Digital Asset Market Clarity Act

(a) Securities Act of 1933.— Section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)), as amended by the GENIUS Act, is amended by striking the final sentence and inserting the following: “The term does not include a digital commodity or permitted payment stablecoin.”.

(b) Securities Exchange Act of 1934.— Section 3(a)(10) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)), as amended by the GENIUS Act, is amended by striking the final sentence and inserting the following: “The term does not include a digital commodity or permitted payment stablecoin.”.

(c) Investment Advisers Act of 1940.— Section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(a)) is amended—

(1) in paragraph (18), as amended by the GENIUS Act, by striking the final sentence and inserting the following: “The term does not include a digital commodity or permitted payment stablecoin.”;

(2) by redesignating the second paragraph (29) (relating to commodity pools) as paragraph (31); and

(3) by adding at the end, the following:

“(32) Digital commodity-related terms.— The terms digital commodity and permitted payment stablecoin have the meaning given those terms, respectively, under section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)).”.

(d) Investment Company Act of 1940.— Section 2(a) of the Investment Company Act of 1940 (15 U.S.C. 80a–2) is amended—

(1) in paragraph (36), as amended by the GENIUS Act, by striking the final sentence and inserting the following: “The term does not include a digital commodity or permitted payment stablecoin.”; and

(2) by adding at the end, the following:

“(55) Digital commodity-related terms.— The terms digital commodity and permitted payment stablecoin have the meaning given those terms, respectively, under section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)).”.

(e) Securities Investor Protection Act of 1970.— Section 16 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll) is amended—

(1) in paragraph (14), as amended by the GENIUS Act, by striking the final sentence and inserting the following: “The term does not include a digital commodity or permitted payment stablecoin, as such terms are defined, respectively, under section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a))”; and

(2) by adding at the end the following:

“(15) Treatment of permitted payment stablecoins.— A permitted payment stablecoin, as defined in section 2(a) of the Securities Act of 1933, shall not qualify as “cash” and a claim for a permitted payment stablecoin shall not qualify as a “claim for cash”.”.

(a) In general.— Section 10 of the Securities Exchange Act of 1934 (15 U.S.C. 78j) is amended—

(1) by moving subsection (c) so as to appear after subsection (b);

(2) by inserting after subsection (c) the following:

“(d) To use or employ, in connection with the purchase or sale of any permitted payment stablecoin or digital commodity, by or through, as applicable, a broker, dealer, national securities exchange, or an alternative trading system, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.”; and

(3) by adding at the end the following: “Rules promulgated under subsection (b) that prohibit fraud, manipulation, or insider trading (but not rules imposing or specifying reporting or recordkeeping requirements, procedures, or standards as prophylactic measures against fraud, manipulation, or insider trading), and judicial precedents decided under subsection (b) and rules promulgated thereunder that prohibit fraud, manipulation, or insider trading, shall apply with respect to permitted payment stablecoin and digital commodity transactions engaged in by or through a broker or dealer or through an alternative trading system or, as applicable, a national securities exchange to the same extent as they apply to securities transactions. Judicial precedents decided under section 17(a) of the Securities Act of 1933 and sections 9, 15, 16, 20, and 21A of this title, and judicial precedents decided under applicable rules promulgated under such sections, shall apply to permitted payment stablecoins and digital commodities with respect to those circumstances in which the permitted payment stablecoins and digital commodities are, as applicable, brokered, traded, or custodied by or through a broker or dealer or through an alternative trading system or a national securities exchange to the same extent as they apply to securities.”.

(b) Treatment of permitted payment stablecoins.— Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after section 6 the following:

“6A. Treatment of transactions in permitted payment stablecoins.—

(a) Authority To broker, trade, and custody permitted payment stablecoins.— Permitted payment stablecoins may be brokered, traded, or custodied by a broker or dealer or through an alternative trading system or national securities exchange.

(b) Commission jurisdiction.— The Commission shall only have jurisdiction over a transaction in a permitted payment stablecoin with respect to those circumstances in which a permitted payment stablecoin is brokered, traded, or custodied—

(1) by a broker or dealer;

(2) through a national securities exchange; or

(3) through an alternative trading system.

(c) Limitation.— Subsection (b) shall only apply to a transaction described in subsection (b) for the purposes of regulating the offer, execution, solicitation, or acceptance of a permitted payment stablecoin in those circumstances in which the permitted payment stablecoin is brokered, traded, or custodied—

(1) by a broker or dealer;

(2) through a national securities exchange; or

(3) through an alternative trading system.”.

(a) In general.— Section 5 of the Securities Exchange Act of 1934 (15 U.S.C. 78e) is amended—

(1) by striking “It” and inserting the following:

“(a) In general.— It”; and

(2) by adding at the end the following:

“(b) Digital commodity protections.—

(1) In general.— The Commission may not preclude a trading platform from operating pursuant to a covered exemption to exchange registration under section 6 of this title on the basis that the assets traded or to be traded on such platform include—

(A) digital commodities or permitted payment stablecoins; and

(B) securities.

(2) Covered exemption.— In this subsection, the term covered exemption means an exemption—

(A) described in subsection (a)(2); or

(B) with respect to any other rule of the Commission relating to the definition of “exchange”.”.

(b) Securities Exchange Act of 1934.— Section 3(a)(2) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(2)) is amended by adding at the end the following: “Neither an alternative trading system predominantly facilitating the trading of digital commodities, permitted payment stablecoins, or both, relative to its securities traded, nor a digital commodity exchange, is a “facility” of an exchange.”.

(c) Rule of construction.— Nothing in this section, the amendments made by this section, or section 304 may be construed to—

(1) prohibit a national securities exchange from owning or operating any other type of alternative trading system; or

(2) create a presumption that any other type of alternative trading system owned or operated by a national securities exchange is a facility of that exchange.

(a) Conflict of interest policies and procedures.— Each person or entity dual-registered with the Commodity Futures Trading Commission as permitted under section 15(p) of the Securities Exchange Act of 1934 shall establish, maintain, and, as applicable, enforce and comply with written policies and procedures reasonably designed to mitigate any conflicts of interest, including with respect to transactions or arrangements with affiliates registered with the Securities and Exchange Commission, taking into consideration the nature of the business of such person or entity.

(b) Exemption from duplicative, conflicting, or unduly burdensome provisions.— The Securities and Exchange Commission shall prescribe rules for a person or entity with multiple registrations, where at least one such registration includes any dual registration permitted under section 15(p) of the Securities Exchange Act of 1934, to exempt the person or entity from duplicative, conflicting, or unduly burdensome provisions of the Securities Exchange Act of 1934 and rules thereunder, to the extent such an exemption would protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

(c) Implementing organizations.— The Securities and Exchange Commission shall require any registered national securities association that has as a member a registered broker or registered dealer that is registered with the Commodity Futures Trading Commission as a digital commodity broker or digital commodity dealer as permitted under section 15(p)(1) of the Securities Exchange Act of 1934 or otherwise transacts in permitted payment stablecoins to revise such rules as may be necessary to further the purposes of and compliance with this section.

(d) Memorandum of understanding.— The Securities and Exchange Commission shall enter into a memorandum of understanding with the Commodity Futures Trading Commission to ensure—

(1) non-duplicative supervision and enforcement with respect to registrants of the Securities and Exchange Commission dual-registered with the Commodity Futures Trading Commission as permitted under section 15(p) of the Securities Exchange Act of 1934; and

(2) appropriate information sharing between the Commissions to further the purposes of and compliance with this section, the Securities Exchange Act of 1934, and the Commodity Exchange Act.

(e) Rule of construction.— Nothing in this section shall be construed to limit the anti-fraud, anti-manipulation, or false reporting enforcement authorities of the Commodity Futures Trading Commission with respect to a contract of sale of a commodity and persons effecting such contracts.

(a) In general.— For purposes of books and records requirements for brokers, dealers, transfer agents, national securities exchanges under the Securities and Exchange Act of 1934 (15 U.S.C. 78a et seq.), investment advisers under the Investment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.), and investment companies under the Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.), a person may, consistent with any rules promulgated under subsection (b), utilize records from a blockchain system.

(b) Revision of rules.— Not later than 180 days after the date of enactment of this Act, the Securities and Exchange Commission shall issue and revise such rules as may be necessary to implement this section.

Section 28 of the Securities Act of 1933 (15 U.S.C. 77z–3) is amended by striking “by rule or regulation” and inserting “by rule, regulation, or order”.

Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o) is amended by adding at the end the following:

“(p) Additional registrations with the Commodity Futures Trading Commission.—

(1) Registered brokers and dealers.— A registered broker or registered dealer shall be permitted to maintain a registration with the Commodity Futures Trading Commission as a digital commodity broker or digital commodity dealer.

(2) National securities exchanges.— A national securities exchange or affiliate thereof shall be permitted to maintain a registration with the Commodity Futures Trading Commission as a digital commodity exchange.

(3) Alternative trading systems.— An alternative trading system, and the operator thereof, shall be permitted to maintain a registration with the Commodity Futures Trading Commission as a digital commodity exchange.

(4) Notice of application.— Any person or entity described in paragraph (1) through (3) shall provide to the Securities and Exchange Commission, at such time and in such form and manner as the Securities and Exchange Commission shall prescribe, notice of any application to register with the Commodity Futures Trading Commission as a digital commodity broker, digital commodity dealer, or digital commodity exchange.”.

(a) Covered security.— Section 18(b) of the Securities Act of 1933 (15 U.S.C. 77r(b)) is amended by adding at the end the following:

“(5) Exemption in connection with digital commodities.— A digital commodity shall be treated as a covered security.”.

(b) Rule of construction.— Nothing in this section, section 202, or the amendments made by such sections may be construed to limit the existing authority described in section 18(c)(1) of the Securities Act of 1933 (15 U.S.C. 77r(c)(1)) of a securities commission (or any agency or office performing like functions) of any State with respect to a covered security or any security.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after section 15G the following:

“15H. Decentralized finance activities not subject to this Act.—

(a) In general.— Notwithstanding any other provision of this Act, a person shall not be subject to this Act and the regulations promulgated under this Act based on the person directly or indirectly engaging in any of the following activities, whether singly or in combination, in relation to the operation of a blockchain system or in relation to a decentralized finance trading protocol:

(1) Compiling network transactions or relaying, searching, sequencing, validating, or acting in a similar capacity.

(2) Providing computational work, operating a node or oracle service, or procuring, offering, or utilizing network bandwidth, or providing other similar incidental services.

(3) Providing a user-interface that enables a user to read and access data about a blockchain system.

(4) Developing, publishing, constituting, administering, maintaining, or otherwise distributing a blockchain system or a decentralized finance trading protocol.

(5) Developing, publishing, constituting, administering, maintaining, or otherwise distributing a decentralized finance messaging system, or operating or participating in a liquidity pool, for the purpose of executing a spot contract for the purchase or sale of a digital commodity in relation to a decentralized finance trading protocol.

(6) Developing, publishing, constituting, administering, maintaining, or otherwise distributing software or systems that create or deploy hardware or software, including wallets or other systems, facilitating an individual user’s own personal ability to keep, safeguard, or custody the user’s digital assets or related private keys.

(b) Exceptions.— Subsection (a) shall not apply to the anti-fraud and anti-manipulation authorities of the Commission.”.

(a) Treatment of custody activities.— The appropriate Federal banking agency, the National Credit Union Administration (in the case of a credit union), and the Securities and Exchange Commission may not require a depository institution, national bank, Federal credit union, State credit union, trust company, broker, or dealer, or any affiliate thereof (the “entity”)—

(1) to include assets held in custody that are not accounted for as assets of the entity as a liability on the financial statement or balance sheet of the entity, including digital commodity or permitted payment stablecoin custody or safekeeping services; and

(2) to hold regulatory capital against assets, including reserves backing such assets, in custody or safekeeping, except as necessary to mitigate against operational risks inherent with the custody or safekeeping services, as determined by—

(A) the appropriate Federal banking agency;

(B) the National Credit Union Administration (in the case of a credit union);

(C) a State bank supervisor;

(D) a State credit union supervisor (as defined in section 6003 of the Anti-Money Laundering Act of 2020 (31 U.S.C. 5311 note)); or

(E) the Securities and Exchange Commission (in the case of a broker or dealer).

(b) Definitions.— In this section:

(1) Banking terms.— The terms appropriate Federal banking agency, depository institution, national bank, and State bank supervisor have the meaning given those terms, respectively, under section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).

(2) Credit union terms.— The terms Federal credit union and State credit union have the meaning given those terms, respectively, under section 101 of the Federal Credit Union Act (12 U.S.C. 1752).

(a) In general.— Not later than 270 days after the date of the enactment of this Act, the Securities and Exchange Commission shall issue rules requiring written disclosures regarding the treatment of customer assets in the event of an insolvency, resolution, or liquidation proceeding to be provided by a registered broker or dealer to an investor before a digital commodity, a permitted payment stablecoin, or an investment contract involving a unit of a digital commodity is received, acquired, or held by the broker or dealer for the account of the investor, which shall include, as necessary or appropriate for the protection of investors—

(1) a description of the manner in which any digital commodity, permitted payment stablecoin, or investment contact involving a unit of a digital commodity received, acquired, or held by the broker or dealer for the account of such investor would be treated in an insolvency, resolution, or liquidation proceeding with respect to the broker or dealer under—

(A) title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5381 et seq.);

(B) the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.); or

(C) as applicable, chapter 7 or chapter 11 of title 11, United States Code; and

(2) how the treatment described in paragraph (1) differs from the treatment of securities and cash received, acquired, or held by the broker or dealer for the account of such investor in the event of an insolvency, resolution, or liquidation proceeding with respect to the broker or dealer under each law described under subparagraph (A) through (C) of paragraph (1).

(a) Digital commodity activities that are financial in nature.— Section 4(k)(4) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)(4)) is amended—

(1) in subparagraph (A), by striking “or securities” and inserting “, securities, or digital commodities”; and

(2) in subparagraph (E), by inserting “or digital commodities” before the period at the end.

(b) National bank activity.—

(1) In general.— A national bank may use a digital asset or blockchain system to perform, provide, or deliver any activity, function, product, or service that the national bank is otherwise authorized by law to perform, provide, or deliver.

(2) Rule of construction.— Nothing in this subsection may be construed to exempt a national bank’s performance, provision, or delivery of an activity, function, product, or service from a requirement that would apply if the activity were not performed, provided, or delivered using a digital asset or blockchain system.

(c) Insured State banks and subsidiaries of insured State banks.— For purposes of sections 24(a) and 24(d) of the Federal Deposit Insurance Act (12 U.S.C. 1831a(a) and (d)), all of the activities authorized for a national bank under subsection (b) that are principal activities shall be permissible for an insured State bank and subsidiary of an insured State bank.

Except as otherwise provided under this title, this title and the amendments made by this title shall take effect 360 days after the date of enactment of this Act, except that, to the extent a provision of this title requires a rulemaking, the provision shall take effect on the later of—

(1) 360 days after the date of enactment of this Act; or

(2) 60 days after the publication in the Federal Register of the final rule implementing the provision.

The Securities and Exchange Commission, in consultation with the Commodity Futures Trading Commission, shall require any registered entity that facilitates the trading of digital commodities or investment contracts involving units of a digital commodity to provide clear and accessible educational materials to the public, including—

(1) an overview of how blockchain technology functions;

(2) a description of common risks associated with digital commodities;

(3) a description of the differences between digital commodity markets and traditional financial markets;

(4) information on reporting requirements related to digital commodity transactions or investment contracts involving units of a digital commodity; and

(5) guidance on recognizing fraudulent schemes and instructions for reporting suspected fraud.

(a) In general.— The dollar amount specified under section 7(a)(3)(A) of the Federal Reserve Act (12 U.S.C. 289(a)(3)(A)) is reduced by $15,000,000.

(b) Effective date.— The amendment made by subsection (a) shall take effect on September 30, 2035.