H.R. 3633, Reported in Senate with an amendment in the nature of a substitute (Calendar No. 423) (Part 3 of 5)
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Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.
(A) the Committees on Financial Services
and Agriculture of the House of Representatives;
and</DELETED>
<DELETED> (B) the Committees on Banking, Housing,
and Urban Affairs and Agriculture, Nutrition, and
Forestry of the Senate.</DELETED>
<DELETED>SEC. 512. CONFORMING AMENDMENTS.</DELETED>
<DELETED> The GENIUS Act is amended--</DELETED>
<DELETED> (1) in section 2, by amending paragraph (7) to
read as follows:</DELETED>
<DELETED> ``(7) Digital asset service provider.--The term
`digital asset service provider' means any entity registered or
required to be registered with the Securities and Exchange
Commission or the Commodity Futures Trading
Commission.'';</DELETED>
<DELETED> (2) in section 4(a)--</DELETED>
<DELETED> (A) by amending paragraph (3) to read as
follows:</DELETED>
<DELETED> ``(3) Monthly certification; examination of
reports by registered public accounting firm.--</DELETED>
<DELETED> ``(A) In general.--A permitted payment
stablecoin issuer shall, each month, have the
information disclosed in the previous month-end report
required under paragraph (1)(C) examined by a
registered public accounting firm and such examination
shall be performed in accordance with standards for
attestation engagements issued or adopted by the
primary Federal payment stablecoin regulator or, in the
case of a State qualified payment stablecoin issuer,
the State payment stablecoin regulator.</DELETED>
<DELETED> ``(B) Certification.--Each month, the
Chief Executive Officer and Chief Financial Officer of
a permitted payment stablecoin issuer shall submit to,
as applicable, the primary Federal payment stablecoin
regulator or, in the case of a State qualified payment
stablecoin issuer, the State payment stablecoin
regulator, a certification that, based on such
officers' knowledge, the previous monthly report
required under paragraph (1)(C)--</DELETED>
<DELETED> ``(i) does not contain any untrue
statement of material fact or omit to state a
material fact necessary in order to make the
statements made, in light of the circumstances
under which such statements were made, not
misleading; and</DELETED>
<DELETED> ``(ii) fairly presented in all
material respects the information required
under paragraph (1)(C) for the period presented
in such report.</DELETED>
<DELETED> ``(C) Criminal penalty.--Any person who
submits a certification required under subparagraph (B)
knowing that such certification is false shall be
subject to the same criminal penalties as those set
forth under section 1350(c) of title 18, United States
Code.</DELETED>
<DELETED> ``(D) Internal controls over permitted
payment stablecoin issuer's requirements.--</DELETED>
<DELETED> ``(i) In general.--Management of a
permitted payment stablecoin issuer shall
establish and maintain an adequate internal
control structure and procedures for the
requirements under this paragraph and
paragraphs (1) and (2) in accordance with a
framework determined acceptable by the primary
Federal payment stablecoin regulator or, in the
case of a State qualified payment stablecoin
issuer, the State payment stablecoin
regulator.</DELETED>
<DELETED> ``(ii) Attestation report.--A
permitted payment stablecoin issuer shall
obtain an annual attestation report by an
independent registered public accounting firm
attesting to management's assertions concerning
the effectiveness of the internal control
structure and procedures for compliance with
the requirements described in this paragraph
and paragraphs (1) and (2). Such attestation
shall be made in accordance with standards for
attestation engagements issued or adopted by
the primary Federal payment stablecoin
regulator or, in the case of a State qualified
payment stablecoin issuer, the State payment
stablecoin regulator.''; and</DELETED>
<DELETED> (B) by amending paragraph (12) to read as
follows:</DELETED>
<DELETED> ``(12) Non-financial companies.--</DELETED>
<DELETED> ``(A) Prohibition on non-financial company
ownership.--It shall be unlawful for a company that
derives a majority of its revenues from activities that
are not financial activities to retain or acquire
control of a nonbank entity that is--</DELETED>
<DELETED> ``(i) a Federal qualified payment
stablecoin issuer; or</DELETED>
<DELETED> ``(ii) a State qualified payment
stablecoin issuer.</DELETED>
<DELETED> ``(B) Financial activities defined.--
</DELETED>
<DELETED> ``(i) In general.--In this
paragraph, the term `financial activities'
means--</DELETED>
<DELETED> ``(I) a financial
activity, within the meaning of section
4(k) of the Bank Holding Company Act of
1956 (12 U.S.C. 1843(k));</DELETED>
<DELETED> ``(II) issuing, redeeming,
providing custodial or safekeeping
services for, buying, selling, making a
market in, or managing a reserve for
payment stablecoins;</DELETED>
<DELETED> ``(III) providing
electronic wallet services for payment
stablecoins; or</DELETED>
<DELETED> ``(IV) an activity
determined by the Board to be a
financial activity pursuant to clause
(ii).</DELETED>
<DELETED> ``(ii) Establishing additional
financial activities.--Not later than 180 days
after the date of enactment of the CLARITY Act
of 2025, the Board, in consultation with the
Secretary of the Treasury and the Comptroller,
shall issue rules, consistent with the purposes
of this Act, to establish--</DELETED>
<DELETED> ``(I) a list of additional
activities that are financial
activities for purposes of clause (i),
including applicable digital asset
activities that are financial
activities; and</DELETED>
<DELETED> ``(II) a streamlined
procedure for a nonbank entity to
submit an activity to the Board for
purposes of the Board determining
whether such activity should be added
to the list of additional activities
that are financial activities for
purposes of clause (i).'';
and</DELETED>
<DELETED> (3) by adding at the end the following:</DELETED>
<DELETED>``SEC. 21. COMMODITY-BACKED PAYMENT STABLECOINS.</DELETED>
<DELETED> ``(a) Rule of Construction.--Nothing in this Act shall be
construed to prohibit or limit a commodity-backed payment stablecoin
issuer from issuing a commodity-backed payment stablecoin in accordance
with regulations established by a State commodity-backed payment
stablecoin regulator.</DELETED>
<DELETED> ``(b) Preservation of Federal Authority.--Nothing in this
section shall be construed to alter or limit the jurisdiction of the
Commodity Futures Trading Commission over any matter within the
Commission's authority under applicable law.</DELETED>
<DELETED> ``(c) Definitions.--For purposes of this
section:</DELETED>
<DELETED> ``(1) Commodity-backed payment stablecoin.--The
term `commodity-backed payment stablecoin' means a digital
asset--</DELETED>
<DELETED> ``(A) that is, or is designed to be, used
as a means of payment or settlement;</DELETED>
<DELETED> ``(B) that is denominated in a highly
liquid, publicly traded physical commodity, such as
gold;</DELETED>
<DELETED> ``(C) the issuer of which is obligated
to--</DELETED>
<DELETED> ``(i) convert, redeem, or
repurchase for a fixed amount of the
denominated highly liquid, publicly traded
physical commodity; and</DELETED>
<DELETED> ``(ii) custody or cause to be
custodied, for the benefit of the holders of
the payment stablecoin, an amount of the
physical commodity equal to or greater than the
total amount of outstanding payment
stablecoins, for the purpose of converting,
redeeming, or repurchasing the digital asset;
and</DELETED>
<DELETED> ``(D) that is not--</DELETED>
<DELETED> ``(i) a security issued by--
</DELETED>
<DELETED> ``(I) an investment
company registered under section 8(a)
of the Investment Company Act of 1940
(15 U.S.C. 80a-8(a)); or</DELETED>
<DELETED> ``(II) a person that would
be an investment company under the
Investment Company Act of 1940 but for
paragraphs (1) and (7) of section 3(c)
of that Act (15 U.S.C. 80a-
3(c));</DELETED>
<DELETED> ``(ii) a deposit (as defined under
section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813)), regardless of the technology
used to record such deposit;</DELETED>
<DELETED> ``(iii) an account (as defined in
section 101 of the Federal Credit Union Act (12
U.S.C. 1752)), regardless of the technology
used to record such account; or</DELETED>
<DELETED> ``(iv) an interest or
participation in a commodity pool (as defined
in section 1a(10) of the Commodity Exchange Act
(7 U.S.C. 1a)).</DELETED>
<DELETED> ``(2) Commodity-backed payment stablecoin
issuer.--The term `commodity-backed payment stablecoin issuer'
means--</DELETED>
<DELETED> ``(A) an entity that issues a commodity-
backed payment stablecoin; and</DELETED>
<DELETED> ``(B) an entity that is approved to issue
such commodity-backed payment stablecoins by a State
commodity-backed payment stablecoin
regulator.</DELETED>
<DELETED> ``(3) Physical commodity.--The term `physical
commodity' means any exempt commodity (as defined in section
1a(21) of the Commodity Exchange Act (7 U.S.C. 1a)) which can
be physically delivered.</DELETED>
<DELETED> ``(4) State commodity-backed payment stablecoin
regulator.--The term `State commodity-backed payment stablecoin
regulator' means a State agency that has primary regulatory and
supervisory authority over entities that issue commodity-backed
payment stablecoins in such State.</DELETED>
<DELETED>``SEC. 22. PROTECTION OF SELF-CUSTODY.</DELETED>
<DELETED> ``(a) In General.--A United States individual shall retain
the right to--</DELETED>
<DELETED> ``(1) maintain a hardware wallet or software
wallet for the purpose of facilitating the individual's own
lawful custody of digital assets; and</DELETED>
<DELETED> ``(2) engage in direct, peer-to-peer transactions
in digital assets with another individual or entity for the
individual's own lawful purposes using a hardware wallet or
software wallet, if--</DELETED>
<DELETED> ``(A) such other individual or entity is
not a financial institution (as defined in section 5312
of title 31, United States Code); and</DELETED>
<DELETED> ``(B) the transactions do not involve any
property or interests in property that are blocked
pursuant to, or are otherwise prohibited by, United
States sanctions.</DELETED>
<DELETED> ``(b) Application.--This section--</DELETED>
<DELETED> ``(1) applies solely to personal use by
individuals; and</DELETED>
<DELETED> ``(2) does not apply to individuals acting in a
custodial or fiduciary capacity for others.</DELETED>
<DELETED> ``(c) Rule of Construction.--Nothing in this section shall
be construed to limit the authority of the Secretary of the Treasury,
the Securities and Exchange Commission, the Commodity Futures Trading
Commission, or the primary Federal payment stablecoin regulators to
carry out any enforcement action or special measure authorized under
applicable law, including--</DELETED>
<DELETED> ``(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</DELETED>
<DELETED> ``(2) any other law relating to illicit finance,
money laundering, terrorism financing, or United States
sanctions.''.</DELETED>
<DELETED>TITLE VI--ANTI-CBDC SURVEILLANCE STATE ACT</DELETED>
<DELETED>SEC. 601. SHORT TITLE.</DELETED>
<DELETED> This title may be cited as the ``Anti-CBDC Surveillance
State Act''.</DELETED>
<DELETED>SEC. 602. PROHIBITION ON FEDERAL RESERVE BANKS RELATING TO
CERTAIN PRODUCTS OR SERVICES FOR INDIVIDUALS AND
PROHIBITION ON DIRECTLY ISSUING A CENTRAL BANK DIGITAL
CURRENCY.</DELETED>
<DELETED> Section 16 of the Federal Reserve Act (12 U.S.C. 411 et
seq.) is amended by adding at the end the following new
paragraph:</DELETED>
<DELETED> ``(18)(A) A Federal reserve bank may not--</DELETED>
<DELETED> ``(i) offer financial products or services directly to an
individual;</DELETED>
<DELETED> ``(ii) maintain an account on behalf of an individual;
or</DELETED>
<DELETED> ``(iii) issue a central bank digital currency, or any
digital asset that is substantially similar under any other name or
label.</DELETED>
<DELETED> ``(B) In this paragraph, the term `central bank digital
currency' has the meaning given that term under section
10(11)(D).''.</DELETED>
<DELETED>SEC. 603. PROHIBITION ON FEDERAL RESERVE BANKS INDIRECTLY
ISSUING A CENTRAL BANK DIGITAL CURRENCY.</DELETED>
<DELETED> Section 16 of the Federal Reserve Act (12 U.S.C. 411 et
seq.), as amended by section 2, is further amended by adding at the end
the following paragraph:</DELETED>
<DELETED> ``(19)(A) A Federal reserve bank may not offer a central
bank digital currency, or any digital asset that is substantially
similar under any other name or label, indirectly to an individual
through a financial institution or other intermediary.</DELETED>
<DELETED> ``(B) In this paragraph, the term `central bank digital
currency' has the meaning given that term under section
10(11)(D).''.</DELETED>
<DELETED>SEC. 604. PROHIBITION WITH RESPECT TO CENTRAL BANK DIGITAL
CURRENCY.</DELETED>
<DELETED> Section 10 of the Federal Reserve Act (12 U.S.C. 241 et
seq.) is amended by inserting before paragraph (12) the
following:</DELETED>
<DELETED> ``(11) Prohibition with respect to central bank
digital currency.--</DELETED>
<DELETED> ``(A) In general.--The Board of Governors
of the Federal Reserve System may not test, study,
develop, create, or implement a central bank digital
currency, or any digital asset that is substantially
similar under any other name or label.</DELETED>
<DELETED> ``(B) Monetary policy.--The Board of
Governors of the Federal Reserve System and the Federal
Open Market Committee may not use a central bank
digital currency to implement monetary policy, or any
digital asset that is substantially similar under any
other name or label.</DELETED>
<DELETED> ``(C) Exception.--Subparagraph (A) and
sections 16(18)(A)(iii) and 16(19)(A) may not be
construed to prohibit any dollar-denominated currency
that is open, permissionless, and private, and fully
preserves the privacy protections of United States
coins and physical currency.</DELETED>
<DELETED> ``(D) Central bank digital currency
defined.--In this paragraph, the term `central bank
digital currency' means a form of digital money or
monetary value that is--</DELETED>
<DELETED> ``(i) denominated in the national
unit of account;</DELETED>
<DELETED> ``(ii) a direct liability of the
Federal Reserve System; and</DELETED>
<DELETED> ``(iii) widely available to the
general public.''.</DELETED>
<DELETED>SEC. 605. SENSE OF CONGRESS.</DELETED>
<DELETED> It is the sense of Congress that the Board of Governors of
the Federal Reserve System currently does not have the authority to
issue a central bank digital currency, or any digital asset that is
substantially similar under any other name or label, and will not have
such authority unless Congress grants it under Congress's Article 1
Section 8 powers.</DELETED>
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Digital Asset
Market Clarity Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
TITLE I--RESPONSIBLE SECURITIES INNOVATION
Sec. 101. Short title.
Sec. 102. Disclosure requirements for certain transactions involving
ancillary assets.
Sec. 103. Exemption and rulemaking for certain transactions involving
ancillary assets.
Sec. 104. Special disposition restrictions by related persons.
Sec. 105. Characteristics of network tokens.
Sec. 106. Exemptive authority.
Sec. 107. Modernization of recordkeeping requirements.
Sec. 108. Modernization of securities regulations for digital asset
activities.
Sec. 109. Insider trading with respect to ancillary asset transactions.
Sec. 110. Securities Investor Protection Corporation applicability.
Sec. 111. Investor and consumer protection enforcement.
TITLE II--PROTECTING AGAINST ILLICIT FINANCE
Sec. 201. Treatment under the Bank Secrecy Act and sanctions laws.
Sec. 202. Digital asset examination standards.
Sec. 203. Preventing Illicit Finance Through Partnership Act.
Sec. 204. Financial Technology Protection Act.
Sec. 205. Digital asset kiosks.
Sec. 206. Study on illicit use of digital assets.
TITLE III--RESPONSIBLE INNOVATION IN DECENTRALIZED FINANCE
Sec. 301. Rulemaking on application of existing securities intermediary
requirements and existing Bank Secrecy Act
requirements to non-decentralized finance
trading protocols.
Sec. 302. Illicit finance obligations for distributed ledger messaging
systems.
Sec. 303. Special measure relating to certain transmittals of funds.
Sec. 304. Offshore stablecoin report.
Sec. 305. Temporary hold for certain digital asset transactions.
Sec. 306. Voluntary cybersecurity program for decentralized finance
trading protocols.
Sec. 307. Amendments to monetary instrument definition.
Sec. 308. Risk management standards for digital asset intermediaries.
Sec. 309. Study on digital asset mixers and tumblers.
Sec. 310. GAO study on intermediaries in foreign jurisdictions.
Sec. 311. Studies on foreign adversary activities.
Sec. 312. Treasury study on cybersecurity standards.
Sec. 313. Studies on financial stability risks of decentralized finance
trading and credit in digital commodity
markets.
TITLE IV--RESPONSIBLE BANKING INNOVATION
Sec. 401. Permissibility of digital asset activities.
Sec. 402. Joint rules for portfolio margining determinations.
Sec. 403. Capital requirements to address netting agreements.
Sec. 404. Prohibiting interest and yield on payment stablecoins.
Sec. 405. Expanded securities portfolio margin accounts under the
Securities Investor Protection Act of 1970.
TITLE V--RESPONSIBLE REGULATORY INNOVATION
Sec. 501. CFTC-SEC Micro-Innovation Sandbox.
Sec. 502. International cooperation.
Sec. 503. Automated regulatory compliance study.
Sec. 504. Report on legislative recommendations.
Sec. 505. Tokenization of securities.
Sec. 506. Voluntary adoption of National Institute of Standards and
Technology post-quantum cryptography
standards.
Sec. 507. International coordination to combat digital asset illicit
finance.
Sec. 508. Annual report on foreign digital asset trading volume,
compliance with United States standards and
remediation actions.
Sec. 509. AI innovation labs.
TITLE VI--PROTECTING SOFTWARE DEVELOPERS AND SOFTWARE INNOVATION
Sec. 601. Protecting software developers.
Sec. 602. Safe harbor for nonfungible tokens.
Sec. 603. Study on nonfungible tokens.
Sec. 604. Blockchain Regulatory Certainty Act.
Sec. 605. Keep Your Coins Act.
TITLE VII--PROTECTING CUSTOMER PROPERTY
Sec. 701. Customer property protections for ancillary assets and
digital commodities in bankruptcy.
Sec. 702. Insolvency safe harbor.
TITLE VIII--CUSTOMER PROTECTION
Sec. 801. Educational materials.
Sec. 802. Savings clauses.
Sec. 803. Study on expanding financial literacy.
Sec. 804. Consultation with SIPC regarding mandatory broker-dealer
disclosures to investors concerning the
status of payment stablecoins and digital
commodities.
TITLE IX--OTHER MATTERS
Sec. 901. Joint Advisory Committee on Digital Assets.
Sec. 902. Memorandum of understanding.
Sec. 903. FinCEN appropriations.
Sec. 904. Build Now Act.
Sec. 905. Rulemakings.
Sec. 906. Effective date.
SEC. 2. DEFINITIONS.
In this Act:
(1) Ancillary asset; ancillary asset originator; network
token.--The terms ``ancillary asset'', ``ancillary asset
originator'', and ``network token'' have the meanings given
those terms in section 4B(a) of the Securities Act of 1933, as
added by this Act.
(2) Bank secrecy act.--The term ``Bank Secrecy Act''
means--
(A) section 21 of the Federal Deposit Insurance Act
(12 U.S.C. 1829b);
(B) chapter 2 of title I of Public Law 91-508 (12
U.S.C. 1951 et seq.); and
(C) subchapter II of chapter 53 of title 31, United
States Code.
(3) Commission.--Except where otherwise expressly provided,
the term ``Commission'' means the Securities and Exchange
Commission.
(4) Coordinated control.--With respect to any distributed
ledger system and a related ancillary asset, the term
``coordinated control'' has the meaning given the term by the
Commission pursuant to rules adopted under section 104(b).
(5) Decentralized governance system.--
(A) In general.--The term ``decentralized
governance system'' means, with respect to a
distributed ledger system, any transparent, rules-based
system permitting persons to form consensus or reach
agreement in the development, provision, publication,
maintenance, or administration of the distributed
ledger system, in which participation is not limited
to, or under the control of, any person or group of
persons under common control.
(B) Relationship of persons to decentralized
governance systems.--With respect to a decentralized
governance system, the decentralized governance system
and any persons participating in the decentralized
governance system shall be treated as separate persons
unless those persons are under common control or acting
pursuant to an agreement to act in concert.
(C) Legal entities for decentralized governance
systems.--The term ``decentralized governance system''
shall include a legal entity, including a decentralized
unincorporated nonprofit association or other entity
created pursuant to State law, used to implement the
rules-based system described in subparagraph (A),
provided that the legal entity does not operate
pursuant to centralized management. For the purposes of
this subparagraph, the delegation of ministerial or
administrative authority at the direction of the
participants in a decentralized governance system shall
not be construed to be centralized management.
(D) Rule of construction.--For purposes of this
Act, and the amendments made by this Act, a
decentralized governance system shall not be deemed to
be a person or a group of persons acting under common
control.
(6) Digital asset; digital asset service provider.--The
terms ``digital asset'' and ``digital asset service provider''
have the meanings given those terms in section 2 of the GENIUS
Act (12 U.S.C. 5901).
(7) Digital asset intermediary.--The term ``digital asset
intermediary'' means a person that is engaged in digital asset
activities and required by law to register with the Commodity
Futures Trading Commission or with the Commission under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
(8) Digital commodity.--The term ``digital commodity'' has
the meaning given the term in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a), as added by this Act.
(9) Distributed ledger.--The term ``distributed ledger''
means technology--
(A) through which data is shared across a network
that creates a public digital ledger of verified
transactions or information among network participants;
and
(B) in which cryptography is used to link the data
described in subparagraph (A) to--
(i) maintain the integrity of the digital
ledger described in that subparagraph; and
(ii) execute other functions.
(10) Distributed ledger application.--The term
``distributed ledger application'' means executable software
that is deployed to and maintained on a distributed ledger and
composed of source code that is publicly available, including a
smart contract or any network of smart contracts, or other
similar technology.
(11) Distributed ledger protocol.--The term ``distributed
ledger protocol'' means publicly available source code of a
distributed ledger that is executed by the network participants
of a distributed ledger to facilitate its functioning, or other
similar technology.
(12) Distributed ledger system.--The term ``distributed
ledger system'' means a distributed ledger (together with its
distributed ledger protocol), a distributed ledger application,
or a network of distributed ledger applications.
(13) Related person.--The term ``related person'', with
respect to an ancillary asset originator or an ancillary
asset--
(A) means--
(i) any person that is, or within the
preceding 36-month period was--
(I) a founder or person serving in
a similar capacity with respect to the
ancillary asset originator; and
(II) a beneficial owner of not less
than 4 percent of the total amount of
outstanding units of an ancillary asset
associated with the ancillary asset
originator;
(ii) any person that is, or in the
preceding 12-month period was, an executive
officer, director, trustee, general partner,
owner of more than 10 percent of any class of
equity shares of the ancillary asset
originator, or person serving in a similar
capacity with respect to the ancillary asset
originator;
(iii) any person, or group of persons under
common control, that beneficially owns, or in
the preceding 6-month period owned, 10 percent
or more of the total amount of outstanding
units of the ancillary asset; and
(iv) any person, or group of persons under
common control, that beneficially owns, or in
the preceding 6-month period owned, covered
tokens (as that term is defined in section
104(a)) that equal not less than 2 percent of
the total amount of outstanding units of the
ancillary asset; and
(B) does not include a decentralized governance
system.
(14) Securities laws.--The term ``securities laws'' has the
meaning given the term in section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)).
(15) Smart contract.--The term ``smart contract'' means a
self-executing contract or program that--
(A) is stored on a distributed ledger system; and
(B) automatically executes or enforces digital
asset transactions upon the occurrence of explicit,
pre-determined conditions encoded in the contract or
program, without intervention, other than to provide
data, by any entity or natural person.
TITLE I--RESPONSIBLE SECURITIES INNOVATION
SEC. 101. SHORT TITLE.
This title may be cited as the ``Lummis-Gillibrand Responsible
Financial Innovation Act of 2026''.
SEC. 102. DISCLOSURE REQUIREMENTS FOR CERTAIN TRANSACTIONS INVOLVING
ANCILLARY ASSETS.
(a) In General.--The Securities Act of 1933 (15 U.S.C. 77a et seq.)
is amended by inserting after section 4A (15 U.S.C. 77d-1) the
following:
``SEC. 4B. REQUIREMENTS WITH RESPECT TO CERTAIN TRANSACTIONS INVOLVING
ANCILLARY ASSETS.
``(a) Definitions.--In this section:
``(1) Ancillary asset.--The term `ancillary asset' means a
network token, the value of which is dependent upon the
entrepreneurial or managerial efforts of an ancillary asset
originator or a related person, as those concepts are further
specified by the Commission by regulation.
``(2) Ancillary asset originator.--
``(A) In general.--The term `ancillary asset
originator' means, with respect to a particular
ancillary asset, a person that (whether directly or
through 1 or more subsidiary or controlled entities)--
``(i) initially offers, sells, or
distributes the ancillary asset; or
``(ii) during the 12-month period beginning
on the date on which the ancillary asset is
initially offered, sold, or distributed,
controls or causes the initial offer, sale, or
distribution of that ancillary asset.
``(B) Joint and several liability.--For the
purposes of this paragraph, if the person that
initially offered, sold, or distributed an ancillary
asset (or otherwise sold, distributed, controlled, or
caused the initial offer, sale, or distribution of the
ancillary asset) did not receive the largest amount of
those ancillary assets distributed in the 12-month
period following the commencement of that offer, sale,
or distribution, then that person, solely for purposes
of subsection (c), shall be jointly and severally
considered to be an ancillary asset originator with
respect to that ancillary asset (with the person that
controlled such offer, sale, or distribution) along
with the person (including a person under direct or
indirect control of that person) that received the
largest amount of those ancillary assets in that
period, other than ancillary assets received--
``(i) in an intermediary capacity;
``(ii) solely through a gratuitous
distribution;
``(iii) through an offer, sale, or
distribution of a security to the public
registered under section 5; or
``(iv) otherwise in a broad and public
manner that the Commission determines, pursuant
to regulation, should not subject the person to
disclosure requirements under subsection (d).
``(C) Rulemaking.--Not later than 360 days after
the date of enactment of this section, the Commission
shall, after providing notice and the opportunity for
comment, issue rules regarding the circumstances under
which persons that are jointly and severally considered
an ancillary asset originator pursuant to subparagraph
(B) are responsible for furnishing the disclosures
required under subsection (d) on behalf of the
ancillary asset originator.
``(3) Certification covered party.--The term `certification
covered party' means--
``(A) an ancillary asset originator;
``(B) a subsidiary of the ancillary asset
originator;
``(C) a related person of the ancillary asset
originator; or
``(D) any entity that directly or indirectly
controls or is controlled by a common entity with the
ancillary asset originator.
``(4) Decentralized governance system; digital asset;
digital asset intermediary; related person; securities laws.--
The terms `decentralized governance system', `digital asset',
`digital asset intermediary', `related person', and `securities
laws' have the meanings given those terms in section 2 of the
Digital Asset Market Clarity Act.
``(5) Gratuitous distribution.--
``(A) In general.--The term `gratuitous
distribution'--
``(i) means a distribution of a network
token, including a distribution effected by an
agent or other service provider engaged solely
in an administrative or ministerial capacity,
in exchange for not more than a nominal value
of cash, property, services, or other assets in
a broad, equitable, and non-discretionary
manner; and
``(ii) includes, without limitation, the
mechanisms and methods of distribution
described in subparagraph (B).
``(B) Mechanisms and methods of distribution.--The
mechanisms and methods of distribution described in
this subparagraph are the following:
``(i) Self staking.--The distribution of a
unit of a network token, as a programmatic
result of validating or staking activity for a
distributed ledger system's consensus
mechanism, including the staking of a network
token, and the operation of a node, validator,
or substantially similar software for such
activity where the owner of the staked network
token and the operator of the node, validator,
or substantially similar software are the same
person or entity.
``(ii) Self-custodial staking with a third
party.--The distribution of a unit of a network
token, as a programmatic result of validating
or staking activity for a distributed ledger
system's consensus mechanism, including the
staking of a network token, and the operation
of a node, validator, or substantially similar
software for such activity in which--
``(I) the owner of the staked
network token, and operator of the
node, validator, or substantially
similar software for such activity are
different persons or entities; and
``(II) the operator of the node,
validator, or substantially similar
software does not maintain custody or
control of the staked network token.
``(iii) Liquid staking.--The distribution
of network tokens, as the issuance, transfer,
or redemption of liquid staking tokens
representing a pro rata interest in staked
network tokens, and their associated rewards,
provided that such tokens are issued as
administrative or ministerial receipts and are
not providing discretionary management
authority.
``(iv) Custodial and ancillary staking
services.--
``(I) In general.--Subject to the
rules issued pursuant to subclause
(II), the provision of custodial or
ancillary staking services enabling the
owner of a network token to participate
in validating or staking activity for a
distributed ledger system's consensus
mechanism that results in the
programmatic distribution of a unit of
a network token, provided that such
custodial or ancillary services are
exclusively administrative or
ministerial in nature.
``(II) Rulemaking to define the
custodial and ancillary staking
services.--The Commission shall issue
rules defining the custodial and
ancillary staking services described in
subclause (I) that are exclusively
administrative or ministerial in
nature, consistent with what is
necessary or appropriate for the public
interest or for the protection of
investors.
``(v) Programmatic and automated
distributions.--The automated, programmatic,
protocol-defined, or rules-based distribution
of network tokens achieved through the
transparent functioning of a distributed ledger
system, a distributed ledger, or distributed
ledger applications, in which--
``(I) distributions occur pursuant
to public, transparent, rules-based
parameters that are publicly available
and are accessible on a permissionless
basis, without individualized or real-
time negotiation with recipients;
``(II) recipients receive network
tokens as a direct, programmatic result
of objective, verifiable network
participation, consumption, or
contribution, including consensus
participation, data availability,
bandwidth, governance, or use and
interaction with the protocol or
application;
``(III) the number of network
tokens received is proportionate to the
verifiable service, usage, or
contribution;
``(IV) any expected utility or
value of the network tokens arises
primarily from decentralized network
participation and market forces, rather
than the discretionary actions of any
single person or affiliated group; and
``(V) no person or group has
unilateral authority to alter,
restrict, or direct the issuance
parameters or distribution mechanisms
of the distributed ledger system, and
any modification occurs only through a
decentralized governance system.
``(vi) Technology-neutral clause.--The
distribution employing a mechanism, protocol,
or technology not specifically described in
clauses (i) through (v), without regard to
whether such mechanism, protocol, or technology
is in existence at the time of enactment of
this section, and without regard to terminology
or underlying technical framework, provided
such distribution meets the requirements
described in subparagraph (A)(i).
``(6) Investment company.--The term `investment company'
has the meaning given the term in section 3(a) of the
Investment Company Act of 1940 (15 U.S.C. 80a-3(a)).
``(7) Network token.--
``(A) In general.--The term `network token' means a
digital commodity that is intrinsically linked to a
distributed ledger system and that derives, or is
reasonably expected to derive, its value from the use
of such distributed ledger system, and, pursuant to the
Digital Asset Market Clarity Act and the amendments
made by the Digital Asset Market Clarity Act, is
treated as a non-security solely for purposes of the
securities laws.
``(B) Disqualifying financial rights.--The term
`network token' does not include any of the following:
``(i) Any security, consistent with the
categories of disqualifying financial rights
described in clause (ii).
``(ii) An investment contract or a
certificate of interest or participation in any
profit-sharing agreement that represents, gives
the holder, or is substantially economically or
functionally equivalent to, any of the
following, as the Commission shall establish by
rule:
``(I) A debt or equity interest, or
an option on a debt or equity interest,
in a person.
``(II) Liquidation rights with
respect to a person.
``(III) An entitlement to, or a
reasonable expectation of, an interest,
dividend, or other payment, or direct
or indirect transfer of value, from a
person (other than a decentralized
governance system).
``(IV) An express or implied
financial interest in (including a
limited partnership interest or
interest in intellectual property of),
or provided by, a person (other than a
decentralized governance system).
``(iii) Any interest that is, represents,
or is functionally equivalent to an interest in
an investment company or a company (as defined
in section 2 of the Investment Company Act of
1940 (15 U.S.C. 80a-2)) that would be an
investment company under section 3(a) of that
Act (15 U.S.C. 80a-3(a)) but for the exclusions
provided from that definition by section 3(c)
of that Act (15 U.S.C. 80a-3(c)).
``(iv) Any interest that is, represents, or
is functionally equivalent to an interest in
any entity or person that is not an investment
company but holds or will hold assets other
than securities.
``(C) Rule of construction.--A digital commodity--
``(i) shall be deemed to be intrinsically
linked to a distributed ledger system if the
digital commodity is directly related to the
functionality or operation of the distributed
ledger system or to the activities or services
for which the distributed ledger system is
created or utilized; and
``(ii) shall not be disqualified from being
deemed a network token due to the granting of
economic interests or voting capabilities with
respect to a distributed ledger system or its
decentralized governance system, as further
clarified by the Commission through the final
rules adopted under section 105 of the Lummis-
Gillibrand Responsible Financial Innovation Act
of 2026.
``(b) Treatment of Network Tokens and Transactions.--
``(1) In general.--The offer, sale, or distribution of an
ancillary asset by, or caused by, an ancillary asset
originator, including through an underwriter, shall be
considered to be an offer, sale, or distribution of an
investment contract involving an ancillary asset, except with
respect to a gratuitous distribution.
``(2) Treatment as non-security.--Except as provided in
this section, and subject to paragraph (3), a network token
shall be treated as a non-security, to the extent materially
consistent with the requirements and conditions of this
section, for purposes of --
``(A) section 2(a)(1);
``(B) section 3(a) of the Securities Exchange Act
of 1934 (15 U.S.C. 78c(a));
``(C) section 2(a) of the Investment Company Act of
1940 (15 U.S.C. 80a-2(a));
``(D) section 202(a) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b-2(a));
``(E) section 16 of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78lll); or
``(F) any applicable requirement of State law that
is functionally equivalent to the provisions described
in subparagraphs (A) through (E), including any
provision of State law that directly or indirectly
prohibits, limits, or imposes any conditions on the
use, offer, sale, transfer, or disposition of a network
token in a manner that is--
``(i) not substantially similar to
prohibitions, limitations, or conditions
imposed by that State relating to assets that
are commodities under the laws of that State;
and
``(ii) inconsistent with this section.
``(3) Secondary market treatment.--
``(A) In general.--Except as provided in this
section (including the limitation under subparagraph
(B)), and to the extent materially consistent with the
requirements and conditions of this section, the offer,
sale, or distribution of a network token by a person
shall be treated as not involving the offer, sale, or
distribution of a security under--
``(i) section 2(a)(1);
``(ii) the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.);
``(iii) the Investment Company Act of 1940
(15 U.S.C. 80a-1 et seq.);
``(iv) the Investment Advisers Act of 1940
(15 U.S.C. 80b-1 et seq.);
``(v) the Securities Investor Protection
Act of 1970 (15 U.S.C. 78aaa et seq.); and
``(vi) any applicable requirement of State
law that is functionally equivalent to the
provisions described in clauses (i) through
(v), including any provision of State law that
directly or indirectly prohibits, limits, or
imposes any conditions on the use, offer, sale,
transfer, or disposition of a network token in
a manner that is--
``(I) not substantially similar to
prohibitions, limitations, or
conditions imposed by that State
relating to assets that are commodities
under the laws of that State; and
``(II) inconsistent with this
section.
``(B) Limitation.--Subparagraph (A) shall not apply
if the applicable network token is offered, sold, or
distributed pursuant to the offer, sale, or
distribution of a security by an ancillary asset
originator or underwriter.
``(4) Treatment of gratuitous distributions.--
``(A) In general.--A gratuitous distribution, by
itself, shall be presumed to not constitute an offer,
sale, or distribution of a security for the purposes
of--
``(i) section 2(a)(1);
``(ii) section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a));
``(iii) section 2(a) of the Investment
Company Act of 1940 (15 U.S.C. 80a-2(a));
``(iv) section 202(a) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-2(a));
``(v) section 16 of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78lll); or
``(vi) any applicable requirement of State
law, or any provision of State law that is
functionally equivalent to the provisions
described in clauses (i) through (v), including
any provision of State law that directly or
indirectly prohibits, limits, or imposes any
conditions on the use, offer, sale, transfer,
or disposition of a network token in a manner
that is--
``(I) not substantially similar to
prohibitions, limitations, or
conditions imposed by that State
relating to assets that are commodities
under the laws of that State; and
``(II) inconsistent with this
section.
``(B) Savings clause.--Nothing in this paragraph
may be construed to limit, impair, or otherwise affect
the anti-fraud or anti-manipulation authorities of the
Commission, the Commodity Futures Trading Commission,
or a State regulator.
``(5) Prior certification.--
``(A) Submission and default treatment.--
``(i) In general.--
``(I) Presumption.--For purposes of
this section, there shall be a
rebuttable presumption that a network
token, including a network token
distributed in the manner described in
paragraph (4), is an ancillary asset
unless the originator of that network
token, or a digital asset intermediary
(as provided under subsection (c)(4)),
submits to the Commission a completed
written certification, supported by
reasonable evidence, as defined by the
Commission, sufficient to demonstrate
that the network token is not an
ancillary asset.
``(II) Contents.--A certification
submitted under subclause (I) shall
include a statement in accordance with
subsection (d)(3)(B)(i).
``(ii) Notification.--The Commission shall
notify the Commodity Futures Trading Commission
of each certification made pursuant to clause
(i) and of any final agency action with respect
to that certification.
``(iii) Reciprocal notice.--The Commission
shall receive a copy of any certification and
supporting materials submitted to the Commodity
Futures Trading Commission under section 203(d)
of the Digital Commodity Intermediaries Act.
``(B) Automatic effectiveness.--A certification
submitted under subparagraph (A) by an originator or a
digital asset intermediary shall become effective upon
the earlier of--
``(i) the date on which the Commission
notifies the originator or digital asset
intermediary in writing that the Commission
does not object to the certification; or
``(ii) if the Commission has not issued a
rebuttal to the originator or digital asset
intermediary in accordance with subparagraph
(C), 60 days after the date on which the
originator or digital asset intermediary
submits the certification.
``(C) Commission denial.--
``(i) Authority to deny.--Subject to
clauses (ii) and (iii), the Commission may deny
a certification submitted under subparagraph
(A) by an originator or digital asset
intermediary only during the 60-day period
described in subparagraph (B)(ii) or upon
determining, based on reasonable evidence, that
a material change in circumstances has occurred
after the submission of the certification,
whether or not the certification has taken
effect.
``(ii) Notice of intent to deny.--If the
Commission intends to deny a certification
submitted under subparagraph (A), the
Commission shall--
``(I) either not later than 20
business days after the date on which
the certification is submitted, or
promptly after determining that a
material change in circumstances has
occurred, provide to the applicable
originator or digital asset
intermediary notice of the intent of
the Commission to deny that
certification; and
``(II) provide to the applicable
originator or digital asset
intermediary a 10-day period following
the provision of notice under subclause
(I) during which--
``(aa) interested persons
shall have an opportunity to
submit written data, views, and
arguments relating to that
certification; and
``(bb) the Commodity
Futures Trading Commission may,
at the discretion of the
Commodity Futures Trading
Commission, submit input
regarding whether the
applicable asset--
``(AA) satisfies
the requirements for
being considered an
ancillary asset; or
``(BB) includes any
disqualifying financial
right described in
subsection (a)(7)(B).
``(iii) Requirements after notice of
intent.--After the 10-day period described in
clause (ii)(II), the Commission shall--
``(I) upon request of the
applicable originator or digital asset
intermediary, provide an opportunity
for the oral presentation of data,
views, and arguments by certification
covered parties;
``(II) have a vote of the
Commission (which, notwithstanding
section 4A of the Securities Exchange
Act of 1934 (15 U.S.C. 78d-1), may not
be delegated to an employee or employee
board or to any individual
Commissioner) to deny the certification
after a finding that the applicable
asset--
``(aa) is an ancillary
asset; or
``(bb) includes any
disqualifying financial right
described in subsection
(a)(7)(B); and
``(III) notify the Commodity
Futures Trading Commission of each
denial made under subclause (II).
``(iv) Interested person.--For purposes of
this subparagraph, the term `interested person'
means, with respect to a network token--
``(I) the ancillary asset
originator with respect to that network
token (referred to in this clause as
`the originator');
``(II) a subsidiary of the
originator;
``(III) a related person of the
originator;
``(IV) any entity that directly or
indirectly controls or is controlled by
a common entity with the originator;
``(V) any broker or dealer (as
those terms are defined in section 3(a)
of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a))), or an exchange
registered pursuant to section 6 of
that Act (15 U.S.C. 78f), that operates
in connection with digital assets; or
``(VI) any person registered with
the Commodity Futures Trading
Commission that operates or proposes to
operate in connection with digital
assets.
``(D) Certification filed by digital asset
intermediary.--
``(i) In general.--A certification
submitted by a digital asset intermediary under
this paragraph shall only become effective if--
``(I) the digital asset
intermediary has--
``(aa) conducted a
reasonable inquiry of publicly
available information,
appropriate under the
circumstances, regarding
whether the applicable
originator has engaged in
entrepreneurial and managerial
efforts with respect to the
applicable network token during
the most recent 180-day period,
or is likely to engage in those
efforts in the future; and
``(bb) concluded that the
efforts described in item (aa)
have not occurred or are not
reasonably likely to occur; and
``(II) subject to clause (ii), the
applicable originator has certified
that there is not (and, during the most
recent 180-day period, there has not
been) material, non-public information
regarding entrepreneurial or managerial
efforts with respect to the applicable
network token in the possession of the
originator or a related party.
``(ii) Limitation.--Clause (i)(II) shall
not be required if the applicable digital asset
intermediary, after a reasonable inquiry,
appropriate under the circumstances, determines
that the applicable originator, or any person
jointly and severally liable pursuant to
subsection (a)(2)(B), is not capable of
submitting the applicable certification.
``(E) Final agency action.--Denial under this
paragraph constitutes final agency action reviewable
under applicable law.
``(F) Tolling.--Any applicable period specified in
this paragraph may be tolled, for periods of not longer
than 60 days, during the 3-year period following the
effective date of the Digital Asset Market Clarity Act,
upon a showing in writing that the originator or
digital asset intermediary has not substantially
responded to a request for information from the
Commission within a reasonable time.
``(G) Withdrawal.--An originator or digital asset
intermediary may withdraw a certification submitted
under subparagraph (A) at any time before approval.
``(H) Designated commission office.--The Commission
shall designate an office that shall--
``(i) acknowledge receipt of certifications
submitted under subparagraph (A);
``(ii) support those seeking certification
under subparagraph (A) by providing guidance
regarding the mechanics of preparing and
submitting those certifications; and
``(iii) route certifications submitted
under subparagraph (A), together with any
associated comments or recommendations, to the
appropriate division or office of the
Commission for review.
``(I) Misstatements or omissions.--Any material
misstatement or omission to state a material fact,
including with respect to continuing compliance, in a
certification that has become effective under this
paragraph shall constitute grounds for the Commission,
consistent with the securities laws, to issue an order
denying, suspending, or revoking the effectiveness of
the certification and to pursue any appropriate
enforcement action.
``(c) Disclosure Requirements for Certain Transactions Involving
Ancillary Assets.--
``(1) Specified initial and periodic disclosure
requirements.--
``(A) In general.--An ancillary asset originator
shall be subject to the initial and periodic disclosure
requirements under subsection (d) upon the occurrence
of the earlier of the following:
``(i) Any offer, sale, or distribution of
an ancillary asset after the effective date of
the Digital Asset Market Clarity Act by, or
that is caused by, that ancillary asset
originator pursuant to--
``(I) Regulation Crypto, as adopted
pursuant to section 103 of the Lummis-
Gillibrand Responsible Financial
Innovation Act of 2026;
``(II) the filing of an effective
registration statement under this Act;
``(III) the filing of an offering
statement described in section 3(b)(2);
or
``(IV) an offering conducted
pursuant to section 4(a)(6).
``(ii)(I) The first secondary market offer,
sale, or distribution of an ancillary asset in
the United States after the effective date of
the Digital Asset Market Clarity Act that
constitutes a public offering, whether by the
ancillary asset originator or any other person.
``(II) For the purposes of subclause (I),
the term `public offering' shall be interpreted
consistent with the meaning of that term under
section 4(a)(2).
``(B) Exclusion.--Subparagraph (A) shall not apply
if--
``(i) the aggregate gross proceeds from the
offer, sale, or distribution of the applicable
ancillary asset (together with any related
assets sold in those offers, sales, or
distributions) were $5,000,000 or less
(adjusted for inflation) during the 12-month
period immediately following the date of the
first such offer, sale, or distribution; or
``(ii) the average daily aggregate value of
trading in the applicable ancillary asset in
all spot markets open to the public in the
United States for which trading volume is
generally available is $5,000,000 or less
(adjusted for inflation) during the 12-month
period (or such shorter period as the
Commission may determine) immediately following
the commencement of compliance with the
disclosure requirements under subsection (d)
(as determined pursuant to paragraph (2) of
this subsection), based on the knowledge of the
ancillary asset originator after due inquiry
(or, if the ancillary asset has not yet traded
on spot markets open to the public in the
United States, the trading volume is reasonably
expected to be $5,000,000 or less (adjusted for
inflation) during the 12-month period
immediately following the reporting date
specified by paragraph (2)).
``(C) Calculation.--For the purposes of this
paragraph, the calculation of daily aggregate value
shall be based on a reasonable calculation of public
data.
``(2) Commencement of compliance with specified initial and
periodic disclosure requirements.--
``(A) In general.--An ancillary asset originator
subject to the requirements of paragraph (1) shall
comply with the disclosure requirements under
subsection (d)--
``(i) before--
``(I) any initial offer, sale, or
distribution described in paragraph
(1)(A)(i); or
``(II) a secondary market offer,
sale, or distribution described in
paragraph (1)(A)(ii); and
``(ii) semiannually thereafter.
``(B) Exclusion.--The requirements of this
paragraph shall not apply to an offer, sale, or
distribution of an ancillary asset that occurs after
the effective date of the Digital Asset Market Clarity
Act if an ancillary asset originator has submitted a
certification under subsection (d)(3)(B) and the
Commission has not denied that certification within a
60-day period after the completion of the process under
that subsection.
``(3) Transition rule.--
``(A) In general.--An ancillary asset originator
that initially offered, sold, or distributed (or
otherwise controlled or caused the offer, sale, or
distribution of) a security involving an ancillary
asset before the effective date of the Digital Asset
Market Clarity Act shall comply with the periodic
disclosure requirements under subsection (d), if
applicable, beginning on the date that is 1 year after
that effective date.
``(B) Effect on certification.--An ancillary asset
originator, or any other certification covered party,
subject to this paragraph that meets the requirements
of subsection (d)(3) may furnish a certification as
provided in that subsection without complying with the
periodic disclosure requirements under subsection (d),
if the Commission has not denied that certification
within a 60-day period after the completion of the
process under that subsection.
``(C) Period of disclosures.--The disclosures
required under subparagraph (A) shall apply with
respect to the 3-year period preceding the effective
date described in that subparagraph.
``(4) Digital asset intermediaries.--
``(A) In general.--Other than as provided under
subparagraph (B), with respect to an ancillary asset
that is listed for trading on a digital asset
intermediary, that digital asset intermediary may, in
lieu of the applicable ancillary asset originator,
satisfy the requirements of subsection (d) in
accordance with such rules as the Commission shall
jointly adopt with the Commodity Futures Trading
Commission.
``(B) Allocation of disclosure responsibility.--
``(i) Originator filings.--A digital asset
intermediary may not satisfy the requirements
of subsection (d) in lieu of the applicable
ancillary asset originator, if--
``(I) the ancillary asset
originator is incorporated, organized,
or otherwise registered under the laws
of the United States or of any State;
and
``(II) the applicable ancillary
asset is--
``(aa) offered, sold, or
distributed after the effective
date of the Digital Asset
Market Clarity Act pursuant
to--
``(AA) an
investment contract
that is offered, sold,
or distributed pursuant
to Regulation Crypto,
as adopted pursuant to
section 103 of the
Lummis-Gillibrand
Responsible Financial
Innovation Act of 2026;
``(BB) the filing
of an effective
registration statement
under this Act (other
than a registration
statement on the form
described in section
239.31 or 239.33 of
title 17, Code of
Federal Regulations, or
the successor to either
such form);
``(CC) the filing
of an offering
statement described in
section 3(b)(2); or
``(DD) an offering
conducted pursuant to
section 4(a)(6); or
``(bb) first offered or
sold after the effective date
of the Digital Asset Market
Clarity Act in a transaction
described in paragraph
(1)(A)(ii).
``(ii) Commission determination.--
``(I) In general.--If, after
notice, comment, and the opportunity
for a hearing, the Commission
determines that it is in the public
interest or necessary for the
protection of investors, including with
respect to an ancillary asset
originator incorporated or organized in
a foreign jurisdiction, the Commission
may require an ancillary asset
originator, after a transition period,
to file the disclosures required under
subsection (d).
``(II) Extraterritorial effect.--
Subclause (I) shall apply
extraterritorially.
``(C) Standard of liability.--Notwithstanding any
other provision of this Act, it shall be unlawful for a
digital asset intermediary to file disclosures under
subsection (d) pursuant to this paragraph that contain
any material misstatement or omission to state a
material fact required to be stated therein, or
necessary to make the statements therein not
misleading, unless that digital asset intermediary did
not know (and, in the exercise of reasonable care,
could not have known) of that misstatement or omission.
``(5) Failure to comply.--Subject to the requirements of
this section, an ancillary asset shall not be listed for
trading on a digital asset intermediary if the Commission and
the Commodity Futures Trading Commission jointly find that the
ancillary asset originator that initially offered, sold, or
distributed the ancillary asset after the effective date of the
Digital Asset Market Clarity Act (or, if a digital asset
intermediary is satisfying the requirements of this subsection
in lieu of that ancillary asset originator in accordance with
paragraph (4), such digital asset intermediary) has materially
failed to furnish the required disclosures under this
subsection after a reasonable opportunity to cure, as provided
by joint rule of the Commission and the Commodity Futures
Trading Commission in a manner that is consistent with the
considerations under subsection (d)(5).
``(d) Specified Initial and Periodic Disclosure Requirements.--
``(1) In general.--
``(A) Furnishing of information.--An ancillary
asset originator that is subject to the requirements of
paragraph (1) or (3) of subsection (c), or a digital
asset intermediary acting in accordance with subsection
(c)(4), shall furnish to the Commission, in such form
as the Commission may prescribe by rule after providing
notice and the opportunity for comment, and until the
requirement terminates under paragraph (3) of this
subsection, the information described in paragraph (2)
of this subsection, to the extent that the information
is material and known, or reasonably knowable, to the
ancillary asset originator or digital asset
intermediary.
``(B) Requirements for rules.--A rule prescribed
under subparagraph (A) shall be reasonably tailored,
including by adjusting the scope, form, and content of
required disclosures, based on--
``(i) the size of the applicable ancillary
asset originator in accordance with section
108(a) of the Lummis-Gillibrand Responsible
Financial Innovation Act of 2026;
``(ii) the aggregate amount of ancillary
assets offered, sold, or distributed by the
applicable ancillary asset originator to the
public in the United States; and
``(iii) whether the applicable ancillary
asset and any related distributed ledger system
is subject to coordinated control, as defined
by the Commission pursuant to rules adopted
under section 104(b) of the Lummis-Gillibrand
Responsible Financial Innovation Act of 2026.
``(2) Categories of information.--The information required
under paragraph (1) shall include the following with respect to
the applicable ancillary asset originator and the related
ancillary asset:
``(A) Basic corporate information regarding the
ancillary asset originator and the ancillary asset
activities of the ancillary asset originator, which may
include the following items, as the Commission shall
determine by rule:
``(i) The experience of the ancillary asset
originator (or persons controlling the
ancillary asset originator) in developing
ancillary assets.
``(ii) If the ancillary asset originator
(or persons controlling the ancillary asset
originator) has previously distributed
ancillary assets, information on the subsequent
distribution history of those ancillary assets,
including price history, if the information is
publicly available.
``(iii) The activities that the ancillary
asset originator has taken in the relevant
disclosure period, and is projecting to take in
the 1-year period following the submission of
the disclosure, with respect to promoting the
use, value, or resale of the ancillary asset
(including any activity to facilitate the
creation or maintenance of a trading market for
the ancillary asset and any distributed ledger
system, application, or system that uses the
ancillary asset).
``(iv) The anticipated cost of the
activities of the ancillary asset originator
described in clause (iii), whether the
ancillary asset originator has unencumbered,
liquid funds equal to that amount, and, if the
ancillary asset originator does not have those
funds, the anticipated plan of operations of
the ancillary asset originator for the portion
of time where those liquid funds are less than
the anticipated cost of the activities of the
ancillary asset originator.
``(v) The experience of the ancillary asset
originator with the use of a distributed ledger
system or distributed ledger technology.
``(vi) The identities and expertise of the
board of directors (or equivalent body) and
senior management of the ancillary asset
originator, the experience or functions of whom
are material to the development or value of the
ancillary asset, as well as any personnel
changes relating to the ancillary asset
originator during the period covered by the
disclosure.
``(vii) Financial statements of the
ancillary asset originator that are--
``(I) if the aggregate amount of
such ancillary assets offered, sold, or
distributed to the public does not
exceed $25,000,000 in gross proceeds,
reviewed by a public accountant that is
independent of the ancillary asset
originator; or
``(II) if the aggregate amount of
such ancillary assets offered, sold, or
distributed to the public exceeds
$25,000,000 in gross proceeds, audited
by a public accountant that is
independent of the ancillary asset
originator.
``(viii) A description of any legal
proceedings in which the ancillary asset
originator is engaged.
``(ix) Risk factors arising from the
activities of the ancillary asset originator
with respect to the ancillary asset, and not
generally applicable to other kinds of
ancillary assets, that may limit the utility or
liquidity of the ancillary asset, investor
demand with respect to the ancillary asset, or
the market price or value of the ancillary
asset.
``(x) Information relating to ownership of
the ancillary asset by--
``(I) persons owning not less than
10 percent of any class of equity
security or other ownership interest of
the ancillary asset originator; and
``(II) the board of directors (or
equivalent body) and senior management
of the ancillary asset originator, if
those individuals, in the aggregate,
own not less than 5 percent of the
ancillary asset.
``(xi) For any material transactions
involving the ancillary asset between the
ancillary asset originator and any related
person, a description, in the aggregate, of the
parties, the number of ancillary assets
involved, and a summary of any material
features of the transactions, including any
material terms or ongoing obligations.
``(xii) A summary, in the aggregate by
year, of transactions in ancillary assets
during the 4-year period preceding the
furnishing of the disclosure, by the ancillary
asset originator and persons that directly or
indirectly control the ancillary asset
originator.
``(xiii) Purchases or similar acquisitions
of ancillary assets by the ancillary asset
originator and affiliates of the ancillary
asset originator.
``(xiv) A statement, made in good faith,
from the chief financial officer of the
ancillary asset originator or equivalent
official, stating whether the ancillary asset
originator reasonably expects to maintain or
have the financial resources to continue
business as a going concern for the 12-month
period following the furnishing of the
disclosure, absent a change in circumstances.
``(xv) The current state and timeline for
the development of the distributed ledger
system to which the ancillary asset relates,
detailing if, how, and when the distributed
ledger system and the related ancillary asset
are intended to no longer be subject to
coordinated control, including by related
persons, if the distributed ledger system has
not yet received a certification under section
104(d) of the Lummis-Gillibrand Responsible
Financial Innovation Act of 2026.
``(B) Economic and technical information relating
to the ancillary asset, which may include the following
items, as the Commission shall determine by rule:
``(i) A general description of the
ancillary asset and the distributed ledger
system to which that ancillary asset relates,
including--
``(I) a plain-English description
of how the applicable distributed
ledger, distributed ledger system, or
distributed ledger application
functions;
``(II) the intended or known
functionality and uses of the ancillary
asset and any associated fees for use
or disposition of the ancillary asset;
``(III) the market for the
ancillary asset;
``(IV) other assets or services
that may compete with the ancillary
asset;
``(V) the total supply of the
ancillary asset or the manner and rate
of the ongoing production or creation
of the ancillary asset; and
``(VI) the governance and consensus
mechanism for the ancillary asset and
that distributed ledger system, if
applicable, including for validating
transactions and implementing changes
to the distributed ledger system, the
method of generating or mining
ancillary assets, and any process for
burning or destroying units of the
ancillary asset on a distributed ledger
system.
``(ii) If the ancillary asset originator
has offered, sold, or otherwise provided
ancillary assets to affiliates, investors,
employees, intermediaries, or resellers, a
description of the amount of assets offered,
sold, or otherwise provided to such persons and
a summary of any material resale restrictions
or other material obligations arising from
related contracts, agreements, or other
arrangements.
``(iii) If ancillary assets were
distributed by the ancillary asset originator
without charge or upon meeting certain
conditions, a description of the distributions,
in the aggregate, along with the identity of
any recipient that received more than 5 percent
of the total amount of ancillary assets
(calculated as a percentage of the total supply
of such asset at the time of distribution).
``(iv) The amount of ancillary assets owned
by the ancillary asset originator.
``(v) For the 12-month period following the
furnishing of the disclosure, a description of
the current state and anticipated timeline for
the development of the distributed ledger
system to which that ancillary asset relates,
including--
``(I) plans of the ancillary asset
originator to support (or to cease
supporting) the use or development of
the ancillary asset, including markets
for the ancillary asset and that
distributed ledger system;
``(II) the various roles that exist
or are intended to exist in connection
with any applicable distributed ledger,
distributed ledger system, or
distributed ledger application, such as
users, service providers, developers,
transaction validators, and governance
participants;
``(III) a discussion of any
mechanisms by which control or
authority are exerted with respect to
that distributed ledger system, if
applicable, or the related ancillary
asset; and
``(IV) any critical operational
dependencies of any applicable
distributed ledger, distributed ledger
system, or distributed ledger
application or of the related ancillary
asset.
``(vi) Risk factors that may materially
affect the liquidity of the ancillary asset,
investor demand with respect to the ancillary
asset, or the market price or value of the
ancillary asset.
``(vii) To the extent available to the
ancillary asset originator, the average daily
price for a constant unit of value of the
ancillary asset during the relevant reporting
period, as well as the 12-month high and low
prices for the ancillary asset, as calculated
based on the 3 exchanges with the largest
trading volume in that ancillary asset.
``(viii) If applicable, and subject to
cybersecurity best practices, information
relating to any external audit of the code and
functionality of the ancillary asset, including
the entity performing the audit and the
experience of the entity in conducting similar
audits.
``(ix) Information relating to custodial
services available for the ancillary asset.
``(x) Information on intellectual property
rights claimed or disputed relating to the
ancillary asset.
``(xi) A description of the technology
underlying the initial distribution and trading
of the ancillary asset, including the source
code for the ancillary asset, if applicable,
and technical requirements for holding,
accessing, and transferring the ancillary
asset.
``(xii) If applicable, a description of the
steps necessary to independently access,
search, and verify the transaction history of
the ancillary asset.
``(C) In addition to the information expressly
required to be included under subparagraphs (A) and
(B), the ancillary asset originator or digital asset
intermediary, as applicable, shall provide such further
material information, if any, as may be necessary to
ensure that the statements made in the disclosure are
not, in light of the circumstances under which the
statements are made, materially misleading.
``(3) Termination of requirements.--
``(A) Termination.--The obligation of an ancillary
asset originator to provide disclosures under paragraph
(1) shall terminate on the date that a certification
becomes effective under subparagraph (B), including
through an approval or deemed approval.
``(B) Certification.--
``(i) In general.--A certification covered
party may submit to the Commission a
certification, based on the knowledge of the
certification covered party after due inquiry
and supported by reasonable evidence, that
states--
``(I) that--
``(aa) during the 180-day
period preceding the date on
which the certification covered
party submits the
certification, and as of the
date of submission, no
certification covered party has
engaged in more than a nominal
level of entrepreneurial or
managerial efforts (as defined
by the Commission by rule),
which shall not, for the
purposes of this clause,
include providing
administrative services alone;
``(bb) any efforts
described in item (aa) were not
a primary factor in determining
the value of the related
ancillary asset (which may
include that any essential
promises made by the
certification covered party
have been fulfilled); and
``(cc) a certification is
effective under section 104(d)
of the Lummis-Gillibrand
Responsible Financial
Innovation Act of 2026;
``(II) in good faith that the
certification covered party does not
reasonably expect there to be any
efforts that would render the
certification covered party unable to
provide a new certification following
the date of the certification; and
``(III) that substantially all
material information that is reasonably
expected to contribute to the value of
the ancillary assets offered, sold, or
distributed to the public by the
ancillary asset originator is, and is
reasonably expected to remain,
available to the public.
``(ii) Change in circumstances.--
``(I) Effectiveness of the
certification.--A certification under
clause (i) shall remain effective until
the date on which any certification
covered party engages in
entrepreneurial or managerial efforts
that would render the certification
covered party unable to meet the
standards of the certification.
``(II) New disclosures required.--
On and after the date described in
subclause (I), the certification
covered party undertaking efforts
described in that subclause shall be
responsible for furnishing to the
Commission the disclosures required
under paragraph (1), including a
description of the change in
circumstances.
``(III) Periodic disclosures.--The
furnishing of disclosures pursuant to
subclause (II) shall restart the
schedule for periodic disclosures under
paragraph (1).
``(IV) Prior certifications.--A
certification submitted under clause
(i) before a change in circumstances
shall not be deemed false or misleading
solely by reason of subsequent
reengagement under this clause.
``(iii) Commission denial.--
``(I) In general.--The Commission
may deny a certification submitted
under clause (i) by a certification
covered party by--
``(aa) issuing a written
notice of objection to the
certification submitted under
clause (i) or upon determining
that more than a nominal level
of entrepreneurial or
managerial efforts has been
undertaken by any certification
covered party after the
submission of the
certification; and
``(bb) providing to the
certification covered party 10
days notice of the intent of
the Commission to deny that
certification, during which
period interested persons shall
have an opportunity to submit
written data, views, and
arguments relating to that
certification.
``(II) Requirements after notice of
intent.--After the 10-day period
described in subclause (I)(bb), the
Commission shall--
``(aa) upon request of the
certification covered party,
provide an opportunity for the
oral presentation of data,
views, and arguments by any
interested persons; and
``(bb) have a vote of the
Commission on whether to grant
or deny the certification,
based on a finding as to
whether the applicable
ancillary asset meets the
standard for certification
under clause (i).
``(III) Final agency action.--
Denial under this clause constitutes
final agency action reviewable under
applicable law.
``(iv) Deemed approval.--If the Commission
fails to issue a written notice of objection or
non-objection within 90 days after submission
of a certification under clause (i), the
certification shall be deemed approved by the
Commission.
``(v) Withdrawal.--A certification covered
party may withdraw a certification submitted
under clause (i) at any time before that
certification is approved or denied.
``(vi) Designated commission office.--The
Commission shall designate an office that
shall--
``(I) acknowledge the receipt of
certifications submitted under clause
(i);
``(II) support certification
covered parties seeking certification
under clause (i) by providing guidance
regarding the mechanics of preparing
and submitting those certifications;
and
``(III) route certifications
submitted under clause (i), together
with any associated comments or
recommendations, to the appropriate
division or office of the Commission
for review.
``(vii) Advance review.--
``(I) In general.--A certification
covered party may submit a
certification under clause (i) before
the offer, sale, or distribution of a
network token.
``(II) Intended originator.--In
submitting for a certification for
advance review under subclause (I), a
certification covered party shall
identify the person intending to offer,
sell, or distribute the applicable
network token, and that person shall be
treated as the applicable ancillary
asset originator for the purposes of
this subparagraph.
``(viii) Tolling.--Any applicable period
specified in this subparagraph may be tolled,
for periods of not longer than 60 days, during
the 3-year period following the effective date
of the Digital Asset Market Clarity Act, upon a
showing in writing that the submitting
certification covered party has not
substantially responded to a request for
information from the Commission within a
reasonable time.
``(ix) Misstatements or omissions.--Any
material misstatement or omission to state a
material fact, including with respect to
continuing compliance, in a certification that
has become effective under this subparagraph
shall constitute grounds for the Commission,
consistent with the securities laws, to--
``(I) issue an order denying,
suspending, or revoking the
effectiveness of that certification;
and
``(II) pursue any appropriate
enforcement action.
``(4) Voluntary disclosure.--An ancillary asset originator
may voluntarily furnish to the Commission the information
required under this subsection if the ancillary asset
originator determines that it is reasonably likely that the
ancillary asset originator will become subject to the
requirements of paragraph (1) or (3) of subsection (c) in the
future.
``(5) Rulemaking considerations.--In adopting rules under
this subsection, the Commission shall--
``(A) require only such information as the
Commission finds to be necessary or appropriate to
protect investors, maintain fair, orderly, and
efficient markets, and facilitate capital formation,
innovation, and efficiency;
``(B) include in any final versions of those rules
a cost-benefit analysis evaluating the effects of any
such rule on innovation, efficiency, competition,
maintaining fair and orderly markets, and capital
formation, including the competitiveness of United
States market participants; and
``(C) act jointly with the Commodity Futures
Trading Commission to establish a process for
implementing the requirements of this subsection,
including with respect to listing and disclosures, that
is consistent and coordinated with the listing process
for digital asset intermediaries.
``(6) Limitations.--Rules adopted under this subsection
shall not require the inclusion of financial statements of an
ancillary asset originator, except with respect to the
disclosure of financial information under paragraph (2).
``(e) Exemptions.--The Commission may, by order, exempt an
ancillary asset originator or digital asset intermediary, or any class
of ancillary asset originators or digital asset intermediaries, from
specified requirements under subsection (d) if it is in the public
interest or for the protection of investors, consistent with the
purposes of this section and subject to such conditions as the
Commission determines necessary to protect investors and in the public
interest.
``(f) Confidential Treatment of Certain Information.--Subject to
Commission rules and procedures, an ancillary asset originator required
to furnish to the Commission disclosures under subsection (d), or a
digital asset intermediary furnishing those disclosures in lieu of such
an ancillary asset originator, may submit a request for confidential
treatment of information included in such disclosures pursuant to
procedures the Commission shall establish and that are modeled on or
identical to section 230.406 of title 17, Code of Federal Regulations,
or any successor regulation.
``(g) Effect of Failure to Comply.--The failure of an ancillary
asset originator or digital asset intermediary to comply with a
provision of this section shall not, by itself, cause an ancillary
asset offered, sold, or distributed by that ancillary asset originator
(or that the ancillary asset originator caused to be offered, sold, or
distributed) to be a security under any applicable law.
``(h) Liability for False or Misleading Statements.--
``(1) In general.--It shall be unlawful for an ancillary
asset originator, in any initial and periodic disclosure,
certification, or other document furnished under this section,
to make an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading.
``(2) Rule of construction.--Nothing in this subsection may
be construed as limiting the application of section 240.10b-5
of title 17, Code of Federal Regulations, or any successor
regulation, to false or misleading disclosure statements or
preventing any private right of action otherwise available
under the securities laws.
``(i) Special Disposition Restrictions by Related Persons.--
``(1) In general.--The Commission shall adopt rules,
consistent with section 104 of the Lummis-Gillibrand
Responsible Financial Innovation Act of 2026, establishing
limitations on the disposition of certain ancillary assets with
specified characteristics by related persons.
``(2) Considerations.--In adopting rules under paragraph
(1), the Commission shall consider what is necessary or
appropriate to protect investors, promote capital formation,
and maintain fair and orderly markets, which may include the
prevention of insider self-dealing or other abuses of a
privileged position.
``(j) Safe Harbor for Forward-Looking Statements.--In any action
against an ancillary asset originator or digital asset intermediary
arising under this Act that is based on an untrue statement of a
material fact or omission of a material fact necessary to make the
statement not misleading, no liability shall arise with respect to any
forward-looking statement (including any statement of plans,
objectives, projections, expectations, or assumptions concerning future
performance, financial position, development milestones, asset utility,
system adoption, or market conditions) made in an ancillary asset
disclosure, statement, or other document furnished pursuant to this
section, if the statement is--
``(1) identified as forward-looking; and
``(2) accompanied by meaningful cautionary language that
identifies important factors that could cause actual results to
differ materially.
``(k) Transactions Before Effective Date.--
``(1) Primary transactions.--Notwithstanding any other
provision of law, neither the Commission nor any private
plaintiff may initiate, pursue, or maintain any action, or an
appeal of an action, for a violation of section 5 or 12(a)(1)
of this Act arising from any offer, sale, or distribution of
ancillary assets occurring before the effective date of the
Digital Asset Market Clarity Act, provided that the ancillary
asset originator or a certification covered party complies with
any applicable requirements under subsection (c)(3).
``(2) Primary transactions related to fraud.--Nothing in
paragraph (1) shall limit the ability of the Commission to
bring an action based on the anti-fraud or anti-manipulation
authorities of the Commission.
``(3) Secondary transactions.--Notwithstanding any other
provision of law, the offer, sale, or distribution of a network
token by a person occurring before the effective date of the
Digital Asset Market Clarity Act shall be treated as not
involving the offer, sale, or distribution of a security
under--
``(A) section 2(a)(1);
``(B) section 3(a) of the Securities Exchange Act
of 1934 (15 U.S.C. 78c(a));
``(C) section 2(a) of the Investment Company Act of
1940 (15 U.S.C. 80a-2(a));
``(D) section 202(a) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b-2(a));
``(E) section 16 of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78lll); or
``(F) any applicable requirement of State law that
is functionally equivalent to the provisions described
in subparagraphs (A) through (E), including any
provision of State law that directly or indirectly
prohibits, limits, or imposes any conditions on the
use, offer, sale, transfer, or disposition of a network
token in a manner that is--
``(i) not substantially similar to
prohibitions, limitations, or conditions
imposed by that State relating to assets that
are commodities under the laws of that State;
and
``(ii) inconsistent with this section.
``(4) No inference of liability.--Nothing in paragraph (1),
(2), or (3) may be construed as an admission, acknowledgment,
or inference of liability for any act, transaction, or conduct
occurring before the effective date of the Digital Asset Market
Clarity Act.
``(5) Rules of construction.--Nothing in this subsection
may be construed to--
``(A) impair vested rights or contractual
obligations lawfully established before the effective
date of the Digital Asset Market Clarity Act; or
``(B) limit the authority of the Commission to
bring an action against an ancillary asset originator
or a related person for securities fraud or
manipulation in connection with a statement, a
disclosure, or conduct by that ancillary asset
originator or related person, except that the
Commission may not exercise that authority to treat a
network token as a security or regulate secondary
market trading.
``(l) Rules of Construction.--Nothing in this section may be
construed to--
``(1) preclude the Commission from bringing an appropriate
action or entering into a settlement agreement relating to a
violation or alleged violation of this section;
``(2) permit compliance with this section to be used in any
administrative or judicial proceeding as evidence that an
ancillary asset is a security;
``(3) prohibit the offer, sale, or distribution of a
digital asset in reliance on an exemption from registration
under this Act, other than Regulation Crypto (as adopted
pursuant to section 103 of the Lummis-Gillibrand Responsible
Financial Innovation Act of 2026); or
``(4) require more than 1 person to furnish the disclosures
required under subsection (d), unless otherwise provided by the
Commission by rule.
``(m) Anti-Evasion.--
``(1) Anti-evasion.--The Commission may issue such
regulations as the Commission considers necessary or
appropriate in the public interest or for the protection of
investors to administer and prevent willful evasion of--
``(A) this section;
``(B) sections 103 and 104 of the Lummis-Gillibrand
Responsible Financial Innovation Act of 2026; and
``(C) with respect to an ancillary asset originator
and related persons, the securities laws amended by the
Lummis-Gillibrand Responsible Financial Innovation Act
of 2026.
``(2) Considerations.--In adopting rules under this
section--
``(A) the form, label, and written documentation of
an agreement, contract, or transaction, or an entity,
shall not be dispositive in determining whether the
agreement, contract, or transaction, or the entity, has
been entered into or structured to willfully evade the
requirements of this section;
``(B) the Commission may consider whether, based on
the totality of facts and circumstances, the principal
purpose of any arrangement, allocation of rights,
interposition of entities, or sequencing of steps is to
willfully circumvent the requirements of this section
or the restrictions set forth in section 104 of the
Lummis-Gillibrand Responsible Financial Innovation Act
of 2026, by satisfying the literal terms while
defeating the purpose and policy of this section;
``(C) for purposes of subparagraph (B), factors
that may be considered, without being dispositive, in
determining whether a principal purpose to willfully
circumvent this section exists may include--
``(i) removal of a disqualifying financial
right described in subsection (a)(7)(B) from
the instrument coupled with its re-introduction
through a substantially equivalent right held
by a related person or controlled vehicle,
including, by way of example, any nominally
independent foundation, decentralized
autonomous organization, laboratory, or similar
arrangement;
``(ii) circular or non-commercial flows of
value among related persons designed to
simulate network utility; and
``(iii) timing of steps designed to
trigger, accelerate, or delay certification or
termination of disclosure obligations without a
material change in circumstances relating to
the asset; and
``(D) the Commission shall provide that evasion
shall not have occurred if an agreement, contract, or
transaction is entered into for a legitimate business
purpose and is not structured with a principal purpose
of willfully circumventing the requirements of this
section.
``(n) Fiduciary Obligations.--
``(1) Fiduciary duties under state law.--Nothing in this
section, or in any rule issued under this section, may be
construed to limit, preempt, or otherwise affect any fiduciary
duty of an ancillary asset originator, or of any director,
officer, or controlling person of an ancillary asset
originator, arising under the laws of any State.
``(2) Preservation of fiduciary and other duties to
customers, clients, and shareholders.--Nothing in this section,
or in any rule issued under this section, may be construed to
limit, preempt, or otherwise affect any fiduciary duty that any
person owes to a customer, client, or shareholder under any
other provision of Federal or State law, including in
connection with the offer, sale, transfer, distribution, or
custody of an ancillary asset.
``(o) Savings Clause.--Except as provided by the Digital Asset
Market Clarity Act and the amendments made by that Act, nothing in this
section may be construed to limit the authority of the Commission under
the securities laws.''.
(b) Rulemaking.--Not later than 360 days after the date of
enactment of this Act, the Commission shall conduct a notice and
comment rulemaking as necessary or appropriate to carry out section 4B
of the Securities Act of 1933, as added by subsection (a).
SEC. 103. EXEMPTION AND RULEMAKING FOR CERTAIN TRANSACTIONS INVOLVING
ANCILLARY ASSETS.
(a) Adoption of Regulation Crypto.--The Commission shall adopt
rules under the Securities Act of 1933 (15 U.S.C. 77a et seq.) and the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), which shall be
referred to collectively as ``Regulation Crypto'', to implement
subsections (b), (c), and (d) of this section.
(b) Exemption for Certain Transactions Involving Ancillary
Assets.--
(1) Exemption.--
(A) In general.--Rules adopted by the Commission
under this section shall provide that the registration
requirements of the Securities Act of 1933 (15 U.S.C.
77a et seq.) shall not apply to an offer, sale, or
distribution of an investment contract involving an
ancillary asset, if the offer, sale, or distribution
does not exceed the greater of--
(i) $50,000,000 in gross proceeds per
calendar year for a period of not longer than 4
years; or
(ii) 10 percent of the total dollar value
of those ancillary assets that are outstanding,
as of the date of that offer, sale, or
distribution.
(B) Continued application of certain provisions.--
Sections 12(a)(2) and 17 of the Securities Act of 1933
(15 U.S.C. 77l(a)(2), 77q) shall apply with respect to
an offer, sale, or distribution of an investment
contract involving an ancillary asset that is described
in subparagraph (A).
(2) Limitation.--An ancillary asset originator may not
raise more than $200,000,000 in total gross proceeds in
reliance on the rules adopted under subsection (a).
(3) Review and adjustment for inflation.--
(A) In general.--Not later than 2 years after the
date of enactment of this Act, and every 2 years
thereafter, the Commission shall--
(i) review the amounts described in
paragraphs (1)(A)(i) and (2);
(ii) adjust the amounts described in
paragraphs (1)(A)(i) and (2) to account for
inflation; and
(iii) increase the amounts described in
paragraphs (1)(A)(i) and (2) as the Commission
determines appropriate, if that action would be
in the public interest and consistent with the
protection of investors.
(B) Report.--If the Commission, after conducting a
review under subparagraph (A), determines not to
increase the amount described in paragraph (1)(A)(i) or
(2) (other than to adjust that amount for inflation, as
required under subparagraph (A)(ii) of this paragraph),
the Commission 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 detailing the reasons that the
Commission did not increase that amount.
(c) Conditions for Exemption.--The following conditions shall apply
to the exemption provided under subsection (b):
(1) Initial disclosures.--Not later than 30 days before the
date on which the applicable ancillary asset originator, any
affiliate of the ancillary asset originator, or any underwriter
of an investment contract, offers, sells, or distributes an
ancillary asset in reliance on the rules adopted under
subsection (a), the ancillary asset originator shall furnish to
the Commission the disclosures required under section 4B(d) of
the Securities Act of 1933, as added by this Act, subject to
the periodic semiannual disclosure requirements of that
section.
(2) Coordinated control.--If the applicable ancillary asset
is reliant on a distributed ledger system that, together with
that ancillary asset, is subject to coordinated control,
including by related persons, the restrictions on disposition
under section 104 shall apply.
(3) Criteria.--The applicable ancillary asset originator
may not be--
(A) a company that is not organized under, and
subject to, the laws of a State or territory of the
United States or the District of Columbia;
(B) a development-stage company that either--
(i) has no specific business plan or
purpose; or
(ii) has indicated that the business plan
of the company is to merge with or acquire an
unidentified company;
(C) an investment company (as defined in section
3(a) of the Investment Company Act of 1940 (15 U.S.C.
80a-3(a))) or a company (as defined in section 2 of
that Act (15 U.S.C. 80a-2)) that would be an investment
company under section 3(a) of that Act (15 U.S.C. 80a-
3(a)) but for the exclusions provided from that
definition by section 3(c) of that Act (15 U.S.C. 80a-
3(c)), provided that, solely for the purposes of
evaluating eligibility to rely on the exemption
provided under subsection (b), an ancillary asset
originator shall not be deemed to be an investment
company solely by virtue of investing, reinvesting,
owning, holding, or trading ancillary assets, including
ancillary assets offered for sale by the ancillary
asset originator;
(D) a person issuing fractional undivided interests
in other commodities;
(E) a person that is or has been subject to any
order of the Commission entered pursuant to section
12(j) of the Securities Exchange Act of 1934 (15 U.S.C.
78l(j)) after the date of enactment of this Act and
during the 5-year period preceding the offer and sale;
(F) a person that is or has been disqualified
pursuant to section 230.506(d) of title 17, Code of
Federal Regulations, or any successor regulation,
unless waived by order of the Commission;
(G) a person that is or has been disqualified
pursuant to section 230.251 through 230.263 of title
17, Code of Federal Regulations (commonly referred to
as ``Regulation A''), or any successor regulations,
unless waived by order of the Commission; or
(H) a person convicted of a felony offense
involving insider trading, embezzlement, cybercrime,
money laundering, financing of terrorism, or financial
fraud, within the last 10 years.
(4) Furnishing notice of reliance.--The applicable
ancillary asset originator shall electronically furnish to the
Commission a notice of reliance on the rules adopted under
subsection (a) not fewer than 30 days before the date on which
the ancillary asset originator first offers, sells, or
distributes an ancillary asset in reliance on those rules,
which shall contain the following information:
(A) The name of the ancillary asset originator.
(B) A statement by a person duly authorized by the
ancillary asset originator that the conditions of those
rules are satisfied.
(C) The website where the summary documents of the
ancillary asset originator, if any, may be found and
made available for public consumption.
(D) An email address at which the ancillary asset
originator may be contacted.
(5) Public availability.--The Commission shall require that
the disclosures furnished to the Commission under section 4B(d)
of the Securities Act of 1933, as added by this Act, be made
publicly available in a manner that provides timely and
continuing access.
(6) Form and manner.--The disclosures furnished to the
Commission under section 4B(d) of the Securities Act of 1933,
as added by this Act, shall be prepared, furnished, and made
public in the form and manner prescribed by the Commission,
including through the use of electronic furnishing, web
posting, machine-readable formats, and plain-English legends,
as the Commission determines necessary or appropriate in the
public interest or for the protection of investors.
(d) Status Under Securities Laws.--
(1) In general.--A disclosure furnished under section 4B of
the Securities Act of 1933, as added by this Act, including an
initial or periodic disclosure furnished under subsection (d)
of such section 4B, and any other document furnished under the
rules adopted under subsection (a) of this section, shall be
deemed to be--
(A) a ``prospectus'' solely--
(i) for purposes of section 12(a)(2) of the
Securities Act of 1933 (15 U.S.C. 77l(a)(2));
and
(ii) with respect to the person that is the
purchasing party in a transaction made in
reliance on the rules adopted under subsection
(a); and
(B) a ``statement'' solely for purposes of--
(i) section 17(a) of the Securities Act of
1933 (15 U.S.C. 77q(a));
(ii) section 10(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78j(b)); and
(iii) section 240.10b-5 of title 17, Code
of Federal Regulations, or any successor
regulation.
(2) Registration statement.--
(A) In general.--A disclosure furnished under
section 4B of the Securities Act of 1933, as added by
this Act, including an initial or periodic disclosure
furnished under subsection (d) of such section 4B, or
any other document furnished pursuant to the rules
adopted under subsection (a), shall not be deemed to be
a ``registration statement'' for purposes of section 11
of the Securities Act of 1933 (15 U.S.C. 77k) or to
have been filed under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.).
(B) Civil liability.--Liability under section
12(a)(2) of the Securities Act of 1933 (15 U.S.C.
77l(a)(2)) relating to a disclosure furnished under
section 4B of the Securities Act of 1933, as added by
this Act, including an initial or periodic disclosure
furnished under subsection (d) of such section 4B, or
any other document furnished pursuant to the rules
adopted under subsection (a), shall only apply to the
person making statements in that disclosure or other
document, and only a person that purchased an ancillary
asset in a transaction involving disclosures provided
pursuant to the rules adopted under subsection (a)
shall have a claim under such section 12(a)(2).
(3) Forward-looking statements.--In any action against an
ancillary asset originator under this title or the amendments
made by this title that is based on an untrue statement of a
material fact or omission of a material fact necessary to make
the statement not misleading, no liability shall arise with
respect to any forward-looking statement (including a statement
of plans, objectives, projections, expectations, or assumptions
concerning future performance, financial position, development
milestones, digital asset utility, system adoption, or market
conditions) made in a disclosure, statement, or other document
furnished pursuant to section 4B of the Securities Act of 1933,
as added by this Act, including an initial or periodic
disclosure furnished under subsection (d) of such section 4B,
or furnished under this section, if the statement is--
(A) identified as forward-looking; and
(B) accompanied by meaningful cautionary language
that identifies important factors that could cause
actual results to differ materially.
SEC. 104. SPECIAL DISPOSITION RESTRICTIONS BY RELATED PERSONS.
(a) Definitions.--In this section:
(1) Certification covered party.--The term ``certification
covered party'' means, with respect to an ancillary asset--
(A) the ancillary asset originator;
(B) a subsidiary of the ancillary asset originator;
(C) a related person of the ancillary asset
originator; or
(D) any entity that directly or indirectly controls
or is controlled by a common entity with an ancillary
asset originator.
(2) Covered token.--The term ``covered token'' means any
unit of an ancillary asset that was acquired from the ancillary
asset originator with respect to that ancillary asset or an
agent or underwriter thereof.
(3) Distributed ledger control person.--The term
``distributed ledger control person'' means, with respect to a
distributed ledger system, any person or group of persons under
common control, other than a decentralized governance system,
that has the unilateral 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 or a related ancillary asset.
(b) Coordinated Control.--
(1) In general.--The Commission shall adopt rules, based on
the criteria described in paragraph (2), to define the
circumstances under which a distributed ledger system, together
with a related ancillary asset, is considered to be under
coordinated control.
(2) Considerations.--In adopting rules under paragraph (1),
the Commission shall consider the following criteria as indicia
that a distributed ledger system described in that paragraph,
together with the related ancillary asset, is considered to be
under coordinated control:
(A) Open digital system.--The extent to which the
distributed ledger system is not--
(i) a distributed ledger, the protocol of
which is freely and publicly available;
(ii) a distributed ledger application the
source code of which is--
(I) freely and publicly available
via open-source code; and
(II) recorded on a distributed
ledger described in clause (i); or
(iii) an analogue to a distributed ledger
or distributed ledger application described in
clause (i) or (ii), as determined by the
Commission by rule or order.
(B) Permissionless and credibly neutral digital
system.--The extent to which a person or group of
persons under common control has--
(i) the unilateral authority, via operation
of the distributed ledger system, to restrict,
censor, or prohibit use of the distributed
ledger system, including any applicable system-
based user activity; or
(ii) private permissions, hard-coded
privileges, or similar capabilities granted by
the source code of the distributed ledger
system that provides preferential treatment
compared to other similarly situated persons.
(C) Distributed digital network.--The extent to
which a person or group of persons under common control
has beneficial ownership of, in the aggregate, more
than 49 percent of the total amount of outstanding
units of the ancillary asset or voting power with
respect to any governance system that relates to the
distributed ledger system.
(D) Autonomous distributed ledger system.--The
extent to which--
(i) the distributed ledger system has not
yet reached an autonomous state; and
(ii) a person or group of persons under
common control has the unilateral authority,
directly or indirectly, to alter or change the
functionality, operation, or rules of consensus
or agreement of the distributed ledger system.
(E) Economic independence.--The extent to which the
primary programmatic mechanisms of the distributed
ledger system that are intended to facilitate
substantial value accrual to the ancillary asset
through the functioning of the distributed ledger
system are not yet functional.
(3) Safe harbors.--
(A) In general.--The Commission shall establish
safe harbors under which a distributed ledger system,
together with a related ancillary asset, will not be
considered to be under coordinated control for the
purposes of section 103(c)(2).
(B) Decentralized governance systems.--
(i) In general.--For the purposes of this
section, a decentralized governance system
shall not be considered to be a person or a
group of persons under common control.
(ii) Distributed ledger systems.--For the
purposes of this section, a distributed ledger
system, together with any related ancillary
asset, shall not be precluded from being
considered to not be under coordinated control
solely based on a functional, administrative,
clerical, or ministerial action of a
decentralized governance system, including any
such action taken by a person acting on behalf
of and at the direction of that decentralized
governance system, as determined by the
Commission and consistent with the protection
of investors, maintenance of fair, orderly, and
efficient markets, and the facilitation of
capital formation.
(C) Emergency measures.--For the purposes of this
section, a pre-defined, temporary, rules-based
cybersecurity emergency measure that is exercised by an
incident response or security council exclusively in
response to a specific and documented cybersecurity
incident or imminent threat pursuant to publicly
disclosed, on-chain authorization mechanisms, that is
strictly limited in scope and duration solely to
address that cybersecurity incident or imminent threat,
and that is exercised without unilateral control by any
single person, shall not alone constitute common
control or an agreement to work in concert, if those
rules and mechanisms, including the procedures and
operational limits governing the emergency measure, are
disclosed in publicly available written documentation
reasonably available to the applicable Federal agency
by a decentralized autonomous organization or similar
legal entity sufficiently in advance of any exercise of
the emergency measure.
(D) Nonexclusive.--The safe harbors established
under subparagraphs (A), (B), and (C) shall not be
exclusive and the Commission shall consider such other
circumstances as the Commission finds in the public
interest or for the protection of investors.
(4) Evidence.--The Commission may, in adopting rules under
this subsection, require such certifications, third party
verifications, or other evidence as the Commission determines
necessary or appropriate to determine whether a distributed
ledger system is under coordinated control for the purposes of
section 103(c)(2).
(5) Rule of construction.--For purposes of this
subsection--
(A) the existence or termination of coordinated
control shall be determined independently of whether
entrepreneurial or managerial efforts described in
section 4B of the Securities Act of 1933, as added by
this Act, have been completed; and
(B) the elimination of coordinated control shall be
a prerequisite to the completion of efforts described
in subparagraph (A).
(c) Special Restrictions on Disposition.--The Commission shall
adopt rules that provide that, with respect to transactions involving
an ancillary asset for which disclosures are required pursuant to
section 4B(d) of the Securities Act of 1933, as added by this Act, when
a sale of that ancillary asset is made by a related person, the
following restrictions on that sale shall apply:
(1) Sales prior to certification.--If the covered token was
acquired after the effective date of this Act and principally
relies on a distributed ledger system, the covered token may be
sold by a related person before that distributed ledger system
is certified as not subject to coordinated control, pursuant to
subsection (d), if--
(A) with respect to that distributed ledger system,
the disclosures required pursuant to section 4B(d) of
the Securities Act of 1933, as added by this Act, have
been furnished;
(B) the holder of the covered token has held the
units for not less than 12 months; and
(C) the amount of covered tokens sold in any 12-
month period by the related person is--
(i) not greater than an amount to be
determined by the Commission pursuant to notice
and comment rulemaking not later than 360 days
after the date of enactment of this Act, which
rulemaking shall consider what is necessary or
appropriate in the public interest, including,
among other things, the protection of
investors, whether the action will promote
efficiency, competition, and capital formation,
and how to foster the development of
distributed ledger systems that are not subject
to coordinated control; and
(ii) in no case equal to or greater than
the amount determined by the Commission
pursuant to the rulemaking described in
paragraph (2)(C).
(2) Sales after certification.--If the covered token was
acquired after the effective date of this Act and principally
relies on a distributed ledger system that is certified as not
subject to coordinated control pursuant to subsection (d), the
covered token may be sold by a related person, if--
(A) with respect to that distributed ledger system,
the disclosures required pursuant to section 4B(d) of
the Securities Act of 1933, as added by this Act, have
been furnished;
(B) the holder of the covered token has held the
units for not less than 6 months; and
(C) the amount of covered tokens sold in any 12-
month period by the related person is not greater than
an amount to be determined by the Commission pursuant
to rulemaking that shall not be less than 10 percent of
the total amount of outstanding units of such ancillary
assets.
(3) Sales of pre-existing covered tokens.--If the covered
token was acquired before the effective date of this Act and
principally relies on a distributed ledger system, the covered
token may be sold by a related person if--
(A) in the case that the distributed ledger system
has not been certified as not subject to coordinated
control pursuant to subsection (d)--
(i) the disclosures required pursuant to
section 4B(d) of the Securities Act of 1933, as
added by this Act, have been furnished; and
(ii) the holder of the covered token has
held the units for not less than 12 months; and
(B) in the case that the distributed ledger system
has been certified as not subject to coordinated
control pursuant to subsection (d), the holder of the
covered token has held the units for not less than 6
months.
(4) Limitations on transactions by distributed ledger
control persons.--If the holder of an ancillary asset that
principally relies on a distributed ledger system that has been
certified as not subject to coordinated control is a
distributed ledger control person with respect to that
distributed ledger system, that control person may resell that
ancillary asset if--
(A) that control person furnishes notice to the
Commission, in a form and manner determined by the
Commission, that the person has or intends to obtain an
authority described in subparagraph (B) with respect to
the distributed ledger system;
(B) that distributed ledger control person
furnishes disclosures to the Commission, in a form and
manner determined by the Commission, describing the
material activities, as determined by the Commission,
of the control person;
(C) with respect to that distributed ledger system,
disclosures have been furnished pursuant to section
4B(d) of the Securities Act of 1933, as added by this
Act; and
(D) that control person has satisfied such other
requirements applicable to that control person that may
be established by the Commission to prevent
manipulation or distortion of the value of the
ancillary asset, including resale restrictions
consistent with those applied to related persons that
are not control persons.
(d) Certification of Non-Control by Related Persons.--
(1) Submission.--With respect to an ancillary asset, a
certification covered party may furnish to the Commission a
written certification, in such form and manner as the
Commission may specify by rule consistent with subsection (b),
stating that the distributed ledger system is not under
coordinated control.
(2) Automatic effectiveness.--A certification furnished
under paragraph (1) shall become effective, and the distributed
ledger system shall be deemed not to be under coordinated
control, on the date that is the earlier of--
(A) the date on which the Commission notifies the
certification covered party in writing that the
Commission does not object to the certification; or
(B) if the Commission has not denied the
certification under paragraph (3), the date that is 90
days after the date on which the certification is
furnished, or such shorter period as the Commission may
determine by rule.
(3) Denial.--
(A) In general.--The Commission may deny a
certification furnished under paragraph (1)--
(i) only during the 90-day period beginning
on the date on which the certification is
furnished, or such shorter period as the
Commission may determine by rule, or upon
determining, based on reasonable evidence, that
a material change in circumstances has occurred
after the furnishing of the certification; and
(ii) by providing to the certification
covered party 10 days notice of the intent of
the Commission to deny that certification.
(B) Requirements after notice of intent.--After the
10-day period described in subparagraph (A)(ii), the
Commission shall--
(i) conduct a hearing; and
(ii) vote to deny the certification if
there is a finding that the applicable
ancillary asset does not meet the standard for
certification that the operations of the
distributed ledger system are not under such
coordinated control.
(C) Final agency action.--Denial under this
paragraph constitutes final agency action reviewable
under applicable law.
(4) Verification.--The Commission may, by rule, require
appropriate third-party verification of a certification
furnished under paragraph (1).
(e) Disgorgement.--
(1) In general.--Any profit realized by a related person
from the sale of an ancillary asset in violation of the
restrictions under subsection (c) shall inure to, and be
recoverable by, the holders of the ancillary asset,
irrespective of any intention of holding the asset.
(2) Enforcement.--An action to recover profit described in
paragraph (1)--
(A) may be instituted at law or in equity in any
court of competent jurisdiction of the United States
by--
(i) the applicable ancillary asset
originator;
(ii) the owner of any units of the
applicable ancillary asset; or
(iii) the owner of any units of the
applicable ancillary asset, in the name and on
behalf of the ancillary asset originator, if
the ancillary asset originator--
(I) fails or refuses to bring the
action within 60 days after a written
request by any owner of not less than 5
percent of the total amount of
outstanding units of that ancillary
asset; or
(II) fails to diligently prosecute
the action; and
(B) shall be brought not later than 2 years after
the date that profit was realized.
(f) Exemption From Disposition Restrictions.--The Commission shall
adopt rules that provide for the following exemptions from, or waivers
to, disposition restrictions described in subsection (c):
(1) Material hardship exemption.--
(A) In general.--Subject to subparagraph (B), the
Commission shall adopt rules and procedures to exempt
parties from related person restrictions with respect
to an ancillary asset where those restrictions conflict
with an obligation or requirement arising from one of
the following material hardships on a related person
with respect to the ancillary asset or the ancillary
asset originator:
(i) The death of the related person.
(ii) The bankruptcy or insolvency of the
related person.
(iii) The dissolution, merger, or
acquisition of a corporate person.
(iv) Tax liability relating to the receipt
of the applicable ancillary asset.
(v) Such other material hardships as may be
designated by the Commission.
(B) Requirements.--The rules and procedures adopted
under subparagraph (A) shall be designed to mitigate
the risk that parties may seek to structure holdings to
evade resale restrictions and exempt or waive the
application of resale restrictions only to the extent
necessary to address the identified material hardship.
(2) Liquidity provision exemption.--The Commission shall
adopt rules to exempt from disposition restrictions parties
buying or selling an ancillary asset through regular two-sided
bidding and offering for the purposes of providing market
liquidity, provided that such activities are not undertaken for
the purpose of evading the requirements of this section.
(3) Agency exemption.--The Commission shall adopt rules
that exempt a party acting as a custodian, trading platform,
broker, dealer or other agent from being treated as the owner
of customer or client assets or from being restricted in
facilitating sales on behalf of a customer or client if the
agent is otherwise determined to be a related person.
(4) Exchange-traded product and passive fund exemption.--
The Commission shall adopt rules to exempt from disposition
restrictions, as appropriate--
(A) exchange-traded products, the shares of which
are created and redeemed by authorized participants and
registered with the Commission; and
(B) passive pooled investment vehicles, whether or
not the shares of which are registered with the
Commission.
(g) Related Person Disclosure Requirements.--The Commission shall
adopt rules that provide for reporting to the Commission certain
information with respect to ancillary asset holdings or transactions
relating to ancillary assets by related persons, subject to the
disposition restrictions provided in subsection (c):
(1) Disclosure reports.--
(A) Disclosure of related person status.--Any
person, or group of persons under common control,
directly or indirectly, that acquire beneficial
ownership of 10 percent or more of the total amount of
outstanding units of any such ancillary asset, measured
as of the end of any calendar quarter, shall furnish
initial and continuing reports as determined by the
Commission.
(B) Sales of covered tokens by related person prior
to certification of non-control.--Quarterly reports
relating to the number of ancillary assets sold by a
related person in a form as required by the Commission.
(C) Sales of covered tokens by related person after
certification of non-control.--Quarterly reports
relating to the number of ancillary assets sold by a
related person that holds, at any point during the
applicable calendar quarter, in excess of 5 percent of
the total amount of outstanding units of such ancillary
asset in a form as required by the Commission.
(D) Sales of pre-existing covered tokens by related
person.--Quarterly reports relating to the number of
ancillary assets sold by a related person that holds in
excess of 5 percent of the total amount of outstanding
units of such ancillary asset in a form as required by
the Commission.
(2) Confidential treatment.--The Commission may provide for
confidential treatment of information provided under this
subsection, or may exempt certain related persons from the
requirement to furnish a report required under this subsection,
pursuant to procedures the Commission shall establish and that
are modeled on or identical to section 230.406 of title 17,
Code of Federal Regulations, or any successor regulation.
(3) Good-faith furnishing standard.--
(A) In general.--Any obligation to furnish
information under this section applies only to the
furnisher acting on its own behalf and is limited to
information that is material and known, or reasonably
knowable after due inquiry, to that furnisher.
(B) Reliance.--A furnisher described in
subparagraph (A) may reasonably rely on public sources
and third-party attestations where appropriate.
(C) Liability.--Furnishing in good faith pursuant
to this section shall not create liability for
information outside the furnisher's possession,
custody, or control, or for omissions of information
the furnisher could not reasonably obtain without
breaching legal privilege, contractual confidentiality,
or other applicable law.
(D) Other persons.--Any person other than the
furnisher may, in good faith and absent knowledge to
the contrary, presume that a report required under
paragraph (1) has been timely furnished.
(4) Life cycle event considerations.--The Commission shall
adopt rules establishing streamlined processes for the
following life cycle events:
(A) Successor disclosures in corporate
transactions.--The transfer of disclosure obligations
under this section to a successor entity in the event
of a merger, acquisition, or sale of substantially all
assets relating to the ancillary asset activities,
including a notice of succession.
(B) Cessation of work.--The cessation or suspension
of ongoing disclosure obligations under this section
where the ancillary asset originator or related person
no longer engages, and does not reasonably expect to
engage, in entrepreneurial or managerial efforts with
respect to the ancillary asset or its associated
distributed ledger system, including a notice of
cessation of work.
(C) Contractual termination.--The termination of
disclosure obligations under this section that attach
solely by virtue of a person's status as a related
person when a contractual arrangement with the
ancillary asset originator or distributed ledger system
has concluded, including a notice of cessation of
contractual relationship.
(h) Rule of Construction.--Nothing in this section may be construed
to--
(1) limit or impair the anti-fraud or anti-manipulation
authorities of the Commission; or
(2) preclude reliance on Regulation Crypto, as adopted
under section 103, or any other effective registration
statement or exemption from registration under the Securities
Act of 1933 (15 U.S.C. 77a et seq.), as amended by this Act.
SEC. 105. CHARACTERISTICS OF NETWORK TOKENS.
(a) In General.--Not later than 1 year after the date of enactment
of this Act, the Commission shall adopt rules that provide that--
(1) a network token shall not be considered as providing a
disqualifying financial right under section 4B(a)(7)(B) of the
Securities Act of 1933, as added by this Act, if the market
value of the network token is primarily derived, or is
reasonably expected to be primarily derived, from a distributed
ledger system or from the broader adoption and use of such a
system, including where--
(A) the mechanisms of the distributed ledger system
collect, receive, accrue, or distribute consideration
from the functioning of the distributed ledger system;
(B) the network token provides governance
capabilities with respect to a distributed ledger
system or a decentralized governance system;
(C) the value of the network token appreciates or
depreciates due to the use of, or in response to the
efforts, operations, or financial performance of, the
distributed ledger system to which the network token
relates or its decentralized governance system; or
(D) for a network token that meets the definition
of an ancillary asset, the value of the network token
appreciates or depreciates due to the efforts of the
ancillary asset originator or related person; and
(2) participants in offers or sales of network tokens
providing financial interests described in paragraph (1) shall
not be precluded from relying on the exemption from
registration under section 4B(b) of the Securities Act of 1933,
as added by this Act.
(b) Effect of Rulings and Actions Before Date of Enactment.--
(1) In general.--If, before the date of enactment of this
Act, a court of the United States, in a non-appealable final
judgment, found that a digital asset transaction was not an
offer, sale, or distribution of a security, a digital asset
transferred pursuant to that offer, sale, or distribution shall
not be considered to be a security under any provision of law
described in subsection (b)(2) of section 4B of the Securities
Act of 1933, as added by this Act.
(2) Network tokens.--A network token shall not be
considered to be an ancillary asset, and shall not be
considered to be a security under any provision of law
described in subsection (b)(2) of section 4B of the Securities
Act of 1933, as added by this Act, if, on January 1, 2026, any
units of that network token were the principal asset of an
exchange-traded product--
(A) not registered under the Investment Company Act
of 1940 (15 U.S.C. 80a-1 et seq.); and
(B) the shares of which are listed and traded on a
national securities exchange registered under section 6
of the Securities Exchange Act of 1934 (15 U.S.C. 78f).
SEC. 106. EXEMPTIVE AUTHORITY.
(a) Continued Applicability.--Nothing in this Act, or any amendment
made by this Act, may be construed to amend, limit, impair, or
otherwise affect the authority of the Commission to grant an exemption
pursuant to any provision of law that is in effect on the day before
the date of enactment of this Act, including pursuant to any of the
following:
(1) Section 28 of the Securities Act of 1933 (15 U.S.C.
77z-3).
(2) Section 36 of the Securities Exchange Act of 1934 (15
U.S.C. 78mm).
(3) Section 6(c) of the Investment Company Act of 1940 (15
U.S.C. 80a-6(c)).
(4) Section 206A of the Investment Advisers Act of 1940 (15
U.S.C. 80b-6a).
(5) Section 304(d) of the Trust Indenture Act of 1939 (15
U.S.C. 77ddd(d)).
(6) Section 4(g) of the Securities Investor Protection Act
of 1970 (15 U.S.C. 78ddd(g)).
(b) General Exemptive Authority.--Section 28 of the Securities Act
of 1933 (15 U.S.C. 77z-3) is amended, in the matter preceding the
matter relating to Schedule A--
(1) by striking ``by rule or regulation'' and inserting
``by rule, regulation, or order''; and
(2) by adding at the end the following: ``The Commission
shall, by rule or regulation, determine the procedures under
which an exemptive order under this section shall be granted
and may, in the sole discretion of the Commission, decline to
entertain any application for an order of exemption under this
section.''.
SEC. 107. MODERNIZATION OF RECORDKEEPING REQUIREMENTS.
The Commission shall adopt rules to modernize the recordkeeping
requirements under the Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.), the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et
seq.), and the Investment Company Act of 1940 (15 U.S.C. 80a-1 et
seq.), including to facilitate the utilization of distributed ledger
records.
SEC. 108. MODERNIZATION OF SECURITIES REGULATIONS FOR DIGITAL ASSET
ACTIVITIES.
(a) Tailoring of Existing Requirements.--The Commission shall--
(1) amend, rescind, replace, or supplement by rule, order,
guidance, exemptive relief, or any other appropriate action
(provided such action is consistent with chapter 5 of title 5,
United States Code, and other applicable law) each regulation,
form, interpretive statement, or other requirement within the
jurisdiction of the Commission that is not otherwise amended by
this Act (or required to be amended because of a provision of
this Act or an amendment made by this Act), to the extent that
such provision applies to any digital asset activity, including
any activity