Sec. 403. CFTC jurisdiction over digital asset transactions

1,304 words·~6 min read·/bill/117/s/4356/is/section-403

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

Section 2(c)(2) of the Commodity Exchange Act ( 7 U.S.C. 2(c)(2) ) is amended— in subparagraph (D)(ii)— in subclause (III), in the matter preceding item (aa), by inserting of a commodity, other than a digital asset, before that ; by redesignating subclauses

(IV)and

(V)as subclauses

(V)and (VI), respectively; and by inserting after subclause

(III)the following: a contract of sale of a digital asset that— results in actual delivery within 2 days or such other period as the Commission may determine by rule based upon the typical commercial practice in cash or spot markets for the digital asset involved; or is executed on or subject to the rules of a registered digital asset exchange or with a registered futures commission merchant; ; and by adding at the end the following: Subject to sections 6d and 12(e) and section 403 of the Commodity Futures Modernization Act of 2000 ( 7 U.S.C. 27a ), the Commission shall have exclusive jurisdiction over any agreement, contract, or transaction involving a contract of sale of a digital asset in interstate commerce, including ancillary assets (consistent with section 41(b)(4) of the Securities Exchange Act of 1934), except that specified periodic reporting requirements made by an issuer which provided the holder of the security with an ancillary asset under that section, and the security that constitutes an investment contract (within the meaning of section 2(a)(1) of the Securities Act of 1933 ( 15 U.S.C. 77b(a)(1) )), shall remain within the jurisdiction of the Securities and Exchange Commission. The Commission shall only exercise jurisdiction over an agreement, contract, or transaction involving a contract of sale of a digital asset that is fungible, which shall not include digital collectibles and other unique digital assets. Notwithstanding clause (i), this subparagraph shall not be interpreted to permit the Commission to issue any rule regarding any agreement, contract, or transaction that is not offered, solicited, traded, facilitated, executed, cleared, reported, or otherwise dealt in— on or subject to the rules of a registered entity; or by any other entity registered by the Commission. Clause

(i)shall not apply to custodial activities with respect to a digital asset of an entity supervised or regulated by a State or other Federal regulatory agency. . Section 2(a)(1)(A) of the Commodity Exchange Act ( 7 U.S.C. 2(a)(1)(A) ) is amended, in the first sentence, by striking section 19 of this Act and inserting subsection (c)(2)(F) or section 19 . Section 4d of the Commodity Exchange Act ( 7 U.S.C. 6d ) is amended by adding at the end the following: Each futures commission merchant shall hold customer money, assets, and property in a manner to minimize the customer’s risk of loss of, or unreasonable delay in the access to, the money, assets, and property. A futures commission merchant shall hold the property of a customer of the futures commission merchant with a licensed, chartered, or registered entity subject to regulation by 1 of the following agencies: The Commission. The Securities and Exchange Commission. An appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 )). A State bank supervisor (as defined in that section). An appropriate foreign governmental authority in the home country of the custodian. In this paragraph, the term digital asset customer means a customer involved in a cash or spot, leveraged, margined, or financed digital asset transaction in which the futures commission merchant is acting as the counterparty. A futures commission merchant shall treat and deal with all money, assets, and property of any digital asset customer received as belonging to the customer. Money, assets, and property of a digital asset customer described in clause (i)— shall be separately accounted for; and shall not be— commingled with the funds of the futures commission merchant; or used to margin, secure, or guarantee any trades or accounts of any customer or person other than the person for whom the money, assets, or property are held. Notwithstanding subparagraph (B), money, assets, and property of a digital asset customer may, for convenience, be commingled and deposited in the same account or accounts with an entity described in paragraph (1)(B). Notwithstanding subparagraph (B), the share of the money, assets, and property described in subclause

(I)as in the normal course of business is necessary to margin, guarantee, secure, transfer, adjust, or settle a digital asset transaction with a registered entity may be withdrawn and applied to those purposes, including the payment of commissions, brokerage, interest, taxes, storage, and other charges, lawfully accruing in connection with the digital asset transaction. Notwithstanding subparagraph (B), in accordance with such terms and conditions as the Commission may prescribe by rule or order, any money, assets, or property of a digital asset customer may be commingled and deposited in customer accounts with any other money, assets, or property received by the futures commission merchant and required by the Commission to be separately accounted for and treated and dealt with as belonging to the digital asset customer. Money of a digital asset customer may be invested— in— obligations of the United States; general obligations of any State or of any political subdivision of a State; obligations fully guaranteed as to principal and interest by the United States; or any other investment that the Commission may by rule prescribe; and in accordance with such rules and subject to such conditions as the Commission may prescribe. It shall be unlawful for any person, including any derivatives clearing organization or depository institution, that has received any money, assets, or property for deposit in a separate account or accounts as required by subparagraph

(B)to hold, dispose of, or use any of the money, assets, or property that belongs to the depositing futures commission merchant or any person other than the digital asset customer of the futures commission merchant. A customer shall have the right to waive any requirement under this subsection by affirmatively electing, in writing to the futures commission merchant, to waive the requirement. The Commission may, by rule, establish notice and disclosure requirements, segregation requirements, investment limitations, and other rules relating to the waiving of any requirement under this subsection that are reasonably necessary to protect customers, including eligible contract participants, non-eligible contract participants, and any other class of customers. . Section 4d of the Commodity Exchange Act ( 7 U.S.C. 6d ) (as amended by subsection (b)) is amended by adding at the end the following: A registered futures commission merchant shall not act as a counterparty in any agreement, contract, or transaction involving a digital asset that has not been listed for trading on a registered digital asset exchange. . Section 5c of the Commodity Exchange Act ( 7 U.S.C. 7a–2 ) is amended— in subsection (a)(1), by striking 5(d) and 5b(c)(2) and inserting 5(d), 5b(c)(2), and 5i(c) ; in subsection (b), by inserting registered digital asset exchange, before derivatives each place it appears; and in subsection (c)— in paragraph (2), by inserting or participants before (in a ; in paragraph (4)(B), by striking 1a(10) and inserting 1a(9) ; and in paragraph (5), by adding at the end the following: In the case of listing for trading a digital asset that has not previously 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 . During the 1-year period beginning on the date of the registration of the first digital asset exchange, the Commission shall have an additional 20 business days to review any certification under clause (i). In conducting a review under clause (i), the Commission shall consider any comments provided by the Securities and Exchange Commission with respect to the legal classification of a digital asset. .

Connectionstraces to 5

Traces to 5 documents

U.S. Code

1 reference not yet in our index

7 USC 7a–2

Citation graph

cites case law

Sec. 403

CFTC jurisdiction over digital asset transactions

Cite7 USC 7a–2

Cites 6Cited by 0 across 0 sources