Sec. 205. Mature blockchain system requirements
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Title I of the Securities Exchange Act of 1934 ( 15 U.S.C. 78a et seq. ) is amended by adding at the end the following: For purposes of sections 4(a)(8), 4B, and 4C of the Securities Act of 1933 any digital commodity issuer, digital commodity related person, digital commodity affiliated person, or decentralized governance system of the blockchain system may certify to the Securities and Exchange Commission that the blockchain system to which a digital commodity relates is a mature blockchain system. A certification described under paragraph
(1)shall be filed with the Commission, and include such information that is reasonably necessary to establish that the blockchain system is not controlled by any person or group of persons under common control, which may include information regarding— the operation of the blockchain system; the functionality of the related digital commodity; how the market value of the digital commodity is substantially derived from the programmatic functioning of such blockchain system; any decentralized governance system which relates to the blockchain system; and the current roles, if any, of the digital commodity issuer, digital commodity affiliated persons, and digital commodity related persons where such roles are material to the development or operation of such blockchain system or the decentralized governance system of such blockchain system. The Commission may rebut a certification described under paragraph
(1)with respect to a blockchain system if the Commission, within 60 days of receiving such certification, determines that the blockchain system is not a mature blockchain system. Any blockchain system that relates to a digital commodity for which a certification has been made under paragraph
(1)shall be considered a mature blockchain system 60 days after the date on which the Commission receives a certification under paragraph (1), unless the Commission notifies the person who made the certification within such time that the Commission is staying the certification due to— an inadequate explanation by the person making the certification; or any novel or complex issues which require additional time to consider. The Commission shall make the following available to the public and provide a copy to the Commodity Futures Trading Commission: Each certification received under paragraph (1). Each stay of the Commission under this subsection, and the reasons therefor. Any response from a person making a certification under paragraph
(1)to a stay of the certification by the Commission. The Commission may consolidate and treat as one submission multiple certifications made under paragraph
(1)for the same blockchain system which relates to a digital commodity which are received during the review period provided under this paragraph. A notification by the Commission pursuant to paragraph (4)(A) shall stay the certification once for up to an additional 120 days from the date of the notification. Before the end of the 60-day period described under paragraph (4)(A), the Commission may begin a public comment period of at least 30 days in conjunction with a stay under this subsection. A certification made under paragraph
(1)shall— become effective— upon the publication of a notification from the Commission to the person who made the certification that the Commission does not object to the certification; or at the expiration of the certification review period; and not become effective upon the publication of a notification from the Commission to the person who made the certification that the Commission has rebutted the certification. With respect to a blockchain system for which a certification has been rebutted under this subsection, no person may make a certification under paragraph
(1)with respect to such blockchain system during the 90-day period beginning on the date of such rebuttal. If a certification is rebutted under this section, the person making such certification may appeal the decision to the United States Court of Appeals for the District of Columbia, not later than 60 days after the notice of rebuttal is made. In an appeal under subparagraph (A), the court shall have de novo review of the determination to rebut the certification. It is the sense of the Congress that protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation necessitates establishing clear criteria for blockchain systems to be deemed mature, as well as enabling the Commission to develop, without prejudice to any such criteria codified in statute, alternative criteria by which blockchain systems may be considered not to be controlled by any person or group of persons under common control in order to accommodate changes in markets and technology. The Commission may issue rules identifying conditions by which a blockchain system, together with its related digital commodity, shall be considered a mature blockchain system, consistent with the protection of investors, maintenance of fair, orderly, and efficient markets, and the facilitation of capital formation. Nothing in this subsection may be construed to permit the Commission to impose additional criteria to the criteria in subsection
(c)for certifying that a blockchain system is a mature blockchain system pursuant to subsection (c). Nothing in this subsection or subsection
(c)may be construed to limit the Commission’s ability to identify alternative conditions and criteria by which a blockchain system may be considered a mature blockchain system. Notwithstanding subsection (b), for the purposes of subsection (a), a digital commodity issuer, digital commodity related person, digital commodity affiliated person, or decentralized governance system of the blockchain system may establish that a blockchain system, together with its related digital commodity, is not controlled by any person or group of persons under common control, if the blockchain system, together with its related digital asset, meets the requirements described in paragraph
(2)or (3). The requirements described in this paragraph are the following: The digital commodity has a value that is substantially derived from the adoption, use, and functioning of the blockchain system. Where the digital commodity issuer has made public a development plan describing how the digital commodity’s value is reasonably expected to be derived from the programmatic functioning of the blockchain system, the development of such mechanisms has been substantially completed. The blockchain system allows network participants to engage in the activities the blockchain system is intended to provide, including— using, transmitting, or storing value, or otherwise executing transactions, on the blockchain system; deploying, executing, or accessing software or services, or otherwise offering or participating in services, deployed on or integrated with the blockchain system; participating in the consensus mechanism, transaction validation process, or decentralized governance system of the blockchain system; or operating any client, node, validator, sequencer, or other form of computational infrastructure with respect to the blockchain system. The blockchain system— is composed of source code that is open source; and does not restrict or prohibit based on the exercise of unilateral authority any person, other than a digital commodity issuer, digital commodity related person, or a digital commodity affiliated person from engaging in the activities the blockchain system is intended to provide, including the activities described in subparagraph (B). The blockchain system operates, executes, and enforces its operations and transactions based solely on pre-established, transparent rules encoded directly within the source code of the blockchain system. No person or group of persons under common control— 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 blockchain system or its related digital commodity; or has the unilateral authority to direct the voting, in the aggregate, of 20 percent or more of the outstanding voting power of such blockchain system by means of a related digital commodity, nodes or validators, a decentralized governance system, or otherwise, in a blockchain system which can be altered by a voting system. No person or group of persons under common control possesses a unique permission or privilege to alter the functionality, operation, or rules of consensus or agreement of the blockchain system or its related digital commodity, unless such alteration— addresses errors, regular maintenance, or cybersecurity risks of the blockchain system that affect the programmatic functioning of the blockchain system; and is adopted through the consensus or agreement of a decentralized governance system. No digital commodity issuer, digital commodity related person, or digital commodity affiliated person beneficially owns, in the aggregate, 20 percent or more of the total amount of units of the digital commodity. The requirements described in this paragraph are that the blockchain system— was created prior to the date of enactment of this section; met the requirements of subparagraphs
(A)through
(F)of paragraph
(2)prior to January 1, 2020; and at least 50 percent of the units of the digital commodity related to the blockchain system are held by persons other than the digital commodity issuer, a digital commodity related person, or a digital commodity affiliated person. For the purposes of this section, a decentralized governance system is not a person or a group of persons under common control . A blockchain system, together with its digital commodity, shall not be precluded from being considered a mature blockchain system 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 the 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. Not more than 270 days after the date of enactment of this section, the Commission shall issue rules to carry out this section. .
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Sec. 205
Mature blockchain system requirements
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