Digital Asset Market Clarity Act

27C. Application to software developers

(a) Distributed ledger system defined. In this section, the term distributed ledger system has the meaning given the term in section 2 of the Digital Asset Market Clarity Act.

(b) Application to software developers. Notwithstanding any other provision of this Act, a person shall not be subject to this Act and the regulations promulgated under this Act solely based on the person engaging in any of the following activities, whether singly or in combination, in relation to the operation of a distributed ledger system or any component thereof:

(1) Compiling network transactions or relaying, searching, sequencing, validating, or acting in a similar capacity.

(2) Providing computational work, operating a node or oracle service, or procuring, offering, or utilizing network bandwidth, or providing other similar incidental services.

15H. Application to software developers

(a) Definitions. In this section:

(1) Constitute. The term constitute means to compile, assemble, integrate, or otherwise combine software components into a complete software system.

(2) Decentralized finance trading protocol

(A) In general. The term decentralized finance trading protocol means a distributed ledger system through which multiple participants can execute a financial transaction—

(i) in accordance with an automated rule or algorithm that is predetermined and non-discretionary; and

(ii) without reliance on a person other than the user to maintain custody or control of the digital assets subject to the financial transaction.

(B) Exclusions

(i) In general. The term decentralized finance trading protocol does not include a distributed ledger system if—

(I) a person or group of persons under common control or acting pursuant to an agreement to act in concert has the 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 distributed ledger system;

(II) the distributed ledger system does not operate, execute, and enforce its operations and transactions based solely on pre-established, transparent rules encoded directly within the source code of the distributed ledger system; or

(III) a person or group of persons under common control has the unilateral authority, via operation of the distributed ledger system, to restrict, censor, or prohibit the use of the distributed ledger system, including any applicable system-based user activity.

(ii) Special rule. For purposes of clause (i), a decentralized governance system shall not be considered to be a person or a group of persons under common control or acting pursuant to an agreement to act in concert.

(3) Deploy. The term deploy means to bring software or hardware onto a distributed ledger system for active use.

(4) Digital asset; distributed ledger application; distributed ledger system; distributed ledger protocol; decentralized governance system; smart contract. The terms digital asset, distributed ledger application, distributed ledger system, distributed ledger protocol, decentralized governance system, and smart contract have the meanings given those terms in section 2 of the Digital Asset Market Clarity Act.

(5) Decentralized finance messaging system

(A) In general. The term decentralized finance messaging system means a software application that provides a user with the ability to create or submit an instruction, communication, or message to a decentralized finance trading protocol.

(B) Additional requirements. The term decentralized finance messaging system does not include any system that provides any person other than the user with—

(i) control over the funds of the user; or

(ii) the authority to execute any of the transaction of the user.

(b) Application to software developers. Notwithstanding any other provision of this Act, a person shall not be subject to this Act and the regulations promulgated under this Act solely based on the person engaging in any of the following activities, whether singly or in combination, in relation to the operation of a distributed ledger system or any component thereof:

(1) Compiling network transactions or relaying, searching, sequencing, validating, or acting in a similar capacity.

(2) Providing computational work, operating a node or oracle service, or procuring, offering, or utilizing network bandwidth, or providing other similar incidental services.

(3) Developing, publishing, or constituting—

(A) a distributed ledger system; or

(B) software or systems that create or utilize hardware or software, including wallets or other systems, that facilitate the ability of a user to keep, safeguard, or have custody of the digital assets or private keys of the user.

(c) Rule of construction. Subsection (b)(3) does not extend to any activity covered in any of the activities described in subparagraphs (A) through (D) of subsection (d)(1), including activity taken following deployment of such software or hardware.

(d) Clarification

(1) In general. The Commission shall, pursuant to notice and comment rulemaking, clarify the circumstances under which a person shall not be subject to this Act by reason of engaging solely in 1 or more of the following activities in relation to the operation of a decentralized finance trading protocol or any component thereof:

(A) Providing a user interface that enables a user to read and access data.

(B) Administering, maintaining, or otherwise distributing a decentralized governance system relating to a decentralized finance trading protocol, or a decentralized finance trading protocol.

(C) Administering, maintaining, or otherwise distributing a decentralized finance messaging system or operating or participating in a smart contract-based liquidity pool in a decentralized finance trading protocol.

(D) Administering, maintaining, or otherwise distributing software or systems that create or deploy hardware or software, including wallets or other systems, that facilitate the ability of a user to keep, safeguard, or maintain custody of the digital assets or related private keys of the user.

(2) Considerations. In providing the clarification under paragraph (1) the Commission shall—

(A) ensure that the rules are consistent with the purposes of the securities laws, including the public interest, the protection of investors, and the maintenance of fair and orderly markets;

(B) provide that section 108(a) of the Lummis-Gillibrand Responsible Financial Innovation Act of 2026 shall apply to such rules;

(C) protect the rights of software developers, publishers, and users to create, publish, and use code and software in a manner consistent with the First Amendment to the Constitution of the United States; and

(D) provide legal clarity for the development, publication, and operation of distributed ledger systems and the components therein in a manner consistent with the purposes of this section.

(3) Rule of construction. Nothing in this subsection may be construed to grant the Commission authority over persons, systems, software, or activities that do not otherwise fall within the jurisdiction of the Commission under this Act, or to create a presumption that any such activity is subject to this Act.

(e) Anti-Fraud, anti-Manipulation, and false reporting. The determination that a person is not subject to this Act under subsections (b) and (d) shall not apply to the anti-fraud, anti-manipulation, or false reporting enforcement authorities of the Commission.

(f) Rule of construction. Nothing in this Act or the rules and regulations promulgated under this Act may be construed to apply any requirement of the securities laws to a digital commodity, as defined in section 2 of the Digital Asset Market Clarity Act, or expand the authority of the Commission beyond that which the Commission had before the date of enactment of the Digital Asset Market Clarity Act to regulate the activities described in subsection (d)(1).

(g) Federal preemption

(1) In general. Notwithstanding any other provision of law, no securities, commodities, or digital assets law of any State (or of any political subdivision of a State) shall apply to an activity described in subsection (b).

(2) Rule of construction. Nothing in paragraph (1) may be construed to apply to the anti-money laundering, anti-fraud, or anti-manipulation authorities of a State (or of any political subdivision of a State).