Digital Asset Market Clarity Act

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(21) Blockchain application. The term blockchain application means any executable software that is deployed to a blockchain and composed of source code that is publicly available, including a smart contract or any network of smart contracts, or other similar technology. (22) Blockchain protocol. The term ‘ blockchain protocol ’ means the freely and publicly available source code of a blockchain that is executed by the network participants of a blockchain to facilitate its functioning, or other similar technology.

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(A) In general. The term decentralized governance system means, with respect to a blockchain system, any transparent, rules-based system permitting persons to form consensus or reach agreement in the development, provision, publication, management maintenance , or administration of such blockchain system, where participation is not limited to, or under the effective control of, any person or group of persons under common control. (B) Relationship of persons to decentralized governance systems. With respect to a decentralized governance system, the decentralized governance system and any persons participating in the decentralized governance system shall be treated as separate persons unless such persons are under common control or acting pursuant to an agreement to act in concert . (C) Legal entities for decentralized governance systems. The term decentralized governance system shall include a legal entity used to implement the rules-based system described in subparagraph (A), provided that the organizing and governing laws of such legal entity do does not create operate or pursuant require to centralized and hierarchical management of such legal entity . For the purposes of this subparagraph, the delegation of ministerial or administrative authority at the direction of the participants in a decentralized governance system shall not be construed to be centralized and hierarchical management.

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(27) Digital commodity affiliated person. The term digital commodity affiliated person — (A) means a person (including a digital commodity related person) that, with respect to any digital commodity— ( A i ) acquires or has any right to acquire 5 percent or more of the total outstanding units of such digital commodity from a digital commodity issuer or an agent or underwriter thereof ; ( B ii ) is a founder of the digital commodity issuer; or ( C iii ) is an executive director officer , director, trustee, or general partner , or person serving in a similar capacity of the digital commodity issuer or held such role at any point in the previous 12-month period ; and (B) does not include a decentralized governance system . (28) Digital commodity issuer. (A) In general. With respect to a digital commodity, the term digital commodity issuer means any person that— ( A i ) proposes, issues , or causes to be issued , or proposes to issue or cause to be issued, a unit of such digital commodity to a person; or ( B ii ) offers or sells a right to a future issuance of a unit of such digital commodity to a person. (B) Prohibition on evasion. It shall be unlawful for any person to knowingly evade classification as a digital commodity issuer and facilitate an arrangement for the primary purpose of effecting an offer, sale, distribution, or other issuance of a digital commodity, including via any arrangement involving the transfer of intellectual property associated with the blockchain system to which the digital commodity relates.

(29) Digital commodity related person.

(A) In general. With respect to a digital commodity issuer, the term digital commodity related person means — (i) means a person — (I) that is or was in the previous 6-month period a promoter, senior employee, advisory board member, consultant, advisor, or person serving in a similar capacity; and or ( ii II ) a person that acquires or has any right to acquire 1 percent or more of the total outstanding units of such digital commodity from a digital commodity issuer or an agent or underwriter thereof; and (ii) does not include a decentralized governance system . (B) Senior employee defined. In this paragraph and with respect to a digital commodity issuer, the term senior employee means any employee materially involved in the management or planning of the digital commodity issuer , or including management of the development of the blockchain system to which the digital commodity relates. (30) End user distribution. (A) In general. The term end user distribution means a distribution of a unit of a digital commodity that— ( A i ) does not involve an exchange of more than a nominal value of cash, property, or other assets; and ( B ii ) is distributed in a broad and equitable manner based on conditions capable of being satisfied by any participant in the blockchain system, including, as incentive-based rewards— ( i I ) to users of the digital commodity or any blockchain system to which the digital commodity relates; ( ii II ) for activities directly related to the operation of the blockchain system, such as mining, validating, staking, or other activity directly tied to the operation of the blockchain system; or ( iii III ) to the existing holders of another digital commodity, in proportion to the total units of such other digital commodity as are held by each person. (B) Protocol consensus participation. The term end user distribution includes the following: (i) Self staking. The distribution of a unit of a digital commodity as a programmatic result of validating or staking activity for a blockchain system’s consensus mechanism, including the staking of a digital commodity and the operation of a node or validator for such activity where the owner of the staked digital commodity and operator of the node or validator are the same person or entity. (ii) Self-custodial staking with a third party. The distribution of a unit of a digital commodity as a programmatic result of validating or staking activity for a blockchain system’s consensus mechanism, including the staking of a digital commodity and the operation of a node or validator for such activity where— (I) the owner of the staked digital commodity and operator of the node or validator for such activity are different persons or entities; and (II) the operator of the node or validator does not maintain custody or control of the staked digital commodity. (iii) Custodial and ancillary staking services. Subject to the rules issued pursuant to subparagraph (C), the provision of custodial or ancillary staking services enabling the owner of a digital commodity to participate in validating or staking activity for a blockchain system’s consensus mechanism that results in the programmatic distribution of a unit of a digital commodity, provided that such custodial or ancillary services are exclusively administrative or ministerial in nature. (C) Rulemaking to define the custodial and ancillary staking services. Not later than 270 days after the date of the enactment of this paragraph, the Commission shall issue rules defining the custodial and ancillary staking services described in subparagraph (B)(iii) that are exclusively administrative or ministerial in nature, consistent with what is necessary or appropriate for the public interest or for the protection of investors.

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(32) Permitted payment stablecoin. (A) In general. The term permitted payment stablecoin means a digital asset— (i) that is or is designed to be used as a means of payment or stablecoin settlement; ( ii) that is denominated in a national currency; (iii) the issuer of which is subject to the regulatory and supervisory authority of a State or Federal agency; (iv) the issuer of which— (I) is obligated to convert, redeem, or repurchase for a fixed amount of monetary value; or (II) represents that the digital asset will maintain or creates the reasonable expectation that the digital asset will maintain a stable value relative to the value of a fixed amount of monetary value; and (v) that is not— (I) a national currency; (II) a security issued by— (aa) an investment company registered under section 8(a) of the Investment Company Act of 1940 (15 U.S.C. 80a–8(a)); or (bb) a person that would be an investment company under the Investment Company Act of 1940 but for paragraphs (1) and (7) of section 3(c) of that Act (15 U.S.C. 80a–3(c)); (III) a deposit ( as defined under section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)), regardless of the technology used to record such deposit; or (IV) an account (as defined in section 101 2 of the Federal GENIUS Credit Union Act (12 U.S.C. 1752)), regardless of the technology used to record such account. (B ) Monetary issued value by defined. The term monetary value— (i) means— (I) a national permitted currency; payment (II) stablecoin a deposit (as defined in section 3 of the Federal Deposit Insurance Act (12 U issuer . S.C. 1813)) that is denominated in a national currency; or ( III 33 ) an Permitted account payment (as stablecoin defined in section 101 of the Federal Credit Union Act (12 U issuer . S.C. 1752)); and (ii) does not include any agricultural or other physical commodity (as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a)). (33) Securities laws. The term securities permitted laws payment stablecoin issuer has the meaning given that term under in section 3(a) 2 of the Securities GENIUS Exchange Act of 1934 (15 U . S.C. 78c(a)).

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