 
regulations as are appropriate for the implementation of this 
section.''.

SEC. 5. ADDITIONAL AMENDMENTS.

    (a) Retail Commodity Transactions.--Section 2(c)(2)(D)(ii) of the 
Commodity Exchange Act (7 U.S.C. 2(c)(2)(D)(ii)) is amended--
            (1) in subclause (III)(bb), by striking ``or'' at the end;
            (2) by redesignating subclauses (IV) and (V) as subclauses 
        (V) and (VI), respectively; and
            (3) by inserting after subclause (III) the following:
                                    ``(IV) a digital commodity 
                                trade;''.
    (b) Applicability.--Section 2(i) of the Commodity Exchange Act (7 
U.S.C. 2(i)) is amended--
            (1) by redesignating paragraphs (1) and (2) as 
        subparagraphs (A) and (B), respectively, and indenting 
        appropriately;
            (2) in the matter preceding subparagraph (A) (as so 
        redesignated), by striking ``The provisions'' and inserting the 
        following:
            ``(1) Swaps.--The provisions''; and
            (3) by adding at the end the following:
            ``(2) Digital commodities.--The provisions of this Act 
        (including any rule prescribed or regulation promulgated under 
        this Act) relating to digital commodities shall not apply to 
        activities outside the United States unless those activities--
                    ``(A) have a reasonably foreseeable significant 
                effect within the United States;
                    ``(B) involve, for the purpose of soliciting or 
                accepting any order for, or otherwise dealing in, 
                digital commodities--
                            ``(i) the offering to enter into, entering 
                        into, execution, or confirming the execution of 
                        digital commodities with any United States 
                        person; or
                            ``(ii) the conducting of any office or 
                        business anywhere in the United States 
                        (including any territory or possession of the 
                        United States); or
                    ``(C) contravene such rules or regulations as the 
                Commission may prescribe or promulgate as are necessary 
                or appropriate to prevent the evasion of any provision 
                of this Act.''.
    (c) Registration of Associated Persons.--
            (1) In general.--Section 4k of the Commodity Exchange Act 
        (7 U.S.C. 6k) is amended--
                    (A) by redesignating paragraphs (4) through (6) as 
                paragraphs (5) through (7);
                    (B) by inserting after paragraph (3) the following:
            ``(4) It shall be unlawful for any person to act as an 
        associated person of a digital commodity broker or an 
        associated person of a digital commodity dealer unless such 
        person is registered with the Commission under this Act and 
        such registration shall not have expired, been suspended (and 
        the period of suspension has not expired), or been revoked. It 
        shall be unlawful for a digital commodity broker or a digital 
        commodity dealer to permit such a person to become or remain 
        associated with the digital commodity broker or digital 
        commodity dealer if such digital commodity broker or digital 
        commodity dealer knew or should have known that such person was 
        not so registered or that such registration had expired, been 
        suspended (and the period of suspension has not expired), or 
        been revoked.''; and
                    (C) in paragraph (5) (as so redesignated), by 
                striking ``or of a commodity trading advisor'' and 
                inserting ``of a commodity trading advisor, of a 
                digital commodity broker, or of a digital commodity 
                dealer''.
            (2) Conforming amendment.--The Commodity Exchange Act (7 
        U.S.C. 1a et seq.) is amended by striking ``section 4k(6)'' 
        each place it appears and inserting ``section 4k(7)''.
    (d) Commodity Trading Advisers; Commodity Pool Operators.--
            (1) In general.--Section 4l of the Commodity Exchange Act 
        (7 U.S.C. 6l) is amended--
                    (A) in paragraph (2), by striking ``derivatives 
                transaction execution facilities'' and inserting 
                ``digital commodity trades on or subject to the rules 
                of digital commodity trading facilities''; and
                    (B) in paragraph (3), by striking ``derivatives 
                transaction execution facilities'' and inserting 
                ``digital commodity trading facilities''.
            (2) Use of mail or other interstate commerce.--Section 
        4m(3)(C) of the Commodity Exchange Act (7 U.S.C. 6m(3)(C)) is 
        amended by inserting ``digital commodity trades,'' before ``and 
        any monies''.
            (3) Registration.--Section 4n(3)(B) of the Commodity 
        Exchange Act (7 U.S.C. 6n(3)(B)) is amended by inserting ``or 
        digital commodity'' after ``futures market''.
    (e) Acceptable Business Practices Under Core Principles.--Section 
5c(a)(1) of the Commodity Exchange Act (7 U.S.C. 7a-2(a)(1)) is amended 
by striking ``and 5b(c)(2),'' and inserting ``, 5b(c)(2), and 5i(b)''.
    (f) Public Disclosure.--Section 8(a)(1) of the Commodity Exchange 
Act (7 U.S.C. 12(a)(1)) is amended, in the first sentence of the matter 
preceding subparagraph (A), by inserting ``, digital commodity 
platforms,'' after ``boards of trade''.
    (g) Anti-Money Laundering.--
            (1) Amendment.--Section 5312(a)(2) of title 31, United 
        States Code, is amended--
                    (A) by redesignating subparagraphs (Y) and (Z) as 
                subparagraphs (Z) and (AA), respectively; and
                    (B) by inserting after subparagraph (X) the 
                following:
                    ``(Y) a digital commodity platform (as defined in 
                section 1a of the Commodity Exchange Act (7 U.S.C. 
                1a));''.
            (2) Regulations.--
                    (A) Proposed regulations.--Not later than 180 days 
                after the date of enactment of this Act, the Secretary 
                of the Treasury, after consultation with the Commodity 
                Futures Trading Commission, shall publish proposed 
                regulations in the Federal Register requiring a digital 
                commodity platform (as defined in section 1a of the 
                Commodity Exchange Act (7 U.S.C. 1a)) registered with 
                the Commodity Futures Trading Commission to submit a 
                report of any suspicious transaction under section 
                5318(g) of title 31, United States Code.
                    (B) Final regulations.--Not later than 180 days 
                after the date of publication of the proposed 
                regulations under subparagraph (A), the Secretary of 
                the Treasury shall publish those regulations in final 
                form.
    (h) Registration of Commodity Dealers and Associated Persons.--
Section 8a of the Commodity Exchange Act (7 U.S.C. 12a) is amended--
            (1) in paragraph (1), by inserting ``digital commodity 
        brokers, associated persons of digital commodity brokers, 
        digital commodity dealers, associated persons of digital 
        commodity dealers,'' after ``to register'';
            (2) in paragraph (2)--
                    (A) in subparagraph (C)--
                            (i) in clause (i), by inserting ``digital 
                        commodity broker, digital commodity dealer,'' 
                        before ``futures commission merchant''; and
                            (ii) in clause (ii), by striking 
                        ``contracts of'' and inserting ``a digital 
                        commodity trade or a contract of'';
                    (B) in subparagraph (D)--
                            (i) in clause (i), by inserting ``digital 
                        commodity trade or'' before ``contract of 
                        sale''; and
                            (ii) in clause (ii), by inserting ``digital 
                        commodity broker, digital commodity dealer,'' 
                        before ``futures commission merchant''; and
                    (C) in subparagraph (E)(i), by striking 
                ``Investors'' and inserting ``Investor'';
            (3) in paragraph (3)--
                    (A) in subparagraph (B)(i), by striking 
                ``Investors'' and inserting ``Investor'';
                    (B) in subparagraph (E)--
                            (i) in clause (i), by striking ``contract 
                        of sale of a commodity for future delivery or'' 
                        and inserting ``contract of sale of a commodity 
                        for future delivery, digital commodity trade, 
                        or''; and
                            (ii) in clause (ii), by inserting ``digital 
                        commodity broker, digital commodity dealer,'' 
                        before ``futures commission merchant''; and
                    (C) in subparagraph (J)--
                            (i) by inserting ``a digital commodity 
                        trading facility,'' before ``a registered 
                        entity''; and
                            (ii) by striking ``registered entity, 
                        association'' and inserting ``digital commodity 
                        trading facility, registered entity, registered 
                        futures association'';
            (4) in paragraph (4)--
                    (A) by striking ``futures commission merchant'' and 
                inserting ``digital commodity broker, digital commodity 
                dealer, futures commission merchant,'';
                    (B) by inserting ``digital commodity subject to the 
                rules of a digital commodity trading facility or'' 
                before ``commodity''; and
                    (C) by inserting ``digital commodity trading 
                facility or'' before ``registered entity'' each place 
                it appears;
            (5) in paragraph (6), by inserting ``digital commodity 
        trading facility, digital commodity custodian,'' before 
        ``registered entity'' each place it appears; and
            (6) in paragraph (9)--
                    (A) by inserting ``digital commodity trading 
                facility or'' before ``registered entity'' each place 
                it appears;
                    (B) by inserting ``digital commodity or'' before 
                ``futures contract'' each place it appears; and
                    (C) by inserting ``digital commodity or'' before 
                ``commodity'' each place it appears.
    (i) Amendments to Title 11.--Title 11, United States Code, is 
amended--
            (1) in section 101(6), by inserting ``digital commodity 
        platform, as defined in section 1a of the Commodity Exchange 
        Act (7 U.S.C. 1a),'' after ``leverage transaction merchant,''; 
        and
            (2) in section 761--
                    (A) in paragraph (4)(F)--
                            (i) in clause (i), by striking ``and'' at 
                        the end;
                            (ii) in clause (ii), by inserting ``and'' 
                        after the semicolon; and
                            (iii) by adding at the end the following:
                    ``(iii) with respect to a digital commodity 
                platform, a contract for a digital commodity trade--
                            ``(I) held at a digital commodity platform; 
                        or
                            ``(II) executed by or through a digital 
                        commodity platform;'';
                    (B) in paragraph (9)--
                            (i) in subparagraph (D), by striking ``or'' 
                        at the end;
                            (ii) in subparagraph (E)(ii)(II), by adding 
                        ``or'' after the semicolon at the end; and
                            (iii) by adding at the end the following:
                    ``(F) with respect to a digital commodity 
                platform--
                            ``(i) entity for or with whom the digital 
                        commodity platform deals and that holds a claim 
                        against the digital commodity platform on 
                        account of a commodity contract made, received, 
                        acquired, or held by or through the digital 
                        commodity platform in the ordinary course of 
                        the business of the digital commodity platform 
                        as a digital commodity platform from or for a 
                        commodity contract account of the entity; or
                            ``(ii) entity that holds a claim against 
                        the digital commodity platform arising out of--
                                    ``(I) the making, liquidation, or 
                                change in the value of a commodity 
                                contract of a kind specified in clause 
                                (i) of this subparagraph;
                                    ``(II) a deposit or payment of 
                                cash, a security, digital commodity, or 
                                other property with the digital 
                                commodity platform for the purpose of--
                                            ``(aa) making or margining 
                                        the commodity contract; or
                                            ``(bb) holding in custody, 
                                        or accepting a deposit, of 
                                        property related to the making 
                                        or margining of the commodity 
                                        contract; or
                                    ``(III) the making or taking of 
                                delivery on the commodity contract.'';
                    (C) by redesignating paragraphs (11) through (17) 
                as paragraphs (12) through (18), respectively; and
                    (D) by inserting after paragraph (10) the 
                following:
            ``(11) the terms `digital commodity', `digital commodity 
        platform', and `digital commodity trade' have the meanings 
        given those terms in section 1a of the Commodity Exchange Act 
        (7 U.S.C. 1a);''.

SEC. 6. APPLICABILITY.

    The amendments made by this Act shall not apply to any person 
regulated under the Commodity Exchange Act (7 U.S.C. 1 et seq.), as 
amended by this Act, until the date of effectiveness of the final rule 
of the Commodity Futures Trading Commission requiring registration of 
digital commodity platforms under section 5i of that Act.

SEC. 7. REPORT ON HISTORICALLY UNDERSERVED CUSTOMERS PARTICIPATING IN 
              DIGITAL COMMODITY MARKETS.

    Not later than 180 days after the date of enactment of this Act, 
the Commodity Futures Trading Commission (referred to in this section 
as the ``Commission'') shall--
            (1) examine the racial, ethnic, and gender demographics of 
        customers participating in digital commodity markets; and
            (2) submit to the Committee on Agriculture, Nutrition, and 
        Forestry of the Senate and the Committee on Agriculture of the 
        House of Representatives a report--
                    (A) describing how those demographics will inform 
                the rules and regulations of the Commission relating to 
                customer protection;
                    (B) proposing ways in which the Commission can 
                provide outreach to historically underserved customers 
                participating in digital commodity markets; and
                    (C) containing recommendations relating to any 
                other activities the Commission determines to be 
                necessary to provide appropriate protection, outreach, 
                or other similar activities relating to historically 
                underserved customers participating in digital 
                commodity markets.
                                 <all>