Digital Commodity Exchange Act of 2020
This bill provides for the regulation and registration of digital commodity exchanges. Digital commodity exchanges are subject to oversight by the Commodity Futures Trading Commission. The bill establishes the conditions for the sale of digital commodities, the registration of exchanges, and sets forth other requirements.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8373 Introduced in House (IH)]
<DOC>
116th CONGRESS
2d Session
H. R. 8373
To provide for orderly and secure digital commodity exchange markets,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 24, 2020
Mr. Conaway (for himself, Mr. Austin Scott of Georgia, Mr. Johnson of
South Dakota, Mr. Emmer, Mr. Soto, and Mr. Schweikert) introduced the
following bill; which was referred to the Committee on Agriculture
_______________________________________________________________________
A BILL
To provide for orderly and secure digital commodity exchange markets,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Digital Commodity Exchange Act of
2020''.
SEC. 2. AMENDMENTS TO THE COMMODITY EXCHANGE ACT.
(a) Definitions.--Section 1a of the Commodity Exchange Act (7
U.S.C. 1a) is amended--
(1) in paragraph (40)--
(A) in subparagraph (E), by striking ``and'' at the
end; and
(B) by redesignating subparagraph (F) as
subparagraph (G) and inserting after subparagraph (E)
the following:
``(F) a digital commodity exchange registered under
section 5i; and''; and
(2) by adding at the end the following:
``(52) Digital commodity.--The term `digital commodity'
means any form of fungible intangible personal property that
can be exclusively possessed and transferred person to person
without necessary reliance on an intermediary, and which does
not represent a financial interest in a company, partnership,
or investment vehicle.
``(53) Digital commodity custodian.--The term `digital
commodity custodian' means an entity that holds, maintains, or
safeguards digital commodities and other assets on behalf of
digital commodity market participants.
``(54) Digital commodity exchange.--The term `digital
commodity exchange' means a trading facility that lists for
trading at least one digital commodity.
``(55) Digital commodity presale.--The term `digital
commodity presale' means the delivery of a unit of a digital
commodity, or any promise or right to a future unit of a
digital commodity, to a participant in a securities offering
conducted in compliance with the Securities Act of 1933 before
the listing of the digital commodity for trading on a
registered digital commodity exchange.''.
(b) Commission Jurisdiction Over Retail Digital Commodity
Transactions.--Section 2(c)(2) of such Act (7 U.S.C. 2(c)(2)) is
amended--
(1) in subparagraph (D)(ii)--
(A) in subclause (III), in the matter that precedes
item (aa), by inserting ``of a commodity, other than a
digital commodity,'' before ``that''; and
(B) by redesignating subclauses (IV) and (V) as
subclauses (V) and (VI) and inserting after subclause
(III) the following:
``(IV) a contract of sale of a
digital commodity that--
``(aa) results in actual
delivery within 2 days or such
other period as the Commission
may determine by rule or
regulation based upon the
typical commercial practice in
cash or spot markets for the
digital commodity involved; or
``(bb) is executed on or
subject to the rules of a
registered digital commodity
exchange;''; and
(2) by adding at the end the following:
``(F) Commission Jurisdiction Over Digital Commodity
Transactions.--
``(i) Notwithstanding any other provision of law, the
Commission shall have exclusive jurisdiction over any
agreement, contract, or transaction involving a contract of
sale of any digital commodity in interstate commerce which is
offered, solicited, traded, executed, or otherwise dealt in on
or subject to the rules of a registered entity, including the
conduct of any such office or business.
``(ii) Notwithstanding any other provision of law, the
Commission shall have exclusive jurisdiction over any
agreement, contract, or transaction involving a unit of a
digital commodity, or any promise or right to a future unit of
a digital commodity, obtained through a digital commodity
presale and subject to the restrictions in section 4c(h).
``(iii) Nothing in this subparagraph shall be construed to
limit the power of any State or other Federal regulatory
agency, or to provide the Commission with jurisdiction, with
respect to--
``(I) custodial or depository activities for a
digital asset, or custodial or depository activities
for any promise or right to a future digital asset, of
an entity regulated by a State or another Federal
regulatory agency; or
``(II) a securities offering or transaction
associated with--
``(aa) a digital commodity presale; or
``(bb) a sale described in section
4c(h)(3)(A)(i).''.
(c) Prohibited Transactions.--Section 4c of such Act (7 U.S.C. 6c)
is amended by adding at the end the following:
``(h) Prohibited Digital Commodity Transactions.--
``(1) In general.--It shall be a violation of this Act for
any person who owns or controls a unit of a digital commodity,
or any promise or right to a future unit of a digital
commodity, obtained through a digital commodity presale and
subject to the restrictions in this subsection, to offer to
enter into, to enter into, or to execute a contract for the
purchase or sale of the unit, promise, or right, except as
provided in paragraph (3).
``(2) Unlawful facilitation of prohibited transaction.--It
shall be a violation of this Act for any person willfully to
execute, confirm the execution of, or conduct any office or
business for the purpose of soliciting, accepting any order
for, or otherwise dealing in, any transaction in, or in
connection with, a contract for the purchase or sale of a unit
of a digital commodity, or any promise or right to a future
unit of a digital commodity, which such person has reason to
believe is obtained through a digital commodity presale and
subject to the restrictions in this subsection, except as
provided in paragraph (3).
``(3) Exceptions.--
``(A) Off-exchange transactions.--
``(i) Sale of a promise or right.--A
promise or right to a future unit of a digital
commodity obtained through a digital commodity
presale may be sold pursuant to a securities
transaction conducted in compliance with the
Securities Act of 1933.
``(ii) Sale of a digital commodity.--A unit
of a digital commodity obtained through a
digital commodity presale may be sold to an
accredited imvestor (as defined in section
2(a)(15) of the Securities Act of 1933).
``(iii) Treatment.--For purposes of this
subsection, a unit of a digital commodity or
any promise or right to a future unit of a
digital commodity obtained through a
transaction utilizing this exception shall
continue to be considered to be obtained
through a digital commodity presale.
``(B) On-exchange transactions.--
``(i) In general.--A unit of a digital
commodity that is obtained through a digital
commodity presale or a transaction described in
subparagraph (A) may be offered for sale or
exchange on a registered digital commodity
exchange, subject to any limitations imposed by
the exchange.
``(ii) Treatment.--For purposes of this
subsection, a unit of a digital commodity
obtained through a transaction utilizing this
exception shall not be considered to be
obtained though a digital commodity presale.
``(C) Utilization of presold digital commodities.--
``(i) In general.--A unit of a digital
commodity that is obtained through a digital
commodity presale may be--
``(I) utilized for the purposes of
receiving the non-financial rights or
services associated with the digital
commodity; or
``(II) exchanged or sold in such
limited quantities as the Commission
determines support the public use and
functioning of services and rights
associated with the digital commodity.
``(ii) Treatment.--For purposes of this
subsection, a unit of a digital commodity
obtained through a transaction utilizing this
exception shall not be considered to be
obtained though a digital commodity presale.
``(D) Prior digital commodities.--A unit of a
digital commodity shall not be subject to this
subsection if, before the date of the enactment of this
subsection, the digital commodity was publicly
available for trading on a trading facility licensed as
a money transmitter in a State or territory of the
United States.
``(4) Transition rules.--
``(A) In general.--For the purpose of a transaction
described in paragraph (3)(B), the Commission shall
consider a trading facility to be a registered digital
commodity exchange if--
``(i) the trading facility--
``(I) has been continuously
licensed as a money transmitter in at
least 20 States or territories of the
United States since August 1, 2019;
``(II) is a designated contract
market; or
``(III) is a swap execution
facility;
``(ii) the trading facility submits a
listing notice to the Commission containing--
``(I) documentation demonstrating
its licensing referred to in clause
(i)(I); and
``(II) the determination made by
the trading facility under section
5i(c)(3) that the digital commodity
that is the subject of the transaction
is not readily susceptible to
manipulation; and
``(iii) the Commission has not issued a
notice of disapproval of the listing notice.
``(B) Disapproval process.--In making a disapproval
under subparagraph (A), the Commission shall--
``(i) issue any disapproval within 20
business days after receipt of a completed
listing notice; and
``(ii) identify the specific deficiencies
with the listing notice that necessitated the
disapproval.
``(C) Extensions.--The Commission may extend the
time for disapproval under subparagraph (B)--
``(i) once, for 20 days, through written
notice to the digital commodity exchange given
by a division director; and
``(ii) once, for an additional 90 business
days, through notice given by the Commission
which includes a description of any
deficiencies with the listing notice, including
any--
``(I) novel or complex issues which
require additional time to analyze;
``(II) missing information or
inadequate explanations; or
``(III) potential inconsistencies
with this Act.
``(D) Expiration.--The authority provided by this
subparagraph shall expire 1 year after the date of the
final promulgation of the digital commodity exchange
registration requirements, or on the first registration
of a digital commodity exchange, whichever occurs
earlier.''.
(d) Common Provisions Applicable to Registered Entities.--Section
5c of such Act (7 U.S.C. 7a-2) is amended--
(1) in subsection (a), by striking ``5(d) and 5b(c)(2)''
and inserting ``5(d), 5b(c)(2), and 5i(c)'';
(2) in subsection (b)--
(A) in each of paragraphs (1) and (2), by inserting
``digital commodity exchange,'' before ``derivatives'';
and
(B) in paragraph (3), by inserting ``digital
commodity exchange,'' before ``derivatives'' each place
it appears; and
(3) in subsection (c)--
(A) in paragraph (2), by inserting ``or
participants'' before ``(in'';
(B) in paragraph (4)(B), by striking ``1a(10)'' and
inserting ``1a(9)''; and
(C) in paragraph (5), by adding at the end the
following:
``(D) Special rules for the listing of certain
digital commodities.--
``(i) In general.--In the case of listing a
digital commodity for trading which has not yet
been listed for trading on another registered
entity, paragraphs (2) and (3) shall apply as
if the listing were a rule, and paragraph (2)
shall be applied by substituting `20 business
days' for `10 business days'.
``(ii) Transitional extension.--For 1 year
after the registration of the first digital
commodity exchange, the Commission shall have
an additional 20 business days review any
certification under clause (i).
``(iii) Digital commodity presales.--In
conjunction with listing a digital commodity in
which any unit of the digital commodity was
obtained through a digital commodity presale,
the Commission shall require the registered
entity to prohibit the sale of any unit of the
digital commodity that was obtained in
violation of section 4c(h).''.
(e) Registration of Digital Commodity Exchanges; Qualified Digital
Commodity Custodians.--The Commodity Exchange Act (7 U.S.C. 1 et seq.)
is amended by inserting after section 5h the following:
``SEC. 5I. REGISTRATION OF DIGITAL COMMODITY EXCHANGES.
``(a) In General.--
``(1) Voluntary registration.--
``(A) In general.--Any trading facility that offers
or seeks to offer a market in digital commodities may
register with the Commission as a digital commodity
exchange.
``(B) Application.--A person desiring to register
as a digital commodity exchange shall submit to the
Commission an application in such form and containing
such information as the Commission may require for the
purpose of making the determinations required for
approval under subsections (c) and (e).
``(2) Deemed registration.--A registered designated
contract market or registered swap execution facility which
fulfills the requirements of this section shall be considered a
registered digital commodity exchange.
``(b) Trading.--
``(1) In general.--A digital commodity exchange that is
registered under subsection (a) may make available for trading
any digital commodity that is not readily subject to
manipulation, subject to this subsection.
``(2) Rules governing margined or leveraged trading.--The
Commission may make, promulgate, and enforce such rules
governing margined, leveraged, or financed transactions as are
reasonably necessary to protect market participants and promote
the orderly settlement of transactions with respect to--
``(A) disclosure;
``(B) recordkeeping;
``(C) capital, margin, and other financial
resources;
``(D) reporting;
``(E) business conduct;
``(F) documentation; and
``(G) such other matters as the Commission
demonstrates to be necessary.
``(3) Prohibition on certain trading practices.--Sections
4b, 4c, and 6(c) shall apply to any agreement, contract, or
transaction in a digital commodity as if the agreement,
contract, or transaction were a contract of sale of a commodity
for future delivery.
``(4) Prohibition on trading derivatives products.--
Registration as a digital commodity exchange shall not permit a
trading facility to offer any contract of sale of a commodity
for future delivery, option, or swap for trading without also
being registered as a designated contract market or swap
execution facility.
``(c) Core Principles for Digital Commodity Exchanges.--
``(1) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a digital commodity exchange, the
digital commodity exchange shall comply with--
``(i) the core principles described in this
subsection; and
``(ii) any requirement that the Commission
may impose by rule or regulation pursuant to
section 8a(5).
``(B) Reasonable discretion of a digital commodity
exchange.--Unless otherwise determined by the
Commission by rule or regulation, a digital commodity
exchange described in subparagraph (A) shall have
reasonable discretion in establishing the manner in
which the digital commodity exchange complies with the
core principles described in this subsection.
``(2) Compliance with rules.--A digital commodity exchange
shall--
``(A) establish and enforce compliance with any
rule of the digital commodity exchange, including--
``(i) the terms and conditions of the
trades traded or processed on or through the
digital commodity exchange; and
``(ii) any limitation on access to the
digital commodity exchange;
``(B) establish and enforce trading, trade
processing, and participation rules that will deter
abuses and have the capacity to detect, investigate,
and enforce those rules, including means--
``(i) to provide market participants with
impartial access to the market; and
``(ii) to capture information that may be
used in establishing whether rule violations
have occurred; and
``(C) establish rules governing the operation of
the exchange, including rules specifying trading
procedures to be used in entering and executing orders
traded or posted on the facility.
``(3) Digital commodities not readily susceptible to
manipulation.--
``(A) In general.--The digital commodity exchange
shall permit trading only in digital commodities that
are not readily susceptible to manipulation.
``(B) Determinations.--Prior to offering trading in
any digital commodity, the digital commodity exchange
shall make a determination under this paragraph as to
whether the digital commodity is readily susceptible to
manipulation.
``(C) Considerations.--In making a determination
under this paragraph, the exchange shall consider the
digital commodity's--
``(i) purpose and use;
``(ii) governance structure;
``(iii) participation;
``(iv) distribution;
``(v) intended, current, and proposed
functionality;
``(vi) other relevant factors determined by
the exchange; and
``(vii) any other factor required by the
Commission.
``(D) Rules for digital commodity presales.--The
digital commodity exchange shall have in place such
rules as may be necessary to reasonably ensure the
orderly sale of any unit of a digital commodity
obtained through a digital commodity presale.
``(4) Treatment of customer assets.--
``(A) Required standards and procedures.--Each
digital commodity exchange shall establish standards
and procedures that are designed to protect and ensure
the safety of customer money, assets, and property.
``(B) Holding of customer assets.--
``(i) In general.--Each digital commodity
exchange shall hold customer money, assets, and
property in a manner to minimize the customer's
risk of loss or unreasonable delay in the
access to the money, assets, and property of
the customer.
``(ii) Segregation of funds.--
``(I) In general.--A digital
commodity exchange shall treat and deal
with all money, assets, and property of
any customer received as belonging to
the customer.
``(II) Commingling prohibited.--
Money, assets, and property of a
customer described in subclause (I)
shall be separately accounted for and
shall not be commingled with the funds
of the digital commodity exchange or be
used to margin, secure, or guarantee
any trades or accounts of any customer
or person other than the person for
whom the same are held.
``(iii) Exceptions.--
``(I) Use of funds.--
``(aa) In general.--
Notwithstanding clause (ii),
money, assets, and property of
customers of a described in
clause (ii) may, for
convenience, be commingled and
deposited in the same account
or accounts with any bank,
trust company, or qualified
digital commodity custodian.
``(bb) Withdrawal.--
Notwithstanding clause (ii),
such share of the money,
assets, and property described
in item (aa) as in the normal
course of business shall be
necessary to margin, guarantee,
secure, transfer, adjust, or
settle a digital commodity
transaction with a registered
entity may be withdrawn and
applied to such purposes,
including the payment of
commissions, brokerage,
interest, taxes, storage, and
other charges, lawfully
accruing in connection with the
digital commodity transaction.
``(II) Commission action.--
Notwithstanding clause (ii), in
accordance with such terms and
conditions as the Commission may
prescribe by rule, regulation, or
order, any money, assets, or property
of the customers of a digital commodity
exchange described in clause (ii) may
be commingled and deposited in customer
accounts with any other money, assets,
or property received by the digital
commodity exchange and required by the
Commission to be separately accounted
for and treated and dealt with as
belonging to the customer of the
digital commodity exchange.
``(C) Permitted investments.--Money described in
clause (ii) may be invested in obligations of the
United States, in general obligations of any State or
of any political subdivision of a State, and in
obligations fully guaranteed as to principal and
interest by the United States, or in any other
investment that the Commission may by rule or
regulation prescribe, and such investments shall be
made in accordance with such rules and regulations and
subject to such conditions as the Commission may
prescribe.
``(D) Customer property.--Assets held on behalf of
a customer by a digital commodity exchange shall be
considered to be customer property as such term is
defined in section 761 of title 11, United States Code,
with regard to all money, assets, and property of any
customer received by a digital commodity exchange for
trading or custody, or to margin, guarantee, or secure
digital commodity transactions (including money,
assets, or property accruing to the customer as the
result of such transactions).
``(E) Misuse of customer property.--It shall be
unlawful--
``(i) for any digital commodity exchange
that has received any customer money, assets,
or property for custody to dispose of, or use
any such money, assets, or property as
belonging to the digital commodity exchange; or
``(ii) for any other person, including any
depository, other digital commodity exchange,
or digital commodity custodian that has
received any customer money, assets, or
property for deposit, to hold, dispose of, or
use any such money, assets, or property as
belonging to the depositing digital commodity
exchange or any person other than the customers
of the digital commodity exchange.
``(F) Customer right to opt out.--
``(i) In general.--A customer shall have
the right to waive the restrictions in
subparagraph (B), by affirmatively electing, in
writing to the digital commodity exchange, to
waive the restrictions.
``(ii) Limitations.--The Commission may, by
rule, establish notice and disclosure
requirements, segregation requirements,
investment limitations, and other rules related
to the waiving of any restrictions under this
paragraph that are reasonably necessary to
protect customers, including eligible contract
participants, non-eligible contract
participants, or any other class of customers.
``(5) Monitoring of trading and trade processing.--
``(A) In general.--The digital commodity exchange
shall provide a competitive, open, and efficient market
and mechanism for executing transactions that protects
the price discovery process of trading on the exchange.
``(B) Protection of markets and market
participants.--The digital commodity exchange shall
establish and enforce rules--
``(i) to protect markets and market
participants from abusive practices committed
by any party, including abusive practices
committed by a party acting as an agent for a
participant; and
``(ii) to promote fair and equitable
trading on the exchange.
``(C) The digital commodity exchange shall--
``(i) establish and enforce rules or terms
and conditions defining, or specifications
detailing--
``(I) trading procedures to be used
in entering and executing orders traded
on or through the facilities of the
digital commodity exchange; and
``(II) procedures for trade
processing of digital commodities on or
through the facilities of the digital
commodity exchange; and
``(ii) monitor trading in digital
commodities to prevent manipulation, price
distortion, and disruptions of the delivery or
cash settlement process through surveillance,
compliance, and disciplinary practices and
procedures, including methods for conducting
real-time monitoring of trading and
comprehensive and accurate trade
reconstructions.
``(6) Ability to obtain information.--The digital commodity
exchange shall--
``(A) establish and enforce rules that will allow
the facility to obtain any necessary information to
perform any of the functions described in this section;
``(B) provide the information to the Commission on
request; and
``(C) have the capacity to carry out such
international information-sharing agreements as the
Commission may require.
``(7) Emergency authority.--The digital commodity exchange
shall adopt rules to provide for the exercise of emergency
authority, in consultation or cooperation with the Commission
or a registered entity, as is necessary and appropriate,
including the authority to facilitate the liquidation or
transfer of open positions in any digital commodity or to
suspend or curtail trading in a digital commodity.
``(8) Reporting requirements.--
``(A) Duty of digital commodity exchange.--Each
digital commodity exchange shall provide to the
Commission all information that is determined by the
Commission to be necessary to perform each
responsibility of the Commission under this Act.
``(B) Timely publication of trading information.--
``(i) In general.--The digital commodity
exchange shall make public timely information
on price, trading volume, and other trading
data on digital commodities to the extent
prescribed by the Commission.
``(ii) Capacity of digital commodity
exchange.--The digital commodity exchange shall
be required to have the capacity to
electronically capture and transmit trade
information with respect to transactions
executed on the exchange.
``(9) Recordkeeping and reporting.--
``(A) In general.--A digital commodity exchange
shall--
``(i) maintain records of all activities
relating to the business of the facility,
including a complete audit trail, in a form and
manner acceptable to the Commission for a
period of 5 years;
``(ii) report to the Commission, in a form
and manner acceptable to the Commission, such
information as the Commission determines to be
necessary or appropriate for the Commission to
perform the duties of the Commission under this
Act; and
``(iii) keep any such records of digital
commodities which relate to a security open to
inspection and examination by the Securities
and Exchange Commission.
``(B) Information-sharing.--Subject to section 8,
and on request, the Commission shall share information
collected under subparagraph (A) with--
``(i) the Board;
``(ii) the Securities and Exchange
Commission;
``(iii) each appropriate Federal banking
agency;
``(iv) each appropriate State bank
supervisor (within the meaning of section 3 of
the Federal Deposit Insurance Act);
``(v) the Financial Stability Oversight
Council;
``(vi) the Department of Justice; and
``(vii) any other person that the
Commission determines to be appropriate,
including--
``(I) foreign financial supervisors
(including foreign futures
authorities);
``(II) foreign central banks; and
``(III) foreign ministries.
``(C) Confidentiality agreement.--Before the
Commission may share information with any entity
described in subparagraph (B), the Commission shall
receive a written agreement from each entity stating
that the entity shall abide by the confidentiality
requirements described in section 8 relating to the
information on digital commodity transactions that is
provided.
``(D) Providing information.--Each digital
commodity exchange shall provide to the Commission
(including any designee of the Commission) information
under subparagraph (A) in such form and at such
frequency as is required by the Commission.
``(10) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, the digital
commodity exchange shall not--
``(A) adopt any rules or take any actions that
result in any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on
trading.
``(11) Conflicts of interest.--The digital commodity
exchange shall--
``(A) establish and enforce rules to minimize
conflicts of interest in its decision-making process;
and
``(B) establish a process for resolving the
conflicts of interest.
``(12) Financial resources.--
``(A) In general.--Each digital commodity exchange
shall have adequate financial, operational, and
managerial resources, as determined by the Commission,
to discharge each responsibility of the digital
commodity exchange.
``(B) Minimum amount of financial resources.--Each
digital commodity exchange shall possess financial
resources that, at a minimum, exceed the total amount
that would enable the digital commodity exchange to
conduct an orderly wind down of its activities.
``(C) Additional financial resources for leverage
trading.--The Commission may require such additional
financial resources as are necessary to enable a
digital commodity exchange which offers margined,
leveraged, or financed transactions to fulfill its
customer obligations.
``(13) Governance fitness standards.--
``(A) Governance arrangements.--Each digital
commodity exchange shall establish governance
arrangements that are transparent to fulfill public
interest requirements.
``(B) Fitness standards.--Each digital commodity
exchange shall establish and enforce appropriate
fitness standards for--
``(i) directors;
``(ii) any individual or entity with direct
access to the settlement activities of the
digital commodity exchange;
``(iii) any individual or entity with
direct access to any affiliated digital
commodity custodian;
``(iv) any entity offering affiliated
services for the digital commodity exchange;
and
``(v) any party affiliated with any
individual or entity described in this clause.
``(14) System safeguards.--The digital commodity exchange
shall--
``(A) establish and maintain a program of risk
analysis and oversight to identify and minimize sources
of operational and security risks, through the
development of appropriate controls and procedures, and
automated systems, that--
``(i) are reliable and secure; and
``(ii) have adequate scalable capacity;
``(B) establish and maintain emergency procedures,
backup facilities, and a plan for disaster recovery
that allow for--
``(i) the timely recovery and resumption of
operations; and
``(ii) the fulfillment of the
responsibilities and obligations of the digital
commodity exchange; and
``(C) periodically conduct tests to verify that the
backup resources of the digital commodity exchange are
sufficient to ensure continued--
``(i) order processing and trade matching;
``(ii) price reporting;
``(iii) market surveillance; and
``(iv) maintenance of a comprehensive and
accurate audit trail.
``(d) Appointment of Trustee.--
``(1) In general.--If a proceeding under section 5e results
in the suspension or revocation of the registration of a
digital commodity exchange, or if a digital commodity exchange
withdraws from registration, the Commission, on notice to the
digital commodity exchange, may apply to the appropriate United
States district court where the digital commodity exchange is
located for the appointment of a trustee.
``(2) Assumption of jurisdiction.--If the Commission
applies for appointment of a trustee under paragraph (1)--
``(A) the court may take exclusive jurisdiction
over the digital commodity exchange and the records and
assets of the digital commodity exchange, wherever
located; and
``(B) if the court takes jurisdiction under
subparagraph (A), the court shall appoint the
Commission, or a person designated by the Commission,
as trustee with power to take possession and continue
to operate or terminate the operations of the digital
commodity exchange in an orderly manner for the
protection of customers subject to such terms and
conditions as the court may prescribe.
``(e) Qualified Digital Commodity Custodian.--A digital commodity
exchange shall hold in a qualified digital commodity custodian each
unit of a digital commodity that is--
``(1) the property of a customer of the digital commodity
exchange;
``(2) required to be held by the digital commodity exchange
under subsection (b)(2) or (c)(12) of this section; or
``(3) otherwise so required by the Commission to reasonably
protect customers or promote the public interest.
``(f) Exemptions.--In order to promote responsible economic or
financial innovation and fair competition, or protect customers, the
Commission may (on its own initiative or on application of the
registered digital commodity exchange) exempt, either unconditionally
or on stated terms or conditions or for stated periods and either
retroactively or prospectively, or both, a registered digital commodity
exchange from the requirements of this section, if the Commission
determines that--
``(1) the exemption would be consistent with the public
interest and the purposes of this Act; and
``(2) the exemption will not have a material adverse effect
on the ability of the Commission or the digital commodity
exchange to discharge regulatory or self-regulatory duties
under this Act.
``(g) Customer Defined.--In this section, the term `customer' means
any person that maintains an account for the trading of digital
commodities directly with a digital commodity exchange (other than a
person that is owned or controlled, directly or indirectly, by the
digital commodity exchange) for its own behalf or on behalf of other
any person.
``(h) Fees.--
``(1) In general.--The Commission may, by rule, establish--
``(A) an initial application fee to offset the cost
to review an application under this section and the
initial registration of a digital commodity exchange
under this section; and
``(B) an annual supervisory fee to offset the cost
to provide ongoing supervision and oversight of a
digital commodity exchange under this section.
``(2) Imposition; collection.--The Commission may impose
on, and collect from applicants and entities registered under
this section fees established under paragraph (1), in
reasonable amounts to offset the costs described in paragraph
(1).
``(3) Retention of fees.--Any fees collected under this
section shall remain available for expenditure, without further
appropriation, until expended for the purpose of--
``(A) implementing this section; and
``(B) providing ongoing registration, supervision,
and oversight under this section.
``(i) Federal Preemption.--Notwithstanding any other provision of
law, the Commission shall have exclusive jurisdiction over any digital
commodity exchange registered under this section.
``SEC. 5J. QUALIFIED DIGITAL COMMODITY CUSTODIANS.
``(a) In General.--The Commission shall designate a digital
commodity custodian as a qualified digital commodity custodian, if--
``(1) the Commission finds the digital commodity custodian
is subject to adequate supervision and appropriate regulation
by an appropriate Federal banking agency, a State bank
supervisor (within the meaning of section 3 of the Federal
Deposit Insurance Act), or an appropriate government authority
in the home country of the organization; and
``(2) the digital commodity custodian agrees to such
regular and periodic sharing of information as the Commission
determines by rule shall be reasonably necessary to effectuate
any of the provisions, or to accomplish any of the purposes, of
this Act.
``(b) Rulemaking Authority.--For purposes of subsection (a), the
Commission, by rule or order, shall define `adequate supervision' and
`appropriate regulation' as any regulatory regime which meets such
minimum standards for supervision and regulation as the Commission
determines are reasonably necessary to protect the property of
customers of a registered digital commodity exchange, including minimum
standards relating to--
``(1) financial resources;
``(2) risk management requirements;
``(3) governance arrangements;
``(4) fitness standards;
``(5) recordkeeping;
``(6) information-sharing; and
``(7) conflicts of interest.
``(c) Authority To Temporarily Suspend Standards.--The Commission
may, by rule or order, temporarily suspend, in whole or in part, any
requirement imposed under, or any standard referred to in, this section
if the Commission determines that the suspension would be consistent
with the public interest and the purposes of this Act.''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Agriculture.
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