Sec. 206. Cleaning up crypto asset lending
370 words·~2 min read·
/bill/118/s/2281/is/section-206·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Chapter 98 of title 31, United States Code, as amended by section 205 of this Act, is amended by adding at the end the following: A crypto asset intermediary shall ensure that any lending arrangements relating to crypto assets are— clearly disclosed to customers before any lending services take place, including the potential bankruptcy treatment of customer assets in the event of insolvency; subject to the affirmative consent of the customer; fully enforceable as a matter of State commercial law, including the Uniform Commercial Code; accompanied by full disclosures of applicable terms and risks, yield, and the manner in which the yield is calculated; accompanied by appropriate disclosures relating to collateral requirements and policies, including— possible reductions in value and overcollateralization requirements with respect to a crypto asset; collateral the intermediary accepts when calling for additional collateral from a customer, including collateral substitution; whether customer collateral is commingled with the collateral of other customers or of the intermediary; and how customer collateral is invested and whether the yield belongs to the customer or to the intermediary; accompanied by disclosures of mark-to-market and monitoring arrangements, including— the frequency of mark-to-market monitoring and how frequently the intermediary will call for additional collateral from a customer; the time period in which the customer must supply additional collateral to the intermediary after a collateral call is conducted consistent with subparagraph (A); whether the intermediary permits failures to deliver customer crypto assets or other collateral; and in the event of a failure to deliver, the period of time in which the failure must be cured; and compliant with all applicable Federal and State laws.
In this subsection, the term rehypothecation means the pledging of an asset as collateral for a financial transaction multiple times by a person, including the pledging of a customer asset by a crypto asset intermediary as collateral for a subsequent financial transaction after delivery of the crypto asset to the intermediary by a customer. No rehypothecation of crypto assets by a crypto asset intermediary shall be permitted. . The table of sections for chapter 98 of title 31, United States Code, as amended by section 202, is amended by adding at the end the following: 9806.
Crypto asset lending arrangements. .