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RFIA
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echo "# RFIA-bill" >> README.md
git init
git add README.md
git commit -m "first commit"
git branch -M main
git remote add origin https://github.com/responsible-financial-innovation-act22/RFIA-bill.git
git push -u origin main
# Lummis-Gillibrand Responsible Financial Innovation Act (S. 4356)
*117th Congress, 2d Session*
*Bill Status: https://www.congress.gov/bill/117th-congress/senate-bill/4356*
*Section-by-Section Overview: https://www.lummis.senate.gov/wp-content/uploads/Lummis-Gillibrand-Section-by-Section-Final.pdf*
A bill to provide for responsible financial innovation and to bring digital assets within the regulatory perimeter.
*Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,*
*TABLE OF CONTENTS*
*TITLE I—DEFINITIONS*
Sec.101.Definitions.
*TITLE II—RESPONSIBLE TAXATION OF DIGITAL ASSETS*
Sec.201.Gain from disposition of digital assets.
Sec.202.Information reporting requirements imposed on brokers with respect to digital assets.
Sec.203.Sources of income.
Sec.204.Decentralized autonomous organizations.
Sec.205.Tax treatment of digital asset lending agreements and related matters.
Sec.206.Implementing effective IRS guidance.
Sec.207.Analysis of retirement investing in digital assets.
Sec.208.Digital asset mining and staking.
Sec.209.Conforming amendments.
*TITLE III—RESPONSIBLE SECURITIES INNOVATION*
Sec.301.Securities offerings involving certain intangible assets.
Sec.302.Termination of specified periodic disclosure requirements.
Sec.303.Guidance relating to satisfactory control location.
Sec.304.Custody and customer protection rules.
*TITLE IV—RESPONSIBLE COMMODITIES INNOVATION*
Sec.401.Definitions.
Sec.402.Reporting and recordkeeping.
Sec.403.CFTC jurisdiction over digital asset transactions.
Sec.404.Registration of digital asset exchanges.
Sec.405.Violations.
Sec.406.Market reports.
Sec.407.Bankruptcy treatment of digital assets.
Sec.408.Identified banking products.
Sec.409.Financial institutions definition.
Sec.410.Offsetting the costs of digital asset regulation.
*TITLE V—RESPONSIBLE CONSUMER PROTECTION*
Sec.501.Responsible consumer protection.
Sec.502.Source code version of digital assets.
Sec.503.Settlement finality.
Sec.504.Notice to customers; enforcement.
Sec.505.Right to individual management of digital assets.
Sec.506.Technical and conforming amendments.
*TITLE VI—RESPONSIBLE PAYMENTS INNOVATION*
Sec.601.Issuance of payment stablecoins.
Sec.602.Sanctions compliance responsibilities of payment stablecoin issuers.
Sec.603.Use of the official digital currency of the People’s Republic of China on Government devices.
Sec.604.Certificate of authority to commence banking.
Sec.605.Holding company supervision of covered depository institutions.
Sec.606.Implementation rules to preserve adequate competition in payment stablecoins.
Sec.607.Financial Crimes Enforcement Network Innovation Laboratory.
*TITLE VII—RESPONSIBLE BANKING INNOVATION*
Sec.701.Study on use of distributed ledger technology for reduction of risk in depository institutions.
Sec.702.Eligibility for Federal Reserve services to depository institutions.
Sec.703.Routing transit number issuance.
Sec.704.Clarifying application review times with respect to the Federal banking agencies.
Sec.705.Examination standards for digital asset activities.
Sec.706.Asset custody for depository institutions and certain other entities.
Sec.707.Reputation risk; requirements for account termination requests and orders.
Sec.708.Conforming amendments.
*TITLE VIII—RESPONSIBLE INTERAGENCY COORDINATION*
Sec.801.Timeline for interpretive guidance issued by Federal financial agencies.
Sec.802.Interstate sandbox activities.
Sec.803.State money transmission coordination relating to digital assets.
Sec.804.Information sharing among Federal and State financial regulators.
Sec.805.Analysis of decentralized finance markets and technologies.
Sec.806.Analysis of energy consumption in digital asset markets.
Sec.807.Analysis of self-regulation and registered digital asset associations.
Sec.808.Cybersecurity standards for digital asset intermediaries.
Sec.809.Advisory Committee on Financial Innovation.
# TITLE I—DEFINITIONS
SEC. 101. DEFINITIONS.
(a) In General.—Subtitle VI of title 31, United States Code, is amended by adding after chapter 97 the following:
"CHAPTER 98—DIGITAL ASSETS
"Sec.
"9801. Definitions.
"9801. Definitions
"In this chapter:
"(1) Depository institution.—The term ‘depository institution’ has the meaning given the term in section 19(b)(1) of the Federal Reserve Act (12 U.S.C. 461(b)(1)).
"(2) Digital asset.—The term ‘digital asset’
"(A) means a natively electronic asset that—
"(i) confers economic, proprietary, or access rights or powers; and
"(ii) is recorded using cryptographically secured distributed ledger technology, or any similar analogue; and
"(B) includes—
"(i) virtual currency and ancillary assets in accordance with section 2(c)(2)(F) of the Commodity Exchange Act;
"(ii) payment stablecoins in accordance with section 403 of the Commodity Futures Modernization Act of 2000 (7 U.S.C. 27a); and
"(iii) any other security or commodity that meets the requirements of subparagraph (A).
"(3) Digital asset intermediary.—The term ‘digital asset intermediary’—
"(A) means—
"(i) a person who holds a license, registration, or other similar authorization, as specified by this chapter, the Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities Act of 1933 (15 U.S.C. 77a et seq.), the Corporation of Foreign Bondholders Act, 1933 (15 U.S.C. 77bb et seq.), the Trust Indenture Act of 1939 (15 U.S.C. 77aaa et seq.), the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), the Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.), the Investment Advisers Act of 1940 (15 U.S.C. 80b–1), and the Omnibus Small Business Capital Formation Act of 1980 (15 U.S.C. 80c), that may conduct market activities relating in digital assets; or
"(ii) a person who is required by law to hold a license, registration, or other similar authorization described in clause (i); and
"(B) includes—
"(i) a person who holds a license, registration, or other similar authorization under State or Federal law that issues a payment stablecoin; and
"(ii) a person who is required by law to hold a license, registration, or other similar authorization described in clause (i); and
"(C) does not include a depository institution.
"(4) Distributed ledger technology.—The term ‘distributed ledger technology’ means technology that enables the operation and use of a ledger that—
"(A) is shared across a set of distributed nodes that participate in a network and store a complete or partial replica of the ledger;
"(B) is synchronized between the nodes;
"(C) has data appended to the ledger by following the specified consensus mechanism of the ledger;
"(D) may be accessible to anyone or restricted to a subset of participants; and
"(E) may require participants to have authorization to perform certain actions or require no authorization.
"(5) Payment stablecoin.—The term ‘payment stablecoin’ means a digital asset that is—
"(A) redeemable, on demand, on a 1-to-1 basis for instruments denominated in United States dollars;
"(B) defined as legal tender under section 5103 or under the laws of a foreign country (excluding digital assets);
"(C) issued by a business entity;
"(D) accompanied by a statement from the issuer that the asset is redeemable, as specified in subparagraph (A), from the issuer or another identified person;
"(E) backed by 1 or more financial assets (excluding other digital assets), consistent with subparagraph (A); and
"(F) intended to be used as a medium of exchange.
"(6) Person who provides digital asset services.—The term ‘person who provides digital asset services’ means—
"(A) a digital asset intermediary;
"(B) a financial institution, as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a);
"(C) any other person conducting digital asset activities pursuant to a Federal or State charter, license, registration, or other similar authorization; and
"(D) any person who is required by law to hold a license, registration, or other similar authorization described in subparagraph (C).
"(7) Security.—The term ‘security’ has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
"(8) Smart contract.—The term ‘smart contract’—
"(A) means—
"(i) computer code deployed to a distributed ledger technology network that executes an instruction based on the occurrence or nonoccurrence of specified conditions; or
"(ii) any similar analogue; and
"(B) includes taking possession or control of a digital asset and transferring the asset or issuing executable instructions for these actions.
"(9) Source code version.—The term ‘source code version’—
"(A) means the source code version comprising a digital asset; and
"(B) does not include software used to manage or facilitate transactions in a digital asset.
"(10) Virtual currency.—The term ‘virtual currency’—
"(A) means a digital asset that—
"(i) is used primarily as a medium of exchange, unit of account, store of value, or any combination of such functions;
"(ii) is not legal tender, as described in section 5103; and
"(iii) does not derive value from or is backed by an underlying financial asset (except other digital assets); and
"(B) includes a digital asset, consistent with subparagraph (A) that is accompanied by a statement from the issuer that a denominated or pegged value will be maintained and be available upon redemption from the issuer or other identified person, based solely on a smart contract.".
(b) Technical and Conforming Amendment.—The table of contents for subtitle VI of title 31, United States Code, is amended by adding at the end the following:
"98.Digital assets
9801".
# TITLE II—RESPONSIBLE TAXATION OF DIGITAL ASSETS
SEC. 201. GAIN FROM DISPOSITION OF DIGITAL ASSETS.
(a) In General.—Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139I the following new section:
"SEC. 139J. GAIN OR LOSS FROM SALE OR EXCHANGE OF VIRTUAL CURRENCY.
"(a) In General.—Gross income shall not include gain or loss from the sale or exchange of virtual currency in a personal transaction (as defined in section 988(e)(3)) for goods and services.
"(b) Limitation.—
"(1) In general.—The amount of gain or loss excluded from gross income under subsection (a) with respect to a sale or exchange shall not exceed $200.
"(2) Aggregation rule.—For purposes of this subsection, all sales or exchanges which are part of the same transaction (or a series of related transactions) shall be treated as one sale or exchange.
"(c) Other Sales or Exchanges.—Subsection (a) shall not apply to sales or exchanges in which virtual currency is sold or exchanged for cash, cash equivalents, digital assets (as defined in section 9801 of title 31, United States Code), or other securities or commodities.
"(d) Virtual Currency.—For purposes of this section, the term ‘virtual currency’ has the meaning given such term in section 9801 of title 31, United States Code.
"(e) Inflation Adjustment.—In the case of any taxable year beginning in a calendar year after 2023, the dollar amount in subsection (b) shall be increased by an amount equal to—
"(1) such dollar amount, multiplied by
"(2) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2022’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.
Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $50.".
(b) Clerical Amendment.—The table of sections for part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 139I the following new item:
"Sec.139J.Gain or loss from sale or exchange of virtual currency.".
(c) Reporting of Gains or Losses.—The Secretary shall issue regulations providing for information returns on virtual currency transactions for which gain or loss is recognized.
(d) Effective Date.—The amendments made by this section shall apply to transactions entered into after December 31, 2022.
SEC. 202. INFORMATION REPORTING REQUIREMENTS IMPOSED ON BROKERS WITH RESPECT TO DIGITAL ASSETS.
(a) Clarification of Definition of Broker.—Section 6045(c)(1)(D) of the Internal Revenue Code of 1986 is amended to read as follows:
"(D) any person who (for consideration) stands ready in the ordinary course of a trade or business to effect sales of digital assets at the direction of their customers.".
(b) Reporting of Digital Assets.—
(1) Brokers.—
(A) Definition of digital asset.—Section 6045(g)(3)(D) of the Internal Revenue Code of 1986 is amended to read as follows:
"(D) Digital asset.—The term ‘digital asset’ has the meaning given such term in section 9801 of title 31, United States Code.".
(B) Applicable date.—Section 6045(g)(3)(C)(iii) of such Code is amended to read as follows:
"(iii) January 1, 2025, in the case of any specified security which is a digital asset, and".
(2) Furnishing of information.—Section 6045A(d) of such Code is amended to read as follows:
"(d) Return Requirement for Certain Transfers of Digital Assets Not Otherwise Subject to Reporting.—Any broker, with respect to any transfer (which is not part of a sale or exchange executed by such broker) during a calendar year of a covered security which is a digital asset from an account wholly controlled and maintained by such broker to an account which is not maintained by, or an address not associated with, a person that such broker knows or has reason to know is also a broker, shall make a return for such calendar year, in such form as determined by the Secretary, showing the information otherwise required to be furnished with respect to transfers subject to subsection (a). Information reported by brokers under this section shall be limited to customer information that is voluntarily provided by the customer and held by the broker for a legitimate business purpose.".
(c) Effective Dates.—The amendments made by this section shall apply to returns required to be filed and statements required to be furnished after December 31, 2025.
SEC. 203. SOURCES OF INCOME.
(a) In General.—Paragraph (2) of section 864(b) of the Internal Revenue Code of 1986 is amended by redesignating subparagraph (C) as subparagraph (D) and by inserting after subparagraph (B) the following new subparagraph:
"(C) Digital assets.—
"(i) In general.—Trading in digital assets through a resident broker, commission agent, custodian, digital asset exchange, or other independent agent.
"(ii) Trading for taxpayer’s own account.—Trading in digital assets for the taxpayer’s own account, whether by the taxpayer or the taxpayer’s employees or through a resident broker, commission agent, custodian, digital asset exchange, or other agent, and whether or not any such employee or agent has discretionary authority to make decisions in effecting the transactions. This clause shall not apply in the case of a dealer in digital assets.
"(iii) Definitions.—For purposes of this subparagraph—
"(I) Digital asset exchange.—The term ‘digital asset exchange’ means a centralized or decentralized platform which facilitates the transfer of digital assets.
"(II) Digital asset.—The term ‘digital asset’ has the meaning given such term in section 9801 of title 31, United States Code.
"(iv) Limitation.—This subparagraph shall apply only if the digital assets are of a kind customarily dealt in on a digital asset exchange and if the transaction is of a kind customarily consummated at such exchange.".
(b) Conforming Amendment.—Subparagraph (D) of section 864(b)(2) of the Internal Revenue Code of 1986, as redesignated by subsection (a), is amended by striking "(A)(i) and (B)(i)" and inserting “(A)(i), (B)(i), and (C)(i)”.
(c) Effective Date.—The amendments made by this section shall apply to sales and exchanges after December 31, 2022.
SEC. 204. DECENTRALIZED AUTONOMOUS ORGANIZATIONS.
(a) In General.—Section 7701(a) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
"(51) Decentralized autonomous organizations.—
"(A) In general.—The default classification of a decentralized autonomous organization shall be as a business entity which is not a disregarded entity.
"(B) Classification of other activities.—The following shall not be considered a business activity of such organization for purposes of determining whether such organization is described in section 501(c)(7):
"(i) Treasury management, including mining and staking of digital assets (as defined in section 9801 of title 31, United States Code).
"(ii) Raising funds for a charitable purpose.
"(C) Decentralized autonomous organization.—The term ‘decentralized autonomous organization’ means an organization—
"(i) which utilizes smart contracts (as defined in section 9801 of title 31, United States Code) to effectuate collective action for a business, commercial, charitable, or similar entity,
"(ii) governance of which is achieved primarily on a distributed basis, and
"(iii) which is properly incorporated or organized under the laws of a State or foreign jurisdiction as a decentralized autonomous organization, cooperative, foundation, or any similar entity.".
(b) Effective Date.—Except as provided by subsection (c), the amendments made by this section shall apply to taxable years beginning after December 31, 2022.
SEC. 205. TAX TREATMENT OF DIGITAL ASSET LENDING AGREEMENTS AND RELATED MATTERS.
(a) In General.—Subsection (a) of section 1058 of the Internal Revenue Code of 1986 is amended by striking "(as defined in section 1236(c))".
(b) Fixed Term.—Paragraph (1) of subsection (b) of section 1058 of the Internal Revenue Code of 1986 is amended by inserting ", including a fixed-term transfer that occurs in the ordinary course of a securities lending or investment management business" after “transferred”.
(c) Basis.—Subsection (c) of section 1058 of the Internal Revenue Code of 1986 is amended by adding at the end the following: "All appropriate basis adjustments to an agreement under subsection (b) shall be made, as determined by the Secretary, including upon the return of the lent securities to the taxpayer.".
(d) Securities.—Section 1058 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsections:
"(d) Securities.—For purposes of this section, the term ‘securities’ has the meaning given such term by section 1236(c), except that such term includes any digital asset (as defined in section 9801 of title 31, United States Code) and, with respect to a digital asset, does not require a call option.
"(e) Income.—An amount equal to the income which would otherwise accrue to the lender but for a lending transaction under this section shall be included in gross income of the lender.".
(e) Rule of Construction.—Nothing in this section shall be construed to create any inference with respect to the classification of any digital asset as security under the Securities Act of 1933 (15 U.S.C. 77a et seq.) or the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
(f) Rulemaking Authority.—The Secretary of the Treasury (or the Secretary’s delegate) may adopt rules to implement this section, including the application of this section to forks, airdrops, and similar subsidiary value.
(g) Effective Date.—The amendments made by this section shall apply to sales and exchanges after December 31, 2022.
SEC. 206. IMPLEMENTING EFFECTIVE IRS GUIDANCE.
(a) In General.—Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury (or the Secretary’s delegate) shall adopt guidance relating to the following:
(1) Classification of forks, airdrops, and similar subsidiary value as taxable, contingent upon the affirmative claim and disposition of the subsidiary value by a taxpayer. Such guidance shall also permit a taxpayer to provide notification through an annual return or other appropriate means to the Internal Revenue Service relating to claim and disposition of, or disclaimer of, subsidiary value.
(2) Merchant acceptance of digital assets and the tax treatment of payments and receipts, consistent with the amendments made by section 80603 of the Infrastructure Investment and Jobs Act, as amended by section 203.
(3) Treatment of digital asset mining and staking, including mining and staking rewards, in which income is not realized until disposition of the assets produced or received in connection with such activity, in accordance with section 451(l) of the Internal Revenue Code of 1986 (as added by this Act).
(4) Classification of charitable contributions greater than $5,000 of digital assets which are traded on established financial markets as contributions of readily valued property not requiring a qualified appraisal for purposes of section 170(f)(11)(A) of the Internal Revenue Code of 1986, as amended by this Act.
(5) Characterization of payment stablecoins (as defined in section 9801 of title 31, United States Code) as indebtedness.
(b) Effective Date.—The guidance adopted under this section shall be applicable on a prospective basis for taxable years beginning after December 31, 2023.
SEC. 207. ANALYSIS OF RETIREMENT INVESTING IN DIGITAL ASSETS.
(a) Not later than March 1, 2023, the Comptroller General of the United States shall conduct a study and provide a report to the entities specified in subsection (b) regarding the following issues relating to retirement investing in digital assets:
(1) Potential benefits to diversification and return of an investor’s retirement portfolio.
(2) Appropriate asset allocations, including among other alternative investments.
(3) Consumer education, financial literacy and investment advisor training relating to digital assets.
(4) Risk.
(5) Legal and operational barriers to effective retirement investing in digital assets.
(6) Any other topic determined to be material by the Comptroller General relating to retirement investing in digital assets.
(b) The Comptroller General shall provide the report required by subsection (a) to the following:
(1) The Committee on Banking, Housing, and Urban Affairs of the Senate.
(2) The Committee on Finance of the Senate.
(3) The Committee on Health, Education, Labor, and Pensions of the Senate.
(4) The Committee on Financial Services of the House of Representatives.
(5) The Committee on Ways and Means of the House of Representatives.
(6) The Committee on Education and Labor of the House of Representatives.
(7) The Secretary of the Treasury.
(8) The Secretary of Labor.
SEC. 208. DIGITAL ASSET MINING AND STAKING.
(a) In General.—Section 451 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
"(l) Deferral of Income Recognition for Digital Asset Activities.—In the case of a taxpayer who conducts digital asset mining or staking activities, the amount of income relating to such activities shall not be included in the gross income of the taxpayer until the taxable year of the disposition of the assets produced or received in connection with the mining or staking activities.".
(b) Effective Date.—The amendment made by this section shall apply to taxable years beginning after December 31, 2022.
SEC. 209. CONFORMING AMENDMENTS.
(a) Charitable Contributions.—
(1) In general.—Subclause (I) of section 170(f)(11)(A)(ii) of the Internal Revenue Code of 1986 is amended by inserting ", digital assets (as defined in section 9801 of title 31, United States Code)" after “6050L(a)(2)(B))”.
(2) Effective date.—The amendment made by this subsection shall apply to taxable years beginning after December 31, 2022.
(b) Other Conforming Amendments.—
(1) In general.—Title 31, United States Code, is amended—
(A) in section 5312(a)(2)—
(i) by redesignating subparagraphs (A) through (Z) as clauses (i) through (xxvi), respectively;
(ii) in the matter preceding clause (i), as so designated, by striking "‘institution’ means—" and inserting “‘institution'—
"(A) means—";
(iii) in clause (xxvi), as so designated, by striking the period at the end and inserting "; and"; and
(iv) by adding at the end the following:
"(B) does not include a decentralized autonomous organization, as defined in section 7701(a) of the Internal Revenue Code of 1986."; and
(B) in section 5336(a)(11)(B)(2)—
(i) by redesignating clause (xxv) as clause (xxvi); and
(ii) by adding after clause (xxv) the following:
"(xxv) A decentralized autonomous organization, as defined in section 7701(a) of the Internal Revenue Code of 1986; and".
(2) Anti-money laundering act of 2020.—Section 6110(a) of the Anti-Money Laundering Act of 2020 (division F of Public Law 116–283) is amended by striking paragraph (1) and inserting the following:
"(A) by redesignating clauses (xxv) and (xxvi) as clauses (xxvi) and (xxvii), respectively, and adjust the margins accordingly; and
"(B) by inserting after clause (xxiv) the following:
"‘(Y) a person engaged in the trade of antiquities, including an advisor, consultant, or any other person who engages as a business in the solicitation or the sale of antiquities, subject to regulations prescribed by the Secretary;’.".
# TITLE III—RESPONSIBLE SECURITIES INNOVATION
SEC. 301. SECURITIES OFFERINGS INVOLVING CERTAIN INTANGIBLE ASSETS.
Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by adding at the end the following:
"SEC. 41. SECURITIES OFFERINGS INVOLVING CERTAIN INTANGIBLE ASSETS.
"(a) Definitions.—In this section:
"(1) Ancillary asset.—
"(A) In general.—The term ‘ancillary asset’ means an intangible, fungible asset that is offered, sold, or otherwise provided to a person in connection with the purchase and sale of a security through an arrangement or scheme that constitutes an investment contract, as that term is used in section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)).
"(B) Exclusion.—The term ‘ancillary asset’ does not include an asset that provides the holder of the asset with any of the following rights in a business entity:
"(i) A debt or equity interest in that entity.
"(ii) Liquidation rights with respect to that entity.
"(iii) An entitlement to an interest or dividend payment from that entity.
"(iv) A profit or revenue share in that entity solely from the entrepreneurial or managerial efforts of others.
"(v) Any other financial interest in that entity.
"(2) Foreign private issuer.—The term ‘foreign private issuer’ means a foreign issuer, other than a foreign government, except that the term does not include a foreign issuer that, as of the last business day of the most recently completed fiscal quarter of the issuer, satisfies the following conditions:
"(A) More than 50 percent of the outstanding voting securities of the issuer are directly or indirectly owned by residents of the United States.
"(B) Any of the following:
"(i) The majority of the executive officers or directors of the issuer are citizens or residents of the United States.
"(ii) More than 50 percent of the assets of the issuer are located in the United States.
"(iii) The business of the issuer is principally administered in the United States.
"(b) Disclosure Requirements.—
"(1) Initial compliance with specified periodic disclosure requirements.—Subject to paragraphs (4) and (5), an issuer engaged in business in or affecting interstate commerce, or that is organized outside of the United States and is not a foreign private issuer, that offers, sells, or otherwise provides a security through an arrangement or scheme that constitutes an investment contract, as that term is used in section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)), and that provides or proposes to provide any holder of the security with an ancillary asset, shall be subject to the periodic disclosure requirements under subsection (c) for the 1-year period beginning on the date that is 180 days after the first date on which the security is offered, sold, or otherwise provided by the issuer, if—
"(A) the average daily aggregate value of all ancillary assets offered, sold, or otherwise provided by the issuer in relation to the offer, sale, or provision of the security in all spot markets open to the public in the United States (based on the knowledge of the issuer after due inquiry) is greater than $5,000,000 for the 180-day period immediately succeeding the date of that first offer, sale, or provision; and
"(B) during the 180-day period described in subparagraph (A), the issuer, or any person owning not less than 10 percent of any class of equity securities of the issuer, engaged in entrepreneurial or managerial efforts that primarily determined the value of the ancillary asset.
"(2) Ongoing compliance with specified periodic disclosure requirements.—Subject to paragraphs (4) and (5), an issuer that is engaged in business in or affecting interstate commerce, or that is organized outside of the United States and is not a foreign private issuer, that offers, sells, or otherwise provides a security through an arrangement or scheme that constitutes an investment contract, as that term is used in section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)), and that provides the holder of the security with an ancillary asset in connection with the acquisition of the security, shall be subject to the periodic disclosure requirements under subsection (c) for a given fiscal year of that issuer, if, in the immediately preceding fiscal year of the issuer (or any portion thereof)—
"(A) the average daily aggregate value of all trading in the ancillary asset in all spot markets open to the public in the United States was greater than $5,000,000, based on the knowledge of the issuer after due inquiry; and
"(B) the issuer, or any person owning not less than 10 percent of any class of equity securities of the issuer, engaged in entrepreneurial or managerial efforts that primarily determined the value of the ancillary asset.
"(3) Transition rule.—Subject to paragraphs (4) and (5), an issuer that is engaged in business in or affecting interstate commerce, or that is organized outside of the United States and is not a foreign private issuer, that offers, sells, or otherwise provides a security through an arrangement or scheme that constitutes an investment contract, as that term is used in section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)), and that provides the holder of the security with an ancillary asset before January 1, 2023, in connection with the acquisition of the security shall be subject to the periodic disclosure requirements under subsection (c) beginning in the first fiscal year of the issuer that begins on or after that date, if, in the immediately preceding fiscal year of the issuer—
"(A) the average daily aggregate value of trading in the ancillary asset in all spot markets open to the public for which trading volume is generally available was greater than $5,000,000, based on the knowledge of the issuer after due inquiry; and
"(B) the issuer, or any person owning not less than 10 percent of any class of equity securities of the issuer, engaged in entrepreneurial or managerial efforts that primarily determined the value of the ancillary asset.
"(4) Treatment of ancillary assets.—
"(A) In general.—Notwithstanding any other provision of law, if an issuer issues a security through an arrangement or scheme that constitutes an investment contract, as that term is used in section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)), is subject to paragraph (1), (2), or (3), and is in compliance with the periodic disclosure requirements under subsection (c), an ancillary asset provided directly or indirectly by the issuer shall be presumed—
"(i) to be a commodity, consistent with section 2(c)(2)(F) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(F)); and
"(ii) not to be a security under—
"(I) section 3(a);
"(II) such section 2(a)(1);
"(III) section 2(a) of the Investment Company Act of 1940 (15 U.S.C. 80a–2(a));
"(IV) section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(a)); or
"(V) any applicable provision of State law.
"(B) Other persons.—A person who is not an issuer, an entity controlled by an issuer (including a person that acquires an ancillary asset from such an issuer for the purpose of resale or distribution of the ancillary asset), or a person acting at the direction or on the behalf of an issuer shall be not required to treat an ancillary asset provided by an issuer as a security under this Act or any provision of law described in subparagraph (A)(ii).
"(C) Exception.—
"(i) In general.—Subparagraph (A) shall not apply to an ancillary asset if a court of the United States of competent jurisdiction, after an appropriate proceeding, issues an order finding that there is not a substantial basis for the presumption that the ancillary asset is a commodity and not a security under subparagraph (A).
"(ii) Rules of construction.—Nothing in this subparagraph shall be construed to preclude the Commission from entering into a settlement agreement relating to violations or alleged violations of this section. Compliance under this section shall not be used in any administrative or judicial proceeding that an ancillary asset is a security.
"(5) Calculation.—For the purposes of paragraphs (1), (2), and (3), the calculation of daily aggregate value shall be based on data disclosed by spot markets or otherwise available to the public for inspection.
"(c) Specified Periodic Disclosure Requirements.—If an issuer is subject to paragraph (1), (2), or (3) of subsection (b), the issuer shall furnish, or cause the relevant affiliate to furnish, to the Commission, on a semi-annual basis, information that the Commission may, by rule, require relating to the issuer and any relevant ancillary asset, as necessary or appropriate in the public interest or for the protection of investors, which shall be exclusively comprised of the following:
"(1) Basic corporate information regarding the issuer, including the following:
"(A) The experience of the issuer in developing assets similar to the ancillary asset.
"(B) If the issuer has previously provided ancillary assets to purchasers of securities, information on the subsequent history of those previously provided ancillary assets, including price history, if the information is publicly available.
"(C) The activities that the issuer has taken in the relevant disclosure period, and is projecting to take in the 1-year period following the submission of the disclosure, with respect to promoting the use, value, or resale of the ancillary asset (including any activity to facilitate the creation or maintenance of a trading market for the ancillary asset and any network or system that utilizes the ancillary asset).
"(D) The anticipated cost of the activities of the issuer in subparagraph (C) and whether the issuer has unencumbered, liquid funds equal to that amount.
"(E) To the extent the ancillary asset involves the use of a particular technology, the experience of the issuer with the use of that technology.
"(F) The backgrounds of the board of directors (or equivalent body), senior management, and key employees of the issuer, the experience or functions of whom are material to the value of the ancillary asset, as well as any personnel changes relating to the issuer during the period covered by the disclosure.
"(G) A description of the assets and liabilities of the issuer, to the extent material to the value of the ancillary asset.
"(H) A description of any legal proceedings in which the issuer is engaged (including inquiries by governmental agencies into the activities of the issuer), to the extent material to the value of the ancillary asset.
"(I) Risk factors relating to the impact of the issuer on, or unique knowledge relating to, the value of the ancillary asset.
"(J) Information relating to ownership of the ancillary asset by—
"(i) persons owning not less than 10 percent of any class of equity security of the issuer; and
"(ii) the management of the issuer.
"(K) Information relating to transactions involving the ancillary asset by the issuer with related persons, promoters, and control persons.
"(L) Recent sales or similar dispositions of ancillary assets by the issuer and affiliates of the issuer.
"(M) Purchases or similar dispositions of ancillary assets by the issuer and affiliates of the issuer.
"(N) A going concern statement from the chief financial officer of the issuer or equivalent official, signed under penalty of perjury, stating whether the issuer maintains the financial resources to continue business as a going concern for the 1-year period following the submission of the disclosure, absent a material change in circumstances.
"(2) Information relating to the ancillary asset, including the following:
"(A) A general description of the ancillary asset, including the standard unit of measure with respect to the ancillary asset, the intended or known functionality and uses of the ancillary asset, the market for the ancillary asset, other assets or services that may compete with the ancillary asset, and the total supply of the ancillary asset or the manner and rate of the ongoing production or creation of the ancillary asset.
"(B) If ancillary assets have been offered, sold, or otherwise provided by the issuer to investors, intermediaries, or resellers, a description of the amount of assets offered, sold, or provided, the terms of each such transaction, and any contractual or other restrictions on the resale of the assets by intermediaries.
"(C) If ancillary assets were distributed without charge, a description of each distribution, including the identity of any recipient that received more than 5 percent of the total amount of the ancillary assets in any such distribution.
"(D) The amount of ancillary assets owned by the issuer.
"(E) For the 1-year period following the submission of the disclosure, a description of the plans of the issuer to support (or to cease supporting) the use or development of the ancillary asset, including markets for the ancillary asset and each platform or system that uses the ancillary asset.
"(F) Each third party not affiliated with the issuer, the activities of which may have a material impact on the value of the ancillary asset.
"(G) Risk factors known to the issuer that may limit demand for, or interest in, the ancillary asset.
"(H) The names and locations of the markets in which the ancillary asset is known by the issuer to be available for sale or purchase.
"(I) To the extent available to the issuer, the average daily price for a constant unit of value of the ancillary asset during the relevant reporting period, as well as the 12-month high and low prices for the ancillary asset.
"(J) If applicable, information relating to any external audit of the code and functionality of the ancillary asset, including the entity performing the audit and the experience of the entity in conducting similar audits.
"(K) If applicable, any third-party valuation report or economic analysis regarding the ancillary asset or the projected market of the ancillary asset, which shall include the entity performing the valuation or analysis and the experience of the entity in conducting similar reports or analyses.
"(L) If the ancillary asset is intangible, information relating to custody by the owner of the ancillary asset or a third party.
"(M) Information on intellectual property rights claimed or disputed relating to the ancillary asset.
"(N) A description of the technology underlying the ancillary asset.
"(O) Any material tax considerations applicable to owning, storing, using, or trading the ancillary asset.
"(P) Any material legal or regulatory considerations applicable to owning, storing, using, or trading the ancillary asset, including any legal proceeding that may impact the value of the ancillary asset.
"(Q) Any other material factor or information that may impact the value of the ancillary asset and about which the issuer is reasonably aware.
"(d) Application to Successor Entities and Certain Affiliates.—
"(1) In general.—If an issuer would otherwise be subject to specified periodic disclosure requirements under subsection (c) and is no longer in operation, any successor entity that directly or indirectly received not less than 50 percent of the proceeds raised by the sale of the related securities of that issuer, and that is engaged in entrepreneurial or managerial efforts that primarily determine the value of the applicable ancillary asset, shall furnish, or cause to be furnished, to the Commission the information required under that subsection.
"(2) Certain affiliates.—If an entity controlled by an issuer is subject to specified periodic disclosure requirements under subsection (c) and is engaged in entrepreneurial or managerial efforts that primarily determine the value of an ancillary asset, the entity may furnish to the Commission the information required under that subsection.
"(e) Voluntary Disclosure.—An issuer that is not subject to the specified periodic disclosure requirements under subsection (c) and that offers or sells a security through an arrangement or scheme that constitutes an investment contract, as that term is used in section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)), and that provides the holder of that security with an ancillary asset in connection with the acquisition of the security may voluntarily furnish to the Commission the information required under that subsection if the issuer believes that it is reasonably likely that the issuer will become subject to those requirements in the future.
"(f) Exemptions.—The Commission may, by order, exempt an ancillary asset from the specified periodic disclosure requirements under subsection (c) if the Commission determines that the public policy goals of disclosure and consumer protection are not satisfied by requiring disclosures relating to an ancillary asset.
"(g) Rule of Construction.—If an issuer fails to comply with a provision of this section, an ancillary asset provided by the issuer shall not be presumed to be a security under a provision of law described in subsection (b)(4)(A)(ii), solely because of such failure.
"(h) Rules.—The Commission may adopt rules and guidance to implement this section, consistent with the statutory intent of this section.".
SEC. 302. TERMINATION OF SPECIFIED PERIODIC DISCLOSURE REQUIREMENTS.
Section 41 of the Securities Exchange Act of 1934, as added by section 301 of this Act, is amended by adding at the end the following:
"(i) Termination of Specified Periodic Disclosure Requirements.—
"(1) In general.—The obligation of an issuer to furnish the information required under subsection (c) shall terminate on the date that is 90 days, or such shorter period as the Commission may determine, after the date on which the issuer files a certification described in paragraph (2).
"(2) Certification.—
"(A) In general.—A certification filed under paragraph (1) shall be supported by reasonable evidence, based on the knowledge of the issuer filing the certification, after due inquiry, that—
"(i) the average daily aggregate value of all trading in the applicable ancillary asset in all spot markets open to the public in the United States in the 12-month period preceding the date on which the certification is filed was not greater than $5,000,000; or
"(ii) during the 12-month period preceding the date on which the certification is filed, neither the applicable issuer, nor any entity controlled by the applicable issuer, engaged in entrepreneurial or managerial efforts that primarily determined the value of the ancillary asset.
"(B) Denial.—
"(i) In general.—Subject to subparagraph (C)(ii), the Commission may, by majority vote and after notice and opportunity for hearing, deny a certification filed under paragraph (1) if the Commission finds that the certification is not supported by substantial evidence.
"(ii) Effect.—The denial, under clause (i), of a certification filed under paragraph (1)—
"(I) shall terminate the certification so filed; and
"(II) shall not prevent the applicable issuer from filing another certification under paragraph (1), if the re-filed certification is filed not earlier than 180 days after the date on which the original certification is denied.
"(C) Pending status.—
"(i) In general.—Termination of the disclosure requirements described in paragraph (1) applicable to an issuer that has filed a certification under that paragraph shall be deferred pending review by the Commission of the evidence supporting the certification.
"(ii) Effect of delay.—If, as of the date that is 90 days after receiving a certification filed under paragraph (1), the Commission has not requested additional evidence with respect to the certification from the applicable issuer, the disclosure obligations that are the subject of the certification shall terminate.".
SEC. 303. GUIDANCE RELATING TO SATISFACTORY CONTROL LOCATION.
Not later than 180 days after the date of the enactment of this Act, the Securities and Exchange Commission (referred to in this title as the "Commission") shall issue guidance relating to section 240.15c3–3 of title 17, Code of Federal Regulations, or any successor regulation, providing that the requirement to designate a satisfactory control location for a digital asset that is, or may represent ownership of, a security may be satisfied by protecting the digital asset through commercially reasonable cybersecurity practices to maintain control of sufficient private key material to transfer control of the digital asset to another person, or to cause another person to obtain control of the digital asset, including by means of a smart contract that generates private key material without the involvement of a natural person.
SEC. 304. CUSTODY AND CUSTOMER PROTECTION RULES.
(a) In General.—
(1) Modernization of existing rules and adoption of new rules.—Not later than 18 months after the date of enactment of this Act, the Commission shall—
(A) complete the multi-year study of the Commission with respect to the modernization of the rules of the Commission relating to customer protection (section 240.15c3–3 of title 17, Code of Federal Regulations) and custody of securities, digital assets, and client funds (section 275.206(4)–2 of title 17, Code of Federal Regulations); and
(B) consistent with the results of the study described in subparagraph (A), adopt final rules relating to the issues described in paragraph (2).
(2) Contents.—The final rules adopted under paragraph (1)(B) shall address the following concepts:
(A) Investor protection and education with respect to digital assets.
(B) Digital assets, distributed ledger technology, and use of collaborative custody or multi-signature arrangements, including distribution of private key material and resulting obligations.
(C) Changes in market structure and asset characteristics, including disuse of physical securities and assets and appropriate custodial methods for electronically native assets.
(D) Reduction of regulatory burden.
(E) Use of technology to facilitate regulatory compliance and risk management.
(F) Parity of State- and nationally-chartered banks, as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(a)), with respect to asset custody in a manner consistent with that Act (15 U.S.C. 80b–1 et seq.) and other existing law.
(G) Standards under which an issuer of an unregistered digital asset that is, or may represent ownership of, a security is not required to utilize a registered transfer agent.
(H) Specification of the digital assets which constitute client funds under section 275.206(4)–2 of title 17, Code of Federal Regulations.
(b) Digital Assets and Securities.—Not later than 270 days after the date of enactment of this Act, the Commission shall adopt final guidance permitting, for the purposes of section 240.15c3–3(b) of title 17, Code of Federal Regulations, a broker or a dealer to perform, within the same legal entity, both trading and custodial activities relating to fully-paid and excess margin digital assets, including virtual currency and digital assets that are securities or may represent ownership of securities, in addition to traditional securities, client funds, and other assets permitted by the Commission to be within the control of a broker or dealer.
# TITLE IV—RESPONSIBLE COMMODITIES INNOVATION
SEC. 401. DEFINITIONS.
Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended—
(1) in paragraph (9), by striking "and frozen concentrated orange juice" and inserting “frozen concentrated orange juice, and a digital asset (consistent with section 2(c)(2)(F))”;
(2) by inserting after paragraph (15) the following:
"(15A) Digital asset.—
"(A) In general.—Except as provided in subparagraph (B), the term ‘digital asset’ has the meaning given the term in section 9801 of title 31, United States Code.
"(B) Exclusion.—The term ‘digital asset’ does not include an asset that provides the holder of the asset with any of the following rights in a business entity:
"(i) A debt or equity interest in that entity.
"(ii) Liquidation rights with respect to that entity.
"(iii) An entitlement to an interest or dividend payment from that entity.
"(iv) A profit or revenue share in that entity derived solely from the entrepreneurial or managerial efforts of others.
"(v) Any other financial interest in that entity.
"(15B) Digital asset exchange.—The term ‘digital asset exchange’ means a trading facility that lists for trading at least 1 digital asset.";
(3) in paragraph (28)(A)(i)—
(A) in subclause (I)—
(i) in item (aa)—
(I) in subitem (EE), by striking "or" at the end; and
(II) by adding at the end the following:
"(GG) the purchase or sale of a digital asset that is traded on or subject to the rules of a registered entity;";
(ii) in item (bb), by striking "and" and inserting “or”; and
(iii) by adding at the end the following:
"(cc) acting as a counterparty to any cash or spot agreement, contract, or transaction involving a digital asset with a person who is not an eligible contract participant, unless the activity is—
"(AA) conducted in compliance with the laws of the State in which the activity occurs;
"(BB) subject to regulation by another Federal authority; or
"(CC) separately regulated under this Act; and"; and
(B) in subclause (II), by striking "items (aa) or (bb)" and inserting “item (aa), (bb), or (cc)”;
(4) by inserting after paragraph (39) the following:
"(39A) Registered digital asset exchange.—The term ‘registered digital asset exchange’ means a digital asset exchange registered under section 5i."; and
(5) in paragraph (40)—
(A) in subparagraph (E), by striking "and" at the end;
(B) by redesignating subparagraph (F) as subparagraph (G); and
(C) by inserting after subparagraph (E) the following:
"(F) a registered digital asset exchange; and".
SEC. 402. REPORTING AND RECORDKEEPING.
Section 4g of the Commodity Exchange Act (7 U.S.C. 6g) is amended—
(1) in subsection (a), by inserting "digital assets or" before “commodities”; and
(2) in subsection (d), in the second sentence, by striking "commodity futures." and inserting “commodities.”.
SEC. 403. CFTC JURISDICTION OVER DIGITAL ASSET TRANSACTIONS.
(a) Commission Jurisdiction Over Retail Digital Asset Transactions.—
(1) In general.—Section 2(c)(2) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)) is amended—
(A) in subparagraph (D)(ii)—
(i) in subclause (III), in the matter preceding item (aa), by inserting "of a commodity, other than a digital asset," before “that”;
(ii) by redesignating subclauses (IV) and (V) as subclauses (V) and (VI), respectively; and
(iii) by inserting after subclause (III) the following:
"(IV) a contract of sale of a digital asset that—
"(aa) results in actual delivery within 2 days or such other period as the Commission may determine by rule based upon the typical commercial practice in cash or spot markets for the digital asset involved; or
"(bb) is executed on or subject to the rules of a registered digital asset exchange or with a registered futures commission merchant;"; and
(B) by adding at the end the following:
"(F) Commission jurisdiction over digital asset transactions.—
"(i) In general.—
"(I) Jurisdiction.—Subject to sections 6d and 12(e) and section 403 of the Commodity Futures Modernization Act of 2000 (7 U.S.C. 27a), the Commission shall have exclusive jurisdiction over any agreement, contract, or transaction involving a contract of sale of a digital asset in interstate commerce, including ancillary assets (consistent with section 41(b)(4) of the Securities Exchange Act of 1934), except that specified periodic reporting requirements made by an issuer which provided the holder of the security with an ancillary asset under that section, and the security that constitutes an investment contract (within the meaning of section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1))), shall remain within the jurisdiction of the Securities and Exchange Commission.
"(II) Fungibility requirement.—The Commission shall only exercise jurisdiction over an agreement, contract, or transaction involving a contract of sale of a digital asset that is fungible, which shall not include digital collectibles and other unique digital assets.
"(ii) Withholding of rulemaking authority over certain transactions.—Notwithstanding clause (i), this subparagraph shall not be interpreted to permit the Commission to issue any rule regarding any agreement, contract, or transaction that is not offered, solicited, traded, facilitated, executed, cleared, reported, or otherwise dealt in—
"(I) on or subject to the rules of a registered entity; or
"(II) by any other entity registered by the Commission.
"(iii) Limitation.—Clause (i) shall not apply to custodial activities with respect to a digital asset of an entity supervised or regulated by a State or other Federal regulatory agency.".
(2) Conforming amendment.—Section 2(a)(1)(A) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)) is amended, in the first sentence, by striking "section 19 of this Act" and inserting “subsection (c)(2)(F) or section 19”.
(b) Segregation of Digital Assets.—Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is amended by adding at the end the following:
"(i) Segregation of Digital Assets.—
"(1) Holding of customer assets.—
"(A) In general.—Each futures commission merchant shall hold customer money, assets, and property in a manner to minimize the customer’s risk of loss of, or unreasonable delay in the access to, the money, assets, and property.
"(B) Custodian.—A futures commission merchant shall hold the property of a customer of the futures commission merchant with a licensed, chartered, or registered entity subject to regulation by 1 of the following agencies:
"(i) The Commission.
"(ii) The Securities and Exchange Commission.
"(iii) An appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)).
"(iv) A State bank supervisor (as defined in that section).
"(v) An appropriate foreign governmental authority in the home country of the custodian.
"(2) Segregation of funds.—
"(A) Definition of digital asset customer.—In this paragraph, the term ‘digital asset customer’ means a customer involved in a cash or spot, leveraged, margined, or financed digital asset transaction in which the futures commission merchant is acting as the counterparty.
"(B) Requirements.—
"(i) In general.—A futures commission merchant shall treat and deal with all money, assets, and property of any digital asset customer received as belonging to the customer.
"(ii) Commingling prohibited.—Money, assets, and property of a digital asset customer described in clause (i)—
"(I) shall be separately accounted for; and
"(II) shall not be—
"(aa) commingled with the funds of the futures commission merchant; or
"(bb) used to margin, secure, or guarantee any trades or accounts of any customer or person other than the person for whom the money, assets, or property are held.
"(C) Exceptions.—
"(i) Use of funds.—
"(I) In general.—Notwithstanding subparagraph (B), money, assets, and property of a digital asset customer may, for convenience, be commingled and deposited in the same account or accounts with an entity described in paragraph (1)(B).
"(II) Withdrawal.—Notwithstanding subparagraph (B), the share of the money, assets, and property described in subclause (I) as in the normal course of business is necessary to margin, guarantee, secure, transfer, adjust, or settle a digital asset transaction with a registered entity may be withdrawn and applied to those purposes, including the payment of commissions, brokerage, interest, taxes, storage, and other charges, lawfully accruing in connection with the digital asset transaction.
"(ii) Commission action.—Notwithstanding subparagraph (B), in accordance with such terms and conditions as the Commission may prescribe by rule or order, any money, assets, or property of a digital asset customer may be commingled and deposited in customer accounts with any other money, assets, or property received by the futures commission merchant and required by the Commission to be separately accounted for and treated and dealt with as belonging to the digital asset customer.
"(D) Permitted investments.—Money of a digital asset customer may be invested—
"(i) in—
"(I) obligations of the United States;
"(II) general obligations of any State or of any political subdivision of a State;
"(III) obligations fully guaranteed as to principal and interest by the United States; or
"(IV) any other investment that the Commission may by rule prescribe; and
"(ii) in accordance with such rules and subject to such conditions as the Commission may prescribe.
"(E) Prohibition.—It shall be unlawful for any person, including any derivatives clearing organization or depository institution, that has received any money, assets, or property for deposit in a separate account or accounts as required by subparagraph (B) to hold, dispose of, or use any of the money, assets, or property that belongs to the depositing futures commission merchant or any person other than the digital asset customer of the futures commission merchant.
"(3) Customer right to opt out.—
"(A) In general.—A customer shall have the right to waive any requirement under this subsection by affirmatively electing, in writing to the futures commission merchant, to waive the requirement.
"(B) Limitations.—The Commission may, by rule, establish notice and disclosure requirements, segregation requirements, investment limitations, and other rules relating to the waiving of any requirement under this subsection that are reasonably necessary to protect customers, including eligible contract participants, non-eligible contract participants, and any other class of customers.".
(c) Limitation on Futures Commission Merchants Acting as a Counterparty in Digital Asset Transactions.—Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) (as amended by subsection (b)) is amended by adding at the end the following:
"(j) Limitation on Futures Commission Merchants Acting as a Counterparty in Digital Asset Transactions.—A registered futures commission merchant shall not act as a counterparty in any agreement, contract, or transaction involving a digital asset that has not been listed for trading on a registered digital asset exchange.".
(d) Common Provisions Applicable to Registered Entities.—Section 5c of the Commodity Exchange Act (7 U.S.C. 7a–2) is amended—
(1) in subsection (a)(1), by striking "5(d) and 5b(c)(2)" and inserting “5(d), 5b(c)(2), and 5i(c)”;
(2) in subsection (b), by inserting "registered digital asset exchange," before “derivatives” each place it appears; and
(3) in subsection (c)—
(A) in paragraph (2), by inserting "or participants" before “(in a”;
(B) in paragraph (4)(B), by striking "1a(10)" and inserting “1a(9)”; and
(C) in paragraph (5), by adding at the end the following:
"(D) Special rules for the listing of certain digital assets.—
"(i) In general.—In the case of listing for trading a digital asset that has not previously been listed for trading on another registered entity—
"(I) paragraphs (2) and (3) shall apply as if the listing were a rule; and