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Code · BILL · 119th Congress · H.R. 3633 (Introduced in House) — To provide for a system of regulation of the offer and sale of digital commodities by the Securities and Exchange Com... · Sec. 106

Sec. 106. Provisional registration for digital commodity exchanges, brokers, and dealers

1,316 words·~6 min read·/bill/119/hr/3633/ih/section-106

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Within 180 days after the date of the enactment of this Act, a person acting as a digital commodity exchange, digital commodity broker, or digital commodity dealer shall file a statement of provisional registration with the Commodity Futures Trading Commission (in this subsection referred to as the Commission ), unless exempted from registration under section 5k of the Commodity Exchange Act, as a— digital commodity exchange, for a person acting as a digital commodity exchange; digital commodity broker, for a person acting as a digital commodity broker; or digital commodity dealer, for a person acting as a digital commodity dealer.
A person, other than a registered entity, who files a statement of provisional registration under paragraph
(1)shall be considered to be in compliance with this section if the person— is a member of a futures association registered under section 17 of the Commodity Exchange Act, and complies with the rules of the association, including the rules of the association pertaining to customer disclosures and protection of customer assets; submits to the Commission, in the form and manner determined by the Commission, and continues to materially update, as necessary or required by the Commission, a statement of the nature of the digital commodity-related activities the person is pursuing or intends to pursue; submits to the Commission and continues to materially update the information required by this subsection; complies with subsection
(c)of this section; and pays all fees and penalties imposed on the person under section 410 of this Act. A registered entity who files a statement of provisional registration under paragraph
(1)shall be considered to be in compliance with this section if the person— submits to the Commission and continues to materially update, a statement of the nature of the digital commodity-related activities the person is pursuing or intends to pursue; submits, and continues to materially update, the information required by this subsection and subsection (b); complies with subsection (c); and pays all fees and penalties imposed on the person under section 410. In this paragraph, the term registered entity means a person who is designated by the Commodity Futures Trading Commission as a contract market or registered with the Commodity Futures Trading Commission as a swap execution facility. A person who files a statement of provisional registration under subsection
(a)shall disclose to the Commission, unless already known to the Commission, the following: Information concerning the management of the person, including information describing— the ownership and management of the person; the financial condition of the person; affiliated entities; potential conflicts of interest; the address of the person, including— the place of incorporation; principal place of business; and an address for service of process; and a list of the States in which the person has operations. Information concerning the digital commodity operations of the person, including— a general description of the person’s business and the terms of service for United States customers; a description of the person’s account approval process; any rulebook or other customer order fulfillment rules or procedures; risk management procedures; a description of the product listing process; and policies and procedures for compliance with the Bank Secrecy Act. A person who files a statement of provisional registration under subsection
(a)shall comply with the following requirements: Except to the extent otherwise specifically provided by the Commission or any registered futures association rule, regulation, or order, the person shall not permit an individual who is subject to a statutory disqualification under paragraph
(2)or
(3)of section 8a of the Commodity Exchange Act or subject to a statutory disqualification as defined in section 3(a) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78c(a) ) to effect or be involved in effecting transactions on behalf of the person, if the person knew, or in the exercise of reasonable care should have known, of the statutory disqualification. The person shall keep their books and records open to inspection and examination by the Commission and by any registered futures association or national securities association of which the person is a member. The person shall disclose to customers— information about the material risks and characteristics of the assets listed for trading on the person; information about the legal entity that custodies customer assets and the general manner in which the digital assets of the customer will be and are custodied; information concerning the policies and procedures of the person that are related to the protection of customers of the person, including information regarding any conflicts of interest or material affiliates; and in their disclosure documents, offering documents, and promotional material— in a prominent manner, that they are not registered with or regulated by the Commission; and the contact information for the whistleblower, complaint, and reparation programs of the Commission. A person who remains in compliance with the requirements of this section is deemed to be— a registered digital commodity exchange, pursuant to section 5i, if the person filed a statement of provisional registration as a digital commodity exchange; or a registered digital commodity broker or dealer, pursuant to section 4u, if the person filed a statement of provisional registration as a digital commodity broker or dealer, as the case may be. The applicability of subparagraph
(A)shall expire— in the case of a digital commodity exchange deemed registered pursuant to subparagraph (A)(i), 180 days after the final effective date of the rulemakings required under 5i; or in the case of a digital commodity broker or dealer deemed registered pursuant to subparagraph (A)(ii), 180 days after the final effective date of the rulemakings required under 4u. The requirements of the preceding provisions of this section shall not supersede any requirements applicable to registered persons adopted by the Commission under the Commodity Exchange Act. This section shall not be construed to limit the authority of the Commission and the Securities and Exchange Commission to jointly require a person to delist an asset for trading if the Commission and the Securities and Exchange Commission determine, in accordance with rules, procedures or guidance jointly issued by the Commission and the Securities and Exchange Commission to delist an asset for trading, that the listing is inconsistent with the Commodity Exchange Act, the securities laws (including regulations under those laws), or this Act. A person may not file a statement of provisional registration with the Commission after the Commission has finalized its rules for the registration of digital commodity exchanges, digital commodity brokers, or digital commodity dealers, as appropriate. Within 180 days after the date of the enactment of this Act, a registered futures association shall adopt and enforce rules applicable to persons required by subsection (a)(2) to be members of the association. The rules adopted under subparagraph
(A)of this paragraph may provide for dues in accordance with section 17(b)(6) of the Commodity Exchange Act. A registered futures association shall submit to the Commission any rule adopted under subparagraph
(A)of this paragraph, which shall take effect pursuant to the requirements of section 17(j) of the Commodity Exchange Act. It shall be unlawful for any person to provide false information in support of a filing under this section if the person knew or reasonably should have known that the information was false. For purposes of section 23 of the Commodity Exchange Act, the term this Act includes this section. This section shall supersede any State or local law (other than antifraud provisions of general applicability) that regulates the offer or sale of digital assets in the case of a transaction conducted in compliance with this section and conducted on or through a person who files a statement of provisional registration under subsection
(a)and complies with the requirements of this section. Notwithstanding any other provision of law, the Commission shall have exclusive jurisdiction over the digital asset activities of a person who— files a statement of provisional registration under subsection (a); and complies with the requirements of this section.
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Sec. 106
Provisional registration for digital commodity exchanges, brokers, and dealers
U.S.C.§ 78c
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