H.R. 3633, Reported in Senate with an amendment in the nature of a substitute (Calendar No. 423) (Part 5 of 5)
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elements, if any, that those agencies could publish or
adopt to support the interoperability described in
subparagraph (C) in order to ensure consistency and
regulatory access;
(2) recommends pilot programs, guidance, rule changes, or
amendments to statutes that would be needed to implement
effective automated regulatory compliance approaches and any
other related approaches addressed in the study;
(3) identifies the costs and benefits to issuers of
different sizes, secondary market intermediaries, regulators,
investors, and other applicable parties, including differential
impacts on smaller entities and options to reduce those
burdens;
(4) benchmarks international efforts with respect to
automated regulatory compliance mechanisms and consults with
any appropriate State, Federal, or foreign regulators; and
(5) evaluates whether existing (as of the day before the
date of enactment of this Act) oversight, enforcement, and
liability frameworks are sufficient to--
(A) ensure accountability, transparency, fairness,
and consumer protection; and
(B) prevent misuse of distributed ledger-based
compliance tools.
(c) Report.--Not later than 1 year after the date of enactment of
this Act, the Comptroller General of the United States shall make
publicly available a report that includes the results of the study
conducted under subsection (b).
SEC. 504. REPORT ON LEGISLATIVE RECOMMENDATIONS.
(a) Definitions.--In this section:
(1) Appropriate committees of congress.--The term
``appropriate committees of Congress'' means--
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate;
(B) the Committee on Agriculture, Nutrition, and
Forestry of the Senate;
(C) the Committee on Financial Services of the
House of Representatives; and
(D) the Committee on Agriculture of the House of
Representatives.
(2) Federal financial regulator.--The term ``Federal
financial regulator'' means--
(A) the Board of Governors of the Federal Reserve
System;
(B) the Commodity Futures Trading Commission;
(C) the Department of the Treasury;
(D) the Federal Deposit Insurance Corporation;
(E) the Federal Housing Finance Agency;
(F) the National Credit Union Administration;
(G) the Office of the Comptroller of the Currency;
(H) the Bureau of Consumer Financial Protection;
and
(I) the Commission.
(b) Requirement.--Not later than 1 year after the date of enactment
of this Act, and every 3 years thereafter for a total of not fewer than
12 years after the date of enactment of this Act, each Federal
financial regulator shall submit to the appropriate committees of
Congress a report that includes--
(1) a description of the implementation of this Act and the
amendments made by this Act (including the adoption of rules
and guidance, and the approval or rejection of applications
submitted, under this Act and the amendments made by this Act),
where applicable to the Federal financial regulator; and
(2) any legislative recommendations for the further
effective implementation of this Act and the amendments made by
this Act.
SEC. 505. TOKENIZATION OF SECURITIES.
(a) Definitions.--In this section:
(1) Tokenization.--The term ``tokenization'' means the
process of creating a digital representation of all rights,
obligations, or interests in a tangible or intangible asset on
a distributed ledger or comparable technology.
(2) Tokenized.--The term ``tokenized'', with respect to an
asset, means that the asset has undergone tokenization.
(b) Sense of Congress.--It is the sense of Congress that States
should promptly consider and adopt commercial law frameworks under the
Uniform Commercial Code that provide clear and uniform rules for the
ownership, control, and enforceability of rights relating to digital
assets.
(c) Study.--Not later than 360 days after the date of enactment of
this Act, the Commission shall conduct a comprehensive study of the
regulatory treatment of tokenized securities, including custody
standards, interagency coordination, cross-border coordination, and
consumer protection.
(d) Parity in Regulatory Treatment.--
(1) In general.--Subject to paragraph (2), a tokenized
security shall be treated, for all regulatory purposes, as the
security that the tokenized security represents, except as
otherwise provided by--
(A) section 106(a); or
(B) a rule, regulation, or order issued by the
Commission.
(2) Requirement.--A rule, regulation, or order described in
paragraph (1)(B) may only be issued by the Commission to adapt
the manner in which the applicable regulatory requirements are
satisfied, to the extent necessary or appropriate--
(A) in light of the unique technological or other
characteristics of digital assets or substantially
similar technology; and
(B) consistent with--
(i) what is necessary or appropriate in the
public interest; and
(ii) protecting investors, maintaining
fair, orderly, and efficient markets, and
facilitating capital formation.
(e) Prohibition on Misrepresentation.--Any statement or omission
with respect to any material fact that is made by a person in
connection with the offer, sale, or other representation regarding a
tokenized security shall be subject to the securities laws, including
applicable anti-fraud or anti-manipulation provisions under the
securities laws.
(f) Agency Action for Tokenized Securities.--
(1) In general.--The Commission may issue rules governing
tokenized securities pursuant to the requirements of this
section.
(2) Requirements.--Rules issued under this subsection may
address, consistent with sections 106 and 107, how requirements
applicable to an underlying security apply to custody, books
and records, reconciliation with transfer agents or other
recordkeepers, auditability, settlement finality, treatment of
chain reorganizations, and other operational risks arising from
the use of distributed ledger technology or comparable
technology.
(g) Rule of Construction Regarding Enforcement.--Nothing in this
section may be construed to prevent the Commission from enforcing the
anti-fraud and anti-manipulation provisions of the securities laws, and
the rules issued under the securities laws, with respect to tokenized
securities, provided that the elements of those provisions are
satisfied.
(h) Savings Clauses.--
(1) Tokenized security.--Any asset that is a security under
the securities laws shall not cease to be a security solely
because the asset is issued, recorded, represented, or
transferred using distributed ledger technology or comparable
technology.
(2) Effect on state law.--Nothing in this section may be
construed, interpreted, or applied in a manner that preempts,
supersedes, invalidates, or otherwise affects any State
property transfer rules, laws, regulations, or common law
principles relating to the transfer or recording of real
tangible or intangible assets or interests therein.
(3) Rulemakings, orders, and other actions.--
Notwithstanding any other provision of this section, section
106 shall apply to any rulemaking, order, or other action of
the Commission under this section.
(4) No limit of ability to offer or sell.--Nothing in this
section, or any rule, regulation, or order promulgated under
this section, may be construed to limit the ability of any
person to offer or sell any tokenized security, consistent with
the securities laws.
SEC. 506. VOLUNTARY ADOPTION OF NATIONAL INSTITUTE OF STANDARDS AND
TECHNOLOGY POST-QUANTUM CRYPTOGRAPHY STANDARDS.
(a) Definitions.--In this section:
(1) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate;
(B) the Committee on Agriculture, Nutrition, and
Forestry of the Senate;
(C) the Committee on Commerce, Science, and
Transportation of the Senate;
(D) the Committee on Financial Services of the
House of Representatives;
(E) the Committee on Agriculture of the House of
Representatives; and
(F) the Committee on Energy and Commerce of the
House of Representatives.
(2) Director.--The term ``Director'' means the Under
Secretary of Commerce for Standards and Technology.
(b) Findings.--Congress finds the following:
(1) Technical standards with respect to digital assets
ensure quality, interoperability, and reliability in products,
processes, and services and facilitate innovation.
(2) The digital asset ecosystem should harness standards to
solve coordination problems and foster innovation, not through
regulation, but through voluntary, market-driven measures.
(3) Advances in quantum computing threaten existing (as of
the day before the date of enactment of this Act) cryptographic
standards and the security of digital assets.
(c) Voluntary Adoption.--The Director, in consultation with the
Secretary of Homeland Security and the heads of sector risk management
agencies, as appropriate, shall promote the voluntary adoption and
deployment of post-quantum cryptography standards, including by--
(1) disseminating and making publicly available guidance
and resources to help organizations adopt and deploy those
standards;
(2) providing technical assistance, as practicable, to
entities that are at high risk of quantum cryptography analytic
attacks, such as entities determined to be critical
infrastructure or digital infrastructure providers; and
(3) conducting such other activities determined necessary
by the Director to promote the adoption and deployment of those
standards across the United States.
(d) Industry Consultation.--In implementing subsection (c), the
Director shall, at a minimum--
(1) solicit regular input from a broad range of industry
stakeholders regarding the feasibility and practical challenges
of adopting the standards described in that subsection;
(2) facilitate ongoing dialogue between the National
Institute of Standards and Technology and industry participants
to identify, assess, and address barriers to the adoption of
the standards described in that subsection;
(3) not later than 2 years after the date of enactment of
this Act, and biennially thereafter until 2035, submit to the
appropriate congressional committees a report on the
implementation of that subsection, including stakeholder
engagement with respect to those actions and continued
challenges in adopting the standards described in that
subsection; and
(4) not later than 5 years after the date of enactment of
this Act, make available to the public a report on stakeholder
engagement and lessons learned in implementing that subsection.
SEC. 507. INTERNATIONAL COORDINATION TO COMBAT DIGITAL ASSET ILLICIT
FINANCE.
(a) Definition.--In this section, the term ``Strategy'' means the
National Strategy to Combat International Digital Asset Illicit Finance
submitted under subsection (d).
(b) Interagency Initiative.--The Secretary of the Treasury, in
coordination with the Secretary of State, the Attorney General, the
Secretary of Homeland Security, and the heads of such other Federal
departments and agencies as the President may designate, shall lead an
interagency initiative to strengthen international cooperation to
prevent the misuse of digital assets for illicit finance, sanctions
evasion, terrorist financing, or other national-security threats.
(c) Objectives.--The initiative established under subsection (b)
shall--
(1) engage foreign counterparts, including finance
ministries, central banks, and financial intelligence units, to
promote anti-money-laundering, sanctions evasion, and counter-
terrorist financing standards applicable to digital asset
activities, consistent with United States standards and the
framework established under the Strategy;
(2) encourage the adoption and enforcement of effective
regulatory and supervisory frameworks for digital asset service
providers to ensure transparency and prevent illicit use;
(3) identify and prioritize jurisdictions of concern that
present significant risk of facilitating illicit digital asset
activity and develop coordinated diplomatic, economic, and law
enforcement strategies to address those risks;
(4) support technical assistance and capacity-building
programs for partner jurisdictions to enhance anti-money
laundering, sanctions evasion, and counter-terrorist financing
supervision, enforcement, and information sharing relating to
digital assets; and
(5) report annually to Congress on progress made toward the
objectives described in paragraphs (1) through (4), including a
list of cooperative and non-cooperative jurisdictions and any
recommendations for additional actions or sanctions.
(d) National Strategy to Combat International Digital Asset Illicit
Finance.--Not later than 270 days after the date of enactment of this
Act, the Secretary of the Treasury, in coordination with the Secretary
of State, the Attorney General, and the Director of National
Intelligence, shall submit to the Committee on Banking, Housing, and
Urban Affairs, the Committee on Foreign Relations, and the Committee on
Homeland Security and Governmental Affairs of the Senate, and the
Committee on Financial Services, the Committee on Foreign Affairs, and
the Committee on Homeland Security of the House of Representatives a
National Strategy to Combat International Digital Asset Illicit
Finance, which shall--
(1) assess global vulnerabilities with respect to the
digital assets framework set out in the Strategy;
(2) set measurable goals and timelines for multilateral
engagement with respect to digital assets;
(3) recommend resource and staffing requirements for
Treasury attaches, financial intelligence liaisons, and other
personnel necessary to implement the Strategy; and
(4) identify standards for combating money laundering,
sanctions evasion, and terrorist financing with respect to
digital asset activities applicable to foreign jurisdictions,
which shall be informed by United States law, regulation, and
supervisory standards, including standards relating to--
(A) anti-money laundering and countering the
financing of terrorism laws and regulations that
identify, prioritize, and mitigate illicit finance
threats, including preventive measures for financial
institutions and other entities covered by those laws
and regulations, including measures relating to
customer due diligence, recordkeeping, internal
controls, and the reporting of suspicious transactions;
(B) money laundering offenses, asset seizure, and
confiscation to recover proceeds of crime;
(C) terrorist financing and proliferation-financing
offenses and related targeted financial sanctions; and
(D) regulation, supervision, and enforcement by
competent authorities, including financial
intelligence, law enforcement, and sanctions measures.
SEC. 508. ANNUAL REPORT ON FOREIGN DIGITAL ASSET TRADING VOLUME,
COMPLIANCE WITH UNITED STATES STANDARDS AND REMEDIATION
ACTIONS.
(a) In General.--Not later than 1 year after the date of enactment
of this Act, and annually thereafter for a period of 4 years, the
Secretary of the Treasury shall submit to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives a report that--
(1) lists the top 20 foreign jurisdictions by volume of
digital asset trading activity on foreign digital asset service
providers during the calendar year immediately preceding the
year of the report;
(2) assesses the degree to which each foreign jurisdiction
listed under paragraph (1) has implemented anti-money
laundering, sanctions evasion, and counter-terrorist financing
laws, regulations, or standards applicable to digital asset
activities consistent with the standards and framework
identified under the National Strategy to Combat International
Digital Asset Illicit Finance submitted under section 507; and
(3) identifies foreign jurisdictions with--
(A) material deficiencies in the implementation or
enforcement of the standards described in paragraph
(2); and
(B) trading volumes that present systemic illicit
finance risk to the United States.
(b) Form.--Each report required under subsection (a) shall be
submitted in unclassified form, but may include a classified annex, as
appropriate.
(c) Remediation and Engagement Report.--For each foreign
jurisdiction identified pursuant to subsection (a)(3), the Secretary of
the Treasury shall include in the applicable report--
(1) a description of bilateral diplomatic, regulatory, or
law enforcement engagements undertaken during the calendar year
immediately preceding the year in which the report is submitted
to remedy the deficiencies of the foreign jurisdiction;
(2) a summary of actions taken by the United States
individually, or in conjunction with any applicable
international body, to identify high-risk or non-cooperative
jurisdictions with respect to digital asset illicit finance,
including public statements identifying those jurisdictions and
measures to support their remediation;
(3) any commitments obtained from the foreign jurisdiction
to address identified deficiencies, including timeliness and
benchmarks; and
(4) an assessment of progress made toward full
implementation of the standards identified under the National
Strategy to Combat International Digital Asset Illicit Finance
submitted under section 507.
SEC. 509. AI INNOVATION LABS.
(a) Definitions.--
(1) AI test project.--The term ``AI test project'' means a
financial product, service, or activity--
(A) that makes substantial use of artificial
intelligence;
(B) that is, or may be, subject to a Federal
regulation or Federal statute; and
(C) for which a regulated entity submits an
application for the waiver or modification of an
applicable regulation subject to an alternative
compliance strategy.
(2) Appropriate financial regulatory agency.--The term
``appropriate financial regulatory agency'' means--
(A) the appropriate Federal banking agency, as
defined in section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813), with respect to an institution
described in subsection (q) of that section;
(B) the Bureau of Consumer Financial Protection,
with respect to a covered person, as defined in section
1002 of the Consumer Financial Protection Act of 2010
(12 U.S.C. 5481), that does not have an appropriate
financial regulatory agency under subparagraph (A),
(C), or (D) of this paragraph;
(C) the National Credit Union Administration, with
respect to an insured credit union, as defined in
section 101 of the Federal Credit Union Act (12 U.S.C.
1752); and
(D) the Federal Housing Finance Agency, with
respect to--
(i) a Federal Home Loan Bank;
(ii) the Federal Home Loan Bank System;
(iii) the Federal National Mortgage
Association; and
(iv) the Federal Home Loan Mortgage
Corporation.
(3) Artificial intelligence; ai.--The terms ``artificial
intelligence'' and ``AI'' have the meaning given the term
``artificial intelligence'' in section 5002 of the National
Artificial Intelligence Initiative Act of 2020 (15 U.S.C.
9401).
(4) Financial product or service.--The term ``financial
product or service''--
(A) has the meaning given the term in section 1002
of the Consumer Financial Protection Act of 2010 (12
U.S.C. 5481);
(B) includes--
(i) activities that are financial in
nature, as defined in section 4(k)(4) of the
Bank Holding Company Act of 1956 (12 U.S.C.
1843(k)(4)); and
(ii) any financial product or service
provided by a person regulated by the
Commission, as defined in section 1002 of the
Consumer Financial Protection Act of 2010 (12
U.S.C. 5481); and
(C) does not include the business of insurance.
(5) Financial regulatory agency.--The term ``financial
regulatory agency'' means--
(A) the Board of Governors of the Federal Reserve
System;
(B) the Federal Deposit Insurance Corporation;
(C) the Office of the Comptroller of the Currency;
(D) the Bureau of Consumer Financial Protection;
(E) the National Credit Union Administration; and
(F) the Federal Housing Finance Agency.
(6) Regulated entity.--The term ``regulated entity'' means
an entity regulated by any financial regulatory agency.
(b) Use of Artificial Intelligence by Regulated Financial
Entities.--
(1) AI innovation labs.--
(A) Establishment.--Each financial regulatory
agency shall establish, or identify an office,
division, or department of the agency that shall serve
as, an AI Innovation Lab to enable regulated entities
to experiment with AI test projects without unnecessary
or unduly burdensome regulation or expectation of
enforcement actions, pursuant to the approval of an
application under subparagraph (B).
(B) Applications.--
(i) Submission.--
(I) In general.--On and after the
date that is 1 year after the date of
enactment of this Act, a regulated
entity may submit to the appropriate
financial regulatory agency an
application, on a form determined by
the appropriate financial regulatory
agency, to engage in an AI test project
through the AI Innovation Lab
established or identified under
subparagraph (A).
(II) Contents.--An application
submitted under subclause (I) shall
include--
(aa) a description of the
AI test project proposed to be
carried out by the regulated
entity;
(bb) an alternative
compliance strategy that--
(AA) identifies a
regulation issued by
the appropriate
financial regulatory
agency that the
regulated entity
requests be waived or
modified; and
(BB) proposes an
alternative method for
the regulated entity to
comply with the
regulation, including
an explanation as to
why the alternative
method is essential to
the operation of the
entity and how the
regulated entity would
effectively manage
risks associated with
the AI test project;
(cc) an explanation of how
under the strategy described in
item (aa), the AI test
project--
(AA) would serve
the public interest,
improve consumer or
investor access to a
financial product or
service, or promote
consumer or investor
protection;
(BB) would enhance
efficiency or
operations, foster
innovation or
competitiveness,
improve risk management
and security, or
enhance regulatory
compliance;
(CC) would not
present a systemic risk
to the financial system
of the United States;
(DD) is consistent
with the purposes of
the anti-money
laundering and
countering the
financing of terrorism
obligations under
subchapter II of
chapter 53 of title 31,
United States Code; and
(EE) would not
present a national
security risk to the
United States;
(dd) a proposed date on
which the AI test project would
terminate and an explanation as
to why such termination date
would be appropriate;
(ee) proposed limitations
on the size, scope, and growth
of the AI test project;
(ff) a detailed business
plan; and
(gg) an estimate of the
economic impact of the AI test
project if approved.
(III) Joint applications.--Two or
more regulated entities may submit a
joint application to the same financial
regulatory agency under subclause (I).
(IV) Regulations of other
agencies.--
(aa) In general.--A
regulated entity may submit an
application under this
subparagraph that includes an
alternative compliance strategy
for a regulation issued or
enforced by a financial
regulatory agency that is not
the appropriate financial
regulatory agency for the
regulated entity.
(bb) Requirements.--An
application described in item
(aa) shall be subject to the
same requirements as an
application described in
subclause (II), except that--
(AA) the regulated
entity shall submit the
application to the
appropriate financial
regulatory agency and
the financial
regulatory agency that
issued or enforces the
regulation that is the
subject of the
alternative compliance
strategy; and
(BB) the AI test
project may not take
effect unless the
appropriate financial
regulatory agency and
any other financial
regulatory agency that
issued or enforces the
regulation that is the
subject of the
alternative compliance
strategy jointly
approve the application
using the process
described in clause
(ii).
(V) Notice.--A regulated entity
that is regulated or supervised by more
than 1 financial regulatory agency
shall provide notice of any application
submitted to the appropriate financial
regulatory agency under this section to
each financial regulatory agency by
which it is regulated or supervised not
later than 5 business days after the
entity submits the application to the
appropriate financial regulatory
agency.
(ii) Agency review.--
(I) In general.--Except as provided
in subclause (IV), not later than 120
days after the date on which an
application is submitted to the
appropriate financial regulatory agency
under clause (i), the appropriate
financial regulatory agency shall--
(aa) review the
application; and
(bb) submit to the
applicant in writing a
determination of the agency.
(II) Approval.--
(aa) In general.--If the
applicant shows that it is more
likely than not that the
application meets the
requirements for establishing
an alternative compliance
strategy and satisfies the
standards described in items
(bb) and (cc) of clause
(i)(II), the agency shall
approve the application and
notify the applicant in writing
of--
(AA) the regulation
that is the subject of
the alternative
compliance strategy;
(BB) the terms of
the alternative
compliance strategy for
the AI test project;
(CC) the date on
which the AI test
project will terminate;
(DD) any
limitations on the
size, scope, or growth
of the AI test project;
and
(EE) any additional
limitations or
conditions on the AI
test project, as
determined by the
appropriate financial
regulatory agency.
(bb) Effect of approval.--
With respect to an AI test
project, except as provided in
item (cc), beginning on the
date on which an application
submitted under clause (i) is
approved and ending on the date
described in item (aa)(CC)--
(AA) the
appropriate financial
regulatory agency may
enforce a regulation
described in item
(aa)(AA) only in the
manner set out in the
alternative compliance
strategy described in
item (aa)(BB); and
(BB) except as
provided in subclause
(III), a financial
regulatory agency that
is not the appropriate
financial regulatory
agency may not enforce
a regulation described
in item (aa)(AA).
(cc) Enforcement by another
financial regulatory agency.--
With respect to an AI test
project, a financial regulatory
agency other than the
appropriate financial
regulatory agency that approves
an application under clause
(i)(IV) may enforce a
regulation described in item
(aa)(AA) if the alternative
compliance strategy described
in item (aa)(BB) provides for
enforcement by such financial
regulatory agency.
(dd) Rule of
construction.--Nothing in this
clause may be construed to
limit the authority of a
financial regulatory agency to
take an enforcement action
against a regulated entity with
respect to fraud or market
manipulation or for engaging in
an unsafe or unsound practice
relating to an AI test project.
(III) Denial.--
(aa) In general.--If an
agency denies an application
submitted under clause (i), the
agency--
(AA) shall submit
to the applicant a
written notice
explaining the reason
for denial; and
(BB) may not take
an enforcement action
related to the proposed
AI test project against
the applicant earlier
than the date that is
30 days after the date
on which the agency
submits the written
notice described in
subitem (AA).
(bb) Resubmittals.--Each
time an application submitted
under clause (i) is denied, the
regulated entity--
(AA) may submit an
amended application
after receiving
feedback from the
agency making such
denial; and
(BB) may not
resubmit more than 2
applications that are
substantially similar
to the denied
application.
(cc) Injunctive relief.--
Notwithstanding item (aa)(BB),
a financial regulatory agency,
by and through its own
attorneys, may file a civil
action in an appropriate United
States district court to enjoin
an active AI test project if
the agency determines that the
AI test project presents an
immediate danger to consumers
or investors or presents a
risk--
(AA) to financial
markets;
(BB) in the case of
an AI test project
engaged in by an
insured depository
institution or an
insured credit union,
of loss to a Federal
deposit or share
insurance fund;
(CC) of a violation
of anti-money
laundering and
countering the
financing of terrorism
obligations under
subchapter II of
chapter 53 of title 31,
United States Code; or
(DD) to the
national security of
the United States.
(IV) Extension.--If the financial
regulatory agency needs additional
time, the agency may extend the
approval deadline by 120 days. After
the expiration of the 120-day extension
period, if the agency has not made a
determination on the application, the
application will automatically be
deemed approved and effective.
(V) Additional information.--Not
later than the initial or extended
approval deadline, as applicable, a
financial regulatory agency may request
additional information from the
applicant.
(iii) Data security.--All data supplied by
sponsors of AI test projects to a financial
regulatory agency submitted under this section
shall be stored and maintained in a secure
manner by the financial regulatory agency,
consistent with applicable data security
standards.
(iv) Regulations.--Not later than 180 days
after the date of enactment of this Act, each
financial regulatory agency shall promulgate
regulations that--
(I) shall be published in the
Federal Register and provide a 60-day
period for public notice and comment;
(II) include--
(aa) procedures for
modifying the AI test projects
that are approved by the
agency;
(bb) consequences for
failure to comply with the
terms of an alternative
compliance strategy;
(cc) a requirement that an
AI test project will terminate
not earlier than 1 year after
the AI test project is
approved;
(dd) procedures to extend
the termination date described
in item (cc);
(ee) procedures for
confidentiality; and
(ff) procedures for
coordinating decisions relating
to applications submitted
jointly by multiple regulated
entities or applications
submitted to more than one
financial regulatory agency.
(2) Report.--Not later than 2 years after the date of
enactment of this Act, and each year for 7 years thereafter,
each financial regulatory agency shall submit to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives
an annual report on the outcomes of AI test projects. A report
under this subsection may not include the names of
participating entities or any proprietary or confidential
business information. A report under this subsection shall
include aggregated findings, trends, and lessons learned from
the AI test projects.
(3) Rule of construction.--Nothing in this section may be
construed to limit the authority of a financial regulatory
agency to take an enforcement action against a regulated entity
with respect to fraud or market manipulation relating to an AI
test project.
TITLE VI--PROTECTING SOFTWARE DEVELOPERS AND SOFTWARE INNOVATION
SEC. 601. PROTECTING SOFTWARE DEVELOPERS.
(a) Amendment to the Securities Act of 1933.--The Securities Act of
1933 (15 U.S.C. 77a et seq.) is amended by inserting after section 27B
(15 U.S.C. 77z-2a) the following:
``SEC. 27C. APPLICATION TO SOFTWARE DEVELOPERS.
``(a) Distributed Ledger System Defined.--In this section, the term
`distributed ledger system' has the meaning given the term in section 2
of the Digital Asset Market Clarity Act.
``(b) Application to Software Developers.--Notwithstanding any
other provision of this Act, a person shall not be subject to this Act
and the regulations promulgated under this Act solely based on the
person engaging in any of the following activities, whether singly or
in combination, in relation to the operation of a distributed ledger
system or any component thereof:
``(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.''.
(b) Amendment to the Securities Exchange Act of 1934.--The
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by
inserting after section 15G (15 U.S.C. 78o-11) the following:
``SEC. 15H. APPLICATION TO SOFTWARE DEVELOPERS.
``(a) Definitions.--In this section:
``(1) Constitute.--The term `constitute' means to compile,
assemble, integrate, or otherwise combine software components
into a complete software system.
``(2) Decentralized finance trading protocol.--
``(A) In general.--The term `decentralized finance
trading protocol' means a distributed ledger system
through which multiple participants can execute a
financial transaction--
``(i) in accordance with an automated rule
or algorithm that is predetermined and non-
discretionary; and
``(ii) without reliance on a person other
than the user to maintain custody or control of
the digital assets subject to the financial
transaction.
``(B) Exclusions.--
``(i) In general.--The term `decentralized
finance trading protocol' does not include a
distributed ledger system if--
``(I) a person or group of persons
under common control or acting pursuant
to an agreement to act in concert has
the authority, directly or indirectly,
through any contract, arrangement,
understanding, relationship, or
otherwise, to control or materially
alter the functionality, operation, or
rules of consensus or agreement of the
distributed ledger system;
``(II) the distributed ledger
system does not operate, execute, and
enforce its operations and transactions
based solely on pre-established,
transparent rules encoded directly
within the source code of the
distributed ledger system; or
``(III) a person or group of
persons under common control has the
unilateral authority, via operation of
the distributed ledger system, to
restrict, censor, or prohibit the use
of the distributed ledger system,
including any applicable system-based
user activity.
``(ii) Special rule.--For purposes of
clause (i), a decentralized governance system
shall not be considered to be a person or a
group of persons under common control or acting
pursuant to an agreement to act in concert.
``(3) Deploy.--The term `deploy' means to bring software or
hardware onto a distributed ledger system for active use.
``(4) Digital asset; distributed ledger application;
distributed ledger system; distributed ledger protocol;
decentralized governance system; smart contract.--The terms
`digital asset', `distributed ledger application', `distributed
ledger system', `distributed ledger protocol', `decentralized
governance system', and `smart contract' have the meanings
given those terms in section 2 of the Digital Asset Market
Clarity Act.
``(5) Decentralized finance messaging system.--
``(A) In general.--The term `decentralized finance
messaging system' means a software application that
provides a user with the ability to create or submit an
instruction, communication, or message to a
decentralized finance trading protocol.
``(B) Additional requirements.--The term
`decentralized finance messaging system' does not
include any system that provides any person other than
the user with--
``(i) control over the funds of the user;
or
``(ii) the authority to execute any of the
transaction of the user.
``(b) Application to Software Developers.--Notwithstanding any
other provision of this Act, a person shall not be subject to this Act
and the regulations promulgated under this Act solely based on the
person engaging in any of the following activities, whether singly or
in combination, in relation to the operation of a distributed ledger
system or any component thereof:
``(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) Developing, publishing, or constituting--
``(A) a distributed ledger system; or
``(B) software or systems that create or utilize
hardware or software, including wallets or other
systems, that facilitate the ability of a user to keep,
safeguard, or have custody of the digital assets or
private keys of the user.
``(c) Rule of Construction.--Subsection (b)(3) does not extend to
any activity covered in any of the activities described in
subparagraphs (A) through (D) of subsection (d)(1), including activity
taken following deployment of such software or hardware.
``(d) Clarification.--
``(1) In general.--The Commission shall, pursuant to notice
and comment rulemaking, clarify the circumstances under which a
person shall not be subject to this Act by reason of engaging
solely in 1 or more of the following activities in relation to
the operation of a decentralized finance trading protocol or
any component thereof:
``(A) Providing a user interface that enables a
user to read and access data.
``(B) Administering, maintaining, or otherwise
distributing a decentralized governance system relating
to a decentralized finance trading protocol, or a
decentralized finance trading protocol.
``(C) Administering, maintaining, or otherwise
distributing a decentralized finance messaging system
or operating or participating in a smart contract-based
liquidity pool in a decentralized finance trading
protocol.
``(D) Administering, maintaining, or otherwise
distributing software or systems that create or deploy
hardware or software, including wallets or other
systems, that facilitate the ability of a user to keep,
safeguard, or maintain custody of the digital assets or
related private keys of the user.
``(2) Considerations.--In providing the clarification under
paragraph (1) the Commission shall--
``(A) ensure that the rules are consistent with the
purposes of the securities laws, including the public
interest, the protection of investors, and the
maintenance of fair and orderly markets;
``(B) provide that section 108(a) of the Lummis-
Gillibrand Responsible Financial Innovation Act of 2026
shall apply to such rules;
``(C) protect the rights of software developers,
publishers, and users to create, publish, and use code
and software in a manner consistent with the First
Amendment to the Constitution of the United States; and
``(D) provide legal clarity for the development,
publication, and operation of distributed ledger
systems and the components therein in a manner
consistent with the purposes of this section.
``(3) Rule of construction.--Nothing in this subsection may
be construed to grant the Commission authority over persons,
systems, software, or activities that do not otherwise fall
within the jurisdiction of the Commission under this Act, or to
create a presumption that any such activity is subject to this
Act.
``(e) Anti-Fraud, Anti-Manipulation, and False Reporting.--The
determination that a person is not subject to this Act under
subsections (b) and (d) shall not apply to the anti-fraud, anti-
manipulation, or false reporting enforcement authorities of the
Commission.
``(f) Rule of Construction.--Nothing in this Act or the rules and
regulations promulgated under this Act may be construed to apply any
requirement of the securities laws to a digital commodity, as defined
in section 2 of the Digital Asset Market Clarity Act, or expand the
authority of the Commission beyond that which the Commission had before
the date of enactment of the Digital Asset Market Clarity Act to
regulate the activities described in subsection (d)(1).
``(g) Federal Preemption.--
``(1) In general.--Notwithstanding any other provision of
law, no securities, commodities, or digital assets law of any
State (or of any political subdivision of a State) shall apply
to an activity described in subsection (b).
``(2) Rule of construction.--Nothing in paragraph (1) may
be construed to apply to the anti-money laundering, anti-fraud,
or anti-manipulation authorities of a State (or of any
political subdivision of a State).''.
(c) Applicability.--This section, and the amendments made by this
section, shall apply to conduct occurring before, on, or after the date
of enactment of this Act.
SEC. 602. SAFE HARBOR FOR NONFUNGIBLE TOKENS.
(a) Definitions.--In this section:
(1) Nonfungible token.--The term ``nonfungible token''
means a digital asset recorded on a distributed ledger that--
(A) is individually identifiable and
distinguishable from any other digital asset;
(B) represents ownership of, or rights in, a work
of authorship, art, a collectible, a membership, an
access credential, a certificate of authenticity, an
in-game or in-application item, or another similar
specific item or discrete digital or physical good,
service, or benefit;
(C) is not interchangeable on a 1-to-1 basis with
any other token or digital asset; and
(D) may be bought, sold, or transferred for
consideration.
(2) Promoter.--The term ``promoter'' means a person or
group that manages, controls, or operates an enterprise in
which capital is invested, or any person or group acting on
behalf of such a person or group with respect to such an
enterprise, including an affiliate, agent, or coordinated actor
that contributes to the capital raising efforts of the
enterprise.
(b) Safe Harbor.--
(1) In general.--Except as provided in paragraph (3), the
offer, sale, resale, transfer, or conveyance of a nonfungible
token shall not be deemed to constitute an offer, sale, or
distribution of a security or investment contract under the
Securities Act of 1933 (15 U.S.C. 77a et seq.), the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.), or any equivalent
State law, unless the transaction, in substance, involves all
of the elements of an investment contract.
(2) Rules of construction.--Neither of the following shall
be considered to be a 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.):
(A) The resale or secondary market transfer of a
nonfungible token, where the payment for that resale or
transfer does not flow to a promoter or is not used to
raise new capital for an enterprise.
(B) A nonfungible token that serves as a
collectible, membership right, event ticket, access
credential, or other non-investment-based use case
solely because the nonfungible token may appreciate in
value or depend in part on the continued efforts or the
reputation of the creator or issuer of the nonfungible
token.
(3) Exceptions.--The safe harbor under paragraph (1) shall
not apply to--
(A) a mass-minted series of items with
substantially similar or nearly identical traits that
are marketed or sold interchangeably;
(B) a fractionalized interest in a nonfungible
token; or
(C) an interest representing a beneficial or
economic claim on a nonfungible token or an asset that
a nonfungible token represents.
(4) Reliance; prospective effect.--
(A) Reliance.--A person, other than an originator
or related person, that reasonably and in good faith
relies on the safe harbor under this subsection shall
not be subject to any civil or administrative
penalties.
(B) Prospective effect.--Any determination by the
Commission that the safe harbor under this subsection
does not apply to a particular circumstance shall--
(i) be prospective only; and
(ii) take effect not earlier than 60 days
after the date on which the Commission publicly
posts that determination.
SEC. 603. STUDY ON NONFUNGIBLE TOKENS.
(a) Definition.--In this section, the term ``nonfungible token''
has the meaning given the term in section 602.
(b) Study.--The Comptroller General of the United States shall
carry out a study of nonfungible tokens that analyzes--
(1) the nature, size, role, purpose, and use of nonfungible
tokens;
(2) the similarities and differences between nonfungible
tokens and other digital commodities, including digital
commodities and payment stablecoins, and how the markets for
those digital commodities intersect;
(3) how nonfungible tokens are minted by issuers and
subsequently distributed to purchasers;
(4) how nonfungible tokens are stored after being purchased
by a consumer;
(5) the interoperability of nonfungible tokens between
different distributed ledger systems;
(6) the scalability of different nonfungible token
marketplaces;
(7) the benefits of nonfungible tokens, including
verifiable digital ownership;
(8) the risks of nonfungible tokens, including--
(A) the infringement of intellectual property
rights;
(B) cybersecurity risks; and
(C) market risks;
(9) whether and how nonfungible tokens have been, or could
be, integrated with traditional marketplaces, including
marketplaces for music, real estate, gaming, events, and
travel;
(10) whether and how nonfungible tokens have been, or could
be, used to facilitate commerce or other activities through the
representation of documents, identification, contracts,
licenses, and other commercial, governmental, or personal
records;
(11) any risks to traditional markets from the integration
described in paragraph (9); and
(12) the levels and types of illicit activity in
nonfungible token markets.
(c) Report.--Not later than 1 year after the date of enactment of
this Act, the Comptroller General of the United States shall make
publicly available a report that includes the results of the study
required under subsection (b).
SEC. 604. BLOCKCHAIN REGULATORY CERTAINTY ACT.
(a) Short Title.--This section may be cited as the ``Blockchain
Regulatory Certainty Act''.
(b) Definitions.--In this section:
(1) Developer or provider.--The term ``developer or
provider'' means any person or business that creates or
publishes software to facilitate the creation of, or provide
maintenance to, a distributed ledger, or a service associated
with a distributed ledger.
(2) Distributed ledger service.--The term ``distributed
ledger service'' means any information, transaction, or
computing service or system that provides or enables access to
a distributed ledger system by multiple users, including a
service or system that enables users to send, receive,
exchange, or store digital assets described by distributed
ledger systems.
(3) Non-controlling developer or provider.--The term ``non-
controlling developer or provider'' means a developer or
provider of a distributed ledger service that, in the regular
course of operations, does not have the legal right or the
unilateral and independent ability to control, initiate upon
demand, or effectuate transactions involving digital assets to
which users are entitled, without the approval, consent, or
direction of any third party.
(c) Treatment.--Notwithstanding any other provision of law, a non-
controlling developer or provider--
(1) shall not be treated as--
(A) a money transmitting business, as defined in
section 5330 of title 31, United States Code, and the
regulations promulgated under that section; or
(B) engaged in money transmitting, as defined in
section 1960 of title 18, United States Code; and
(2) on or after the date of enactment of this Act, shall
not be otherwise subject to any registration requirement that
is substantially similar to a requirement (as in effect on the
day before the date of enactment of this Act) that applies to
an entity described in subparagraph (A) or (B) of paragraph
(1), solely on the basis of--
(A) creating or publishing software to facilitate
the creation of, or providing maintenance services to,
a distributed ledger or a service associated with a
distributed ledger;
(B) providing hardware or software to facilitate a
customer's own custody or safekeeping of the digital
assets of the customer; or
(C) providing infrastructure support to maintain a
distributed ledger service.
(d) Clarification of Treatment.--Subsection (c) shall not modify
the application of section 1960(b)(1)(C) of title 18, United States
Code, to any person (referred to in this subsection as the ``initial
person'') that acts with the specific intent to transfer, on behalf of
another person, funds that are known by the initial person to be--
(1) derived from a criminal offense; or
(2) intended to be used to promote or support unlawful
activity.
(e) Rules of Construction.--Nothing in this section may be
construed--
(1) to affect whether a developer or provider of a
distributed ledger service is otherwise subject to
classification or treatment as a money transmitter, or as
engaged in money transmitting, under applicable Federal or
State law, including laws relating to anti-money laundering or
countering the financing of terrorism, based on conduct outside
the scope of subsection (c);
(2) to affect whether a developer or provider is otherwise
subject to classification or treatment as a financial
institution under subchapter II of chapter 53 of title 31,
United States Code, this Act, any amendment made by this Act,
or any Act enacted after the date of enactment of this Act,
based on conduct outside the scope of subsection (c);
(3) to limit or expand any law pertaining to intellectual
property;
(4) to prevent any State from enforcing any State law that
is consistent with this section; or
(5) to create a cause of action or impose liability under
any State or local law that is inconsistent with this section.
SEC. 605. KEEP YOUR COINS ACT.
(a) Short Title.--This section may be cited as the ``Keep Your
Coins Act''.
(b) Definitions.--In this section:
(1) Covered user.--The term ``covered user'' means a United
States individual who obtains digital assets to purchase goods
or services on behalf of that individual, without regard to the
method in which that individual obtained those digital assets.
(2) Self-hosted wallet.--The term ``self-hosted wallet''
means a digital interface--
(A) that is used to secure and transfer digital
assets; and
(B) under which the owner of digital assets secured
and transferred under subparagraph (A) retains
independent control over those digital assets.
(c) Self-Custody.--A Federal agency may not prohibit, restrict, or
otherwise impair the ability of a covered user to self-custody digital
assets using a self-hosted wallet or other means to conduct
transactions for any lawful purpose.
(d) Rule of Construction.--Nothing in this section may be construed
to limit the authority of the Secretary of the Treasury, the
Commission, the Commodity Futures Trading Commission, the Board of
Governors of the Federal Reserve System, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, or the National
Credit Union Administration to carry out any enforcement action or
special measure authorized under applicable law, including--
(1) the Bank Secrecy Act, section 9714 of the Combating
Russian Money Laundering Act (31 U.S.C. 5318A note), and
section 7213A of the Fentanyl Sanctions Act (21 U.S.C. 2313a);
or
(2) any other law relating to illicit finance, money
laundering, terrorism financing, or United States sanctions.
TITLE VII--PROTECTING CUSTOMER PROPERTY
SEC. 701. CUSTOMER PROPERTY PROTECTIONS FOR ANCILLARY ASSETS AND
DIGITAL COMMODITIES IN BANKRUPTCY.
(a) Definitions for Stockbroker Liquidation.--
(1) In general.--Section 741 of title 11, United States
Code, is amended--
(A) by redesignating paragraphs (5) through (9) as
paragraphs (7) through (11), respectively;
(B) by redesignating paragraphs (1) through (4) as
paragraphs (2) through (5), respectively;
(C) by inserting before paragraph (2), as so
redesignated, the following:
``(1) `ancillary asset' has the meaning given that term in
section 2 of the Digital Asset Market Clarity Act;'';
(D) in paragraph (3), as so redesignated--
(i) in subparagraph (A)(vi), by striking
``and'' at the end;
(ii) by redesignating subparagraph (B) as
subparagraph (C);
(iii) by inserting after subparagraph (A)
the following:
``(B) entity with whom a person deals as principal
or agent and that has a claim against such person on
account of a digital commodity or an ancillary asset
received, acquired, or held by such person from or for
the securities account or accounts of such entity for 1
or more of the purposes identified in clauses (i)
through (vi) of subparagraph (A) of this paragraph;
and''; and
(iv) in subparagraph (C), as so
redesignated--
(I) in clause (i)--
(aa) by inserting ``,
ancillary asset, or digital
commodity'' after ``security'';
and
(bb) by inserting ``or
(B)'' after ``subparagraph
(A)''; and
(II) in clause (ii), by inserting
``an ancillary asset, a digital
commodity,'' after ``a security,'';
(E) in paragraph (5), as so redesignated, in the
matter preceding subparagraph (A), by inserting
``ancillary asset, digital commodity,'' after ``cash,
security,'' each place it appears;
(F) by inserting after paragraph (5), as so
redesignated, the following:
``(6) `digital commodity' has the meaning given that term
in section 2 of the Digital Asset Market Clarity Act;''; and
(G) in paragraph (8), as so redesignated, in
subparagraph (A)(i), by inserting ``, ancillary asset
positions, and digital commodities positions'' after
``securities positions''.
(b) Extent of Customer Claims.--Section 746(b) of title 11, United
States Code, is amended, in the matter preceding paragraph (1), by
striking ``cash or a security'' and inserting ``cash, a security, an
ancillary asset, or a digital commodity''.
(c) Technical and Conforming Amendments.--
(1) Section 546(e) of title 11, United States Code, is
amended--
(A) by striking ``section 741(7)'' and inserting
``section 741''; and
(B) by striking ``section 761(4)'' and inserting
``section 761''.
(2) Section 561(a) of title 11, United States Code, is
amended--
(A) in paragraph (1), by striking ``section
741(7)'' and inserting ``section 741''; and
(B) in paragraph (2), by striking ``section
761(4)'' and inserting ``section 761''.
(3) Section 752(c) of title 11, United States Code, is
amended by striking ``section 741(4)(B)'' and inserting
``section 741(5)(B)''.
(d) Clarifications.--For the avoidance of doubt--
(1) nothing in this section or an amendment made by this
section may be construed to apply to securities or cash held by
a broker-dealer and such assets and related claims shall be
governed exclusively by the Securities Investor Protection Act
of 1970 (15 U.S.C. 78aaa et seq.);
(2) nothing in this section or an amendment made by this
section may be construed to apply to deposits held by a bank or
commodity contracts, which shall be governed by the relevant
applicable law; and
(3) in any liquidation proceeding under subchapter III or
IV of chapter 7 of title 11, United States Code, those
provisions shall be construed to treat ancillary assets and
digital commodities held for customers as customer property
governed by title 11, United States Code, and required to be
distributed according to such title.
SEC. 702. INSOLVENCY SAFE HARBOR.
(a) Definitions.--In this section:
(1) Commodity broker; financial institution; financial
participant; securities clearing agency; stockbroker.--The
terms ``commodity broker'', ``financial institution'',
``financial participant'', ``securities clearing agency'', and
``stockbroker'' have the meanings given those terms in section
101 of title 11, United States Code.
(2) Commodity contract.--The term ``commodity contract''
means a commodity contract described in paragraph (4)(A) of
section 761 of title 11, United States Code.
(b) Safe Harbor.--A purchase, sale, or loan of, a margin loan or
other extension of credit on, or a repurchase, reverse repurchase, or
other transaction involving, a unit of a digital commodity occurring
with a commodity broker, stockbroker, financial institution, financial
participant, or securities clearing agency shall be deemed to be--
(1) a commodity contract for purposes of--
(A) sections 362(b)(6), 362(o), 546(e), 553, 556,
561, and 562 of title 11, United States Code;
(B) section 11 of the Federal Deposit Insurance Act
(12 U.S.C. 1821);
(C) section 210 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (12 U.S.C. 5390);
and
(D) section 5(b)(2)(C) of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78eee(b)(2)(C)); and
(2) a margin payment for purposes of section 548(d)(2)(B)
of title 11, United States Code.
TITLE VIII--CUSTOMER PROTECTION
SEC. 801. EDUCATIONAL MATERIALS.
The Commission and the Commodity Futures Trading Commission shall
require digital asset intermediaries to provide clear and accessible
educational materials to the public, including--
(1) an overview of how distributed ledger systems function;
(2) a description of common risks associated with digital
assets;
(3) a description of the differences between digital asset
markets and traditional financial markets;
(4) information on reporting and disclosure requirements
related to digital asset transactions and securities which may
be accompanied by network tokens or ancillary assets; and
(5) guidance on recognizing fraudulent schemes and
instructions for reporting suspected fraud.
SEC. 802. SAVINGS CLAUSES.
(a) Definitions.--In this section:
(1) Digital consumer token.--The term ``digital consumer
token'' means a digital asset that is primarily acquired for a
consumptive purpose, including redemption for a specified good
or service at the time of sale or within a reasonable time
after sale, as defined by the Federal Trade Commission pursuant
to rule.
(2) Nonfungible token.--The term ``nonfungible token''
means a digital asset recorded on a distributed ledger that--
(A) is individually identifiable and
distinguishable from any other digital asset;
(B) represents ownership of, or rights in, a work
of authorship, art, a collectible, a membership, an
access credential, a certificate of authenticity, an
in-game or in-application item, or another similar
specific item or discrete digital or physical good,
service, or benefit;
(C) is not interchangeable on a 1-to-1 basis with
any other token or digital asset; and
(D) may be bought, sold, or transferred for
consideration.
(b) Federal Trade Commission.--Nothing in this Act, or any
amendment made by this Act, may be construed as limiting or abridging
the jurisdiction of the Federal Trade Commission with respect to--
(1) investigations or enforcement actions under the Federal
Trade Commission Act (15 U.S.C. 41 et seq.) relating to unfair
or deceptive acts or practices by persons relating to commerce
in nonfungible tokens or digital consumer tokens, including
deceptive acts with respect to advertising and endorsements
relating to nonfungible tokens and digital consumer tokens;
(2) highlighting best practices relating to commerce in
nonfungible tokens or digital consumer tokens;
(3) promoting responsible innovation;
(4) consumer education relating to fraudulent digital asset
activity; or
(5) investigating unlawful restraints of trade in the
digital asset industry.
(c) Rule of Construction.--Nothing in this Act, or any amendment
made by this Act, may be construed to expand, contract, or otherwise
affect the jurisdiction or authority with respect to the Federal
consumer financial laws under the Consumer Financial Protection Act of
2010 (12 U.S.C. 5481 et seq.), as in effect on the day before the date
of enactment of this Act, including with respect to subsection (i) or
(j) of section 1027 of the Consumer Financial Protection Act of 2010
(12 U.S.C. 5517).
SEC. 803. STUDY ON EXPANDING FINANCIAL LITERACY.
(a) Study.--The Commission and the Commodity Futures Trading
Commission shall jointly conduct a study to identify--
(1) the existing (as of the day before the date of
enactment of this Act) level of financial literacy among retail
digital asset customers;
(2) methods to improve the timing, content, and format of
financial literacy materials regarding digital assets provided
by the respective commissions;
(3) methods to improve coordination between the Commission
and the Commodity Futures Trading Commission with other
agencies, including the Financial Literacy and Education
Commission, nonprofit organizations, and State and local
jurisdictions, to better disseminate financial literacy
materials;
(4) the efficacy of current financial literacy efforts with
a focus on rural communities and communities with majority-
minority populations;
(5) the most useful and understandable relevant
information, including clear disclosures, that retail digital
asset customers need to make informed financial decisions
before engaging with or purchasing a digital asset;
(6) the most effective public-private partnerships in
providing financial literacy regarding digital assets;
(7) the most relevant metrics to measure successful
improvement of the financial literacy of an individual after
engaging with financial literacy efforts; and
(8) in consultation with the Financial Literacy and
Education Commission, a strategy (including, to the extent
practicable, measurable goals and objectives) to increase
financial literacy of investors regarding digital assets.
(b) Report.--Not later than 1 year after the date of enactment of
this Act, the Commission and the Commodity Futures Trading Commission
shall jointly submit to the Committee on Banking, Housing, and Urban
Affairs and the Committee on Agriculture, Nutrition, and Forestry of
the Senate and the Committee on Financial Services and the Committee on
Agriculture of the House of Representatives a written report on the
study required under subsection (a).
SEC. 804. CONSULTATION WITH SIPC REGARDING MANDATORY BROKER-DEALER
DISCLOSURES TO INVESTORS CONCERNING THE STATUS OF PAYMENT
STABLECOINS AND DIGITAL COMMODITIES.
(a) Definition.--In this section, the term ``payment stablecoin''
has the meaning given the term in section 2 of the GENIUS Act (12
U.S.C. 5901).
(b) Rules.--Not later than 270 days after the date of enactment of
this Act, the Commission, after consultation with the Commodity Futures
Trading Commission and the Securities Investor Protection Corporation,
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--
(1) before a digital commodity, a payment stablecoin, or a
security involving a unit of a digital commodity is received,
acquired, or held by the broker or dealer for the account of
the investor; and
(2) after the provision of the disclosures under paragraph
(1), at such frequency as the Commission may prescribe.
(c) Contents.--The rules issued under subsection (b) shall include,
as necessary or appropriate for the protection of investors--
(1) a description of the manner in which any digital
commodity, payment stablecoin, or security involving a unit of
a digital commodity received, acquired, or held by a broker or
dealer for the account of an 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 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 the
applicable investor in the event of an insolvency, resolution,
or liquidation proceeding with respect to the broker or dealer
under each provision of law described in subparagraph (A), (B),
and (C) of paragraph (1).
TITLE IX--OTHER MATTERS
SEC. 901. JOINT ADVISORY COMMITTEE ON DIGITAL ASSETS.
(a) Establishment.--The Commodity Futures Trading Commission and
the Commission (referred to collectively in this section as the
``Commissions'') shall jointly establish the Joint Advisory Committee
on Digital Assets (referred to in this section as the ``Committee'').
(b) Purpose.--
(1) In general.--The Committee shall--
(A) provide the Commissions with official findings
and nonbinding recommendations on--
(i) the rules, regulations, oversight, and
other matters of the Commissions relating to
digital assets, including with respect to
regulatory harmonization between the
Commissions;
(ii) how to further the regulatory
harmonization of digital asset policy between
the Commissions or areas in which that
harmonization should occur; and
(iii) the implementation by the Commissions
of this Act, and the amendments made by this
Act, including with respect to regulatory
harmonization between the Commissions,
memoranda of understanding, and the CFTC-SEC
Micro-Innovation Sandbox established pursuant
to section 501;
(B) develop and share objective methods and best
practices for evaluating digital asset networks and
activities, including, as appropriate, technical
features, economic design, and implications for market
integrity, investor protection, and operational
resilience; and
(C) issue nonbinding recommendations to assist in
resolving disputes between the Commissions.
(c) Review by the Commissions.--Each of the Commissions shall--
(1) review the findings and nonbinding recommendations
provided under subsection (b)(1)(A);
(2) promptly publish a public statement each time the
Committee submits a finding or nonbinding recommendation to the
applicable Commission under subsection (b)(1)(A) that--
(A) assesses the finding or recommendation; and
(B) if applicable, discloses the action or decision
not to take action; and
(3) provide the Committee with a formal written response
not later than 90 days after the date of submission of a
finding or nonbinding recommendation under subsection
(b)(1)(A).
(d) Membership and Leadership.--
(1) Non-federal members; size and composition.--
(A) In general.--The Commissions shall appoint to
the Committee not more than 14 nongovernmental voting
members who--
(i) represent a broad spectrum of
interests, equally divided between the
Commissions; and
(ii) serve at the pleasure of the
appointing Commission.
(B) Specific members.--For each of the Commissions,
the appointees under subparagraph (A) of this paragraph
shall include--
(i) 2 individuals described in paragraph
(2)(A);
(ii) 2 individuals described in paragraph
(2)(B);
(iii) 1 individual described in paragraph
(2)(C);
(iv) 2 individuals described in paragraph
(2)(D); and
(v) 1 individual described in paragraph
(2)(E).
(2) Members described.--A member described in this
paragraph is--
(A) an individual who is employed by, or is a
related person with respect to, a digital asset market
participant;
(B) a person registered with either of the
Commissions and that is engaged in activities relating
to digital assets;
(C) an individual engaged in academic research
relating to digital assets;
(D) a retail user of digital assets; and
(E) a State securities regulator.
(3) NIST.--The Director of the National Institute of
Standards and Technology, or the designee of the Director,
shall serve in an advisory capacity as a nonvoting, ex officio
member of the Committee, and shall not be excluded from any
proceedings, meetings, discussions, or deliberations of the
Committee, except that the chair of the Committee, upon an
affirmative vote of the Committee, may exclude the Director or
the designee from any proceedings, meetings, discussions, or
deliberations of the Committee when necessary to safeguard and
promote the free exchange of confidential information.
(4) Co-designated federal officers; commissioner support.--
(A) Co-designated federal officers.--
(i) In general.--Each Commission shall
designate 1 Federal officer to serve as a co-
designated Federal officer of the Committee.
(ii) Shared duties.--The duties required by
section 1009(e) of title 5, United States Code,
to be carried out by a designated officer or
employee of the Federal Government with respect
to the Committee shall be shared by the Federal
officers of the Committee who are co-designated
under clause (i).
(B) Commissioner support.--
(i) In general.--Commissioners of the
Commissions may be supported by officers or
employees of the respective Commission who may
prepare or transmit materials, coordinate with
agency staff, liaise with Committee leadership,
propose agenda items, gather information, and
otherwise support the participation of that
commissioner in Committee business, in an ex
officio, nonvoting capacity.
(ii) Rule of construction.--An officer or
employee described in clause (i) shall not be
considered to be a member of the Committee for
purposes of chapter 10 of title 5, United
States Code.
(C) Information sharing.--The co-designated Federal
officers under subparagraph (A) and the officers or
employees of the respective Commissions providing
support under subparagraph (B) shall share information
about digital asset activities under this Act, in
accordance with section 902, including with regard to
preventing insider trading.
(5) Committee leadership.--The members of the Committee
shall elect, from among the membership of the Committee, a
secretary and an assistant secretary.
(6) Rotating chair.--The chair and vice chair of the
Committee shall rotate annually between the Commissions, with
the Commission designating the chair in even-numbered calendar
years, the Commodity Futures Trading Commission designating the
chair in odd-numbered calendar years, the Commission
designating the vice chair in odd-numbered calendar years, and
the Commodity Futures Trading Commission designating the vice
chair in even-numbered calendar years.
(7) Terms; vacancies; holdover.--
(A) In general.--Each non-Federal member of the
Committee shall be appointed for a term of 4 years.
(B) Service until new appointment.--A member of the
Committee may continue to serve after the expiration of
the term of the member until a successor is appointed.
(C) Vacancies.--A vacancy with respect to
membership in the Committee shall be filled only for
the remainder of the applicable term.
(D) Reappointment.--A member of the Committee may
be reappointed.
(8) Status of members.--A member of the Committee appointed
under paragraph (1) shall not be deemed to be an employee or
agent of either of the Commissions solely by reason of
membership on the Committee.
(e) No Compensation for Committee Members.--
(1) Non-federal members.--All Committee members appointed
under subsection (d)(1) shall--
(A) serve without compensation; and
(B) while away from the home or regular place of
business of the member in the performance of services
for the Committee, be allowed travel expenses,
including per diem in lieu of subsistence, in the same
manner as persons employed intermittently in Government
service are allowed expenses under section 5703 of
title 5, United States Code.
(2) No compensation for co-designated federal officers.--
The Federal officers co-designated under subsection (d)(4)(A)
shall serve without compensation in addition to that received
for their services as officers or employees of the United
States.
(f) Frequency of Meetings.--The Committee shall meet--
(1) not less frequently than twice annually; and
(2) at such other times as either of the Commissions may
request.
(g) Procedures; Advisory Nature.--
(1) In general.--The Committee shall operate pursuant to
chapter 10 of title 5, United States Code, except as otherwise
expressly provided by this section.
(2) Advisory nature of recommendations.--The
recommendations of the Committee are advisory in nature, shall
not create any legal rights or obligations, and shall not limit
or delay the independent authority of either of the
Commissions.
(h) Time Limits.--The Commissions shall--
(1) not later than 90 days after the date of enactment of
this Act, adopt a joint charter for the Committee;
(2) not later than 120 days after the date of enactment of
this Act, make the appointments required under subsection
(d)(1); and
(3) not later than 180 days after the date of enactment of
this Act, hold the initial meeting of the Committee.
(i) Funding.--Subject to the availability of funds, the Commissions
shall jointly fund the Committee.
(j) Duration and Renewal.--
(1) Initial period.--The Committee shall remain in effect
for 10 years beginning on the date of enactment of this Act.
(2) Renewal thereafter.--At the conclusion of the 10-year
period described in paragraph (1)--
(A) the Committee shall be subject to subsections
(a) and (b) of section 1013 of title 5, United States
Code; and
(B) the Commissions may renew the Committee for
successive 2-year periods by publishing a notice in the
Federal Register, consistent with chapter 10 of title
5, United States Code.
SEC. 902. MEMORANDUM OF UNDERSTANDING.
(a) Memorandum of Understanding.--The Commission shall enter into a
memorandum of understanding with the Commodity Futures Trading
Commission to ensure--
(1) coordinated supervision and enforcement with respect to
registrants of the Commission and the Commodity Futures Trading
Commission, including with regard to--
(A) the anti-fraud and anti-manipulation
authorities of the Commission, such as with regard to
insider trading; and
(B) the market integrity authorities of the
Commodity Futures Trading Commission; and
(2) appropriate information sharing between the Commission
and the Commodity Futures Trading Commission to further the
purposes of and compliance with this Act, the amendments made
by this Act, the Securities Act of 1933 (15 U.S.C. 77a et seq.)
(as amended by this Act), the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.) (as amended by this Act), and the
Commodity Exchange Act (7 U.S.C. 1 et seq.).
(b) Rule of Construction.--Nothing in this section may 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.
(c) Rule of Construction.--Nothing in this Act, or any amendment
made by this Act, may be construed to limit or prevent the continued
application of applicable law regarding the insider trading of
securities, including digital asset securities, including section 21A
of the Securities Exchange Act of 1934 (15 U.S.C. 78u-1).
SEC. 903. FINCEN APPROPRIATIONS.
(a) Authorization of Appropriations.--For the purposes of
developing policy relating to digital assets, acquiring information
technology resources, funding the operations described in sections 202
and 203 of this Act, and enforcement of the laws within its
jurisdiction relating to digital assets, there is authorized to be
appropriated to the Financial Crimes Enforcement Network of the
Department of the Treasury the following:
(1) $30,000,000 for fiscal year 2026, to remain available
until September 30, 2027.
(2) $30,000,000 for fiscal year 2027, to remain available
until September 30, 2028.
(3) $30,000,000 for fiscal year 2028, to remain available
until September 30, 2029.
(4) $30,000,000 for fiscal year 2029, to remain available
until September 30, 2030.
(5) $30,000,000 for fiscal year 2030, to remain available
until September 30, 2031.
(b) Incentive Premium for Highly Qualified Individuals.--
Notwithstanding any other provision of law or regulation, the Director
of the Financial Crimes Enforcement Network of the Department of the
Treasury may pay an annual incentive premium of not more than 20
percent of the annual rate of basic pay for a position if necessary to
attract highly qualified individuals for positions that the Director
has certified to the Director of the Office of Personnel Management
reflect the needs of the Financial Crimes Enforcement Network.
SEC. 904. BUILD NOW ACT.
(a) Definitions.--In this section:
(1) Covered recipient.--The term ``covered recipient''
means a metropolitan city or urban county, as those terms are
defined in section 102 of the Housing and Community Development
Act of 1974 (42 U.S.C. 5302), that receives funds under section
106.
(2) Current annual growth rate.--The term ``current annual
growth rate'', with respect to an eligible recipient and a
fiscal year, means the average annual percentage increase in
the number of housing units in the jurisdiction of the eligible
recipient, as calculated by the Secretary, during the period--
(A) beginning with the third quarter of the sixth
preceding fiscal year; and
(B) ending with the third quarter of the preceding
fiscal year.
(3) Eligible recipient.--The term ``eligible recipient''
means any covered recipient unless--
(A)(i) the median Small Area Fair Market Rent in
the jurisdiction of the covered recipient is at or
below the 60th percentile of median Small Area Fair
Market Rents in the jurisdictions of all covered
recipients; and
(ii) the median home value in the jurisdiction of
the covered recipient is below the median home value
for the United States;
(B) the annual rental vacancy rate in the
jurisdiction of the covered recipient is greater than
the national annual rental vacancy rate for the most
recent year available, as published by the Bureau of
the Census;
(C) during the 1-year period preceding the date on
which the Secretary allocates funds under section 106,
the jurisdiction of the covered recipient has been the
subject of a major disaster or emergency declaration
under section 401 or 501, respectively, of the Robert
T. Stafford Disaster Relief and Emergency Assistance
Act (42 U.S.C. 5170, 5191); or
(D) the covered recipient lacks the legal authority
to enact or update zoning and permitting ordinances.
(4) Extremely high-growth recipient.--The term ``extremely
high-growth recipient'' means an eligible recipient for which
the current annual growth rate is at or above 4 percent.
(5) Housing growth improvement rate.--The term ``housing
growth improvement rate'', with respect to an eligible
recipient and a fiscal year, means the quotient of--
(A)(i) the current annual growth rate of the
eligible recipient, minus
(ii) the prior annual growth rate of the eligible
recipient; and
(B) the sum obtained by adding the absolute values
of the current annual growth rate and the prior annual
growth rate of the eligible recipient.
(6) Prior annual growth rate.--The term ``prior annual
growth rate'', with respect to an eligible recipient and a
fiscal year, means the average annual percentage increase in
the number of housing units in the jurisdiction of the eligible
recipient, as calculated by the Secretary, during the period--
(A) beginning with the third quarter of the 11th
preceding fiscal year; and
(B) ending with the third quarter of the sixth
preceding fiscal year.
(7) Secretary.--The term ``Secretary'' means the Secretary
of Housing and Urban Development.
(8) Section 106.--The term ``section 106'' means section
106 of the Housing and Community Development Act of 1974 (42
U.S.C. 5306).
(b) Adjustments to Community Development Block Grant Allocations.--
(1) In general.--In allocating amounts to an eligible
recipient under section 106 for a fiscal year, the Secretary
shall adjust the allocation based on the housing growth
improvement rate of the eligible recipient, in accordance with
paragraph (2) of this subsection.
(2) Adjustments.--
(A) Housing growth improvement rate at or above
median; extremely high-growth recipients.--
(i) In general.--If, with respect to a
fiscal year for which the allocation under
section 106 is being determined, the housing
growth improvement rate for an eligible
recipient is at or above the median housing
growth improvement rate for all eligible
recipients other than extremely high-growth
recipients, or if an eligible recipient is an
extremely high-growth recipient, the Secretary
shall allocate to the eligible recipient for
that fiscal year, in addition to the amount
that would otherwise be allocated to the
eligible recipient under section 106, a bonus
amount, as determined under clause (ii) of this
subparagraph.
(ii) Bonus amount.--For purposes of clause
(i), the bonus amount for an eligible recipient
for a fiscal year shall be equal to the product
of--
(I) the aggregate amount by which
allocations to eligible recipients are
decreased under subparagraph (B) for
that fiscal year; and
(II) the quotient of--
(aa) the number of housing
units, as of the third quarter
of the preceding fiscal year,
in the jurisdiction of the
eligible recipient, as
calculated by the Secretary;
and
(bb) the number of housing
units, as of the third quarter
of the preceding fiscal year,
in the jurisdictions of all
eligible recipients that
receive a bonus amount under
this paragraph, as calculated
by the Secretary.
(B) Housing growth improvement rate below median.--
If, with respect to a fiscal year for which the
allocation under section 106 is being determined, the
housing growth improvement rate for an eligible
recipient is below the median housing growth
improvement rate for all eligible recipients other than
extremely high-growth recipients, the Secretary shall
decrease the amount that would otherwise be allocated
to the eligible recipient under section 106 for that
fiscal year by 10 percent.
(c) Calculation of Housing Units.--
(1) Housing and urban development requirements.--In
calculating the number of housing units in the jurisdiction of
an eligible recipient under any provision of this section, the
Secretary shall--
(A) use the Current Address Count Listing Files and
other data products, as needed, of the Bureau of the
Census tabulated from the Master Address File; and
(B) make calculations at the block level, using
boundaries that reflect the most current boundaries.
(2) Census bureau and postal service requirements.--The
Bureau of the Census and the United States Postal Service shall
provide any relevant data to the Secretary upon request to
assist the Secretary in making a calculation described in
paragraph (1).
(3) Adjustment of calculation periods.--The Secretary may
adjust the calculation periods under subparagraphs (A) and (B)
of subsection (a)(2), subparagraphs (A) and (B) of subsection
(a)(6), and items (aa) and (bb) of subsection (b)(2)(A)(ii)(II)
by not more than 2 months to achieve alignment with the data
provided by the Bureau of the Census.
(d) Annual Report on Housing Growth Improvement Rate.--Before
allocating funds under section 106 for a fiscal year, the Secretary
shall publish a report that--
(1) includes the housing growth improvement rate for each
eligible recipient; and
(2) lists, for the most recent fiscal year for which
allocations were made under section 106--
(A) the eligible recipients that received a bonus
amount under subsection (b)(2)(A) of this section; and
(B) the eligible recipients for which the
allocation under section 106 was decreased under
subsection (b)(2)(B) of this section.
(e) Notification; Implementation Dates.--
(1) Notification.--
(A) In general.--Not later than 60 days after the
date of enactment of this Act, the Secretary shall
notify each eligible recipient of the recipient's
housing growth improvement rate and whether that
housing growth improvement rate is above, at, or below
the median housing growth improvement rate for all
eligible recipients other than extremely high-growth
recipients.
(B) Guidance.--As part of the notification under
subparagraph (A), the Secretary shall share guidance,
including resources developed by the Department of
Housing and Urban Development, on best practices and
recommendations for policies to reduce regulatory
barriers to housing and increase housing supply.
(2) Implementation dates.--Subsection (b) shall take effect
beginning with the third full fiscal year after the date of
enactment of this Act and remain in effect through fiscal year
2043.
(3) No effect on previous appropriations.--This section
shall not apply to amounts appropriated before the date of
enactment of this Act.
SEC. 905. RULEMAKINGS.
Except as otherwise provided, not later than 1 year after the date
of enactment of this Act, each applicable regulator shall adopt rules
to carry out this Act, and the amendments made by this Act, through
appropriate notice and comment rulemaking.
SEC. 906. EFFECTIVE DATE.
This Act, and the amendments made by this Act, shall take effect on
the date that is 360 days after the date of enactment of this Act,
except that, if a provision of this Act, or an amendment made by this
Act, requires a rulemaking, that provision shall take effect on the
later of--
(1) the date that is 360 days after the date of enactment
of this Act; or
(2) the date that is 60 days after the publication in the
Federal Register of the final rule implementing the provision.
Calendar No. 423
119th CONGRESS
2d Session
H. R. 3633
_______________________________________________________________________
AN ACT
To provide for a system of regulation of the offer and sale of digital
commodities by the Securities and Exchange Commission and the Commodity
Futures Trading Commission, to amend the Federal Reserve Act to
prohibit the Federal reserve banks from offering certain products or
services directly to an individual, to prohibit the use of central bank
digital currency for monetary policy, and for other purposes.
_______________________________________________________________________
June 1, 2026
Reported with an amendment