Digital Asset Market Clarity Act

In this Act:

(1) Ancillary asset; ancillary asset originator; network token. The terms ancillary asset, ancillary asset originator, and network token have the meanings given those terms in section 4B(a) of the Securities Act of 1933, as added by this Act.

(2) Bank Secrecy Act. The term Bank Secrecy Act means—

(A) section 21 of the Federal Deposit Insurance Act (12 U.S.C. 1829b);

(B) chapter 2 of title I of Public Law 91–508 (12 U.S.C. 1951 et seq.); and

(C) subchapter II of chapter 53 of title 31, United States Code.

(3) Commission. Except where otherwise expressly provided, the term Commission means the Securities and Exchange Commission.

(4) Coordinated control. With respect to any distributed ledger system and a related ancillary asset, the term coordinated control has the meaning given the term by the Commission pursuant to rules adopted under section 104(b).

(5) Decentralized governance system

(A) In general. The term decentralized governance system means, with respect to a distributed ledger system, any transparent, rules-based system permitting persons to form consensus or reach agreement in the development, provision, publication, maintenance, or administration of the distributed ledger system, in which participation is not limited to, or under the 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 those 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, including a decentralized unincorporated nonprofit association or other entity created pursuant to State law, used to implement the rules-based system described in subparagraph (A), provided that the legal entity does not operate pursuant to centralized management. 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 management.

(D) Rule of construction. For purposes of this Act, and the amendments made by this Act, a decentralized governance system shall not be deemed to be a person or a group of persons acting under common control.

(6) Digital asset; digital asset service provider. The terms digital asset and digital asset service provider have the meanings given those terms in section 2 of the GENIUS Act (12 U.S.C. 5901).

(7) Digital asset intermediary. The term digital asset intermediary means a person that is engaged in digital asset activities and required by law to register with the Commodity Futures Trading Commission or with the Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).

(8) Digital commodity. The term digital commodity has the meaning given the term in section 1a of the Commodity Exchange Act (7 U.S.C. 1a), as added by this Act.

(9) Distributed ledger. The term distributed ledger means technology—

(A) through which data is shared across a network that creates a public digital ledger of verified transactions or information among network participants; and

(B) in which cryptography is used to link the data described in subparagraph (A) to—

(i) maintain the integrity of the digital ledger described in that subparagraph; and

(ii) execute other functions.

(10) Distributed ledger application. The term distributed ledger application means executable software that is deployed to and maintained on a distributed ledger and composed of source code that is publicly available, including a smart contract or any network of smart contracts, or other similar technology.

(11) Distributed ledger protocol. The term distributed ledger protocol means publicly available source code of a distributed ledger that is executed by the network participants of a distributed ledger to facilitate its functioning, or other similar technology.

(12) Distributed ledger system. The term distributed ledger system means a distributed ledger (together with its distributed ledger protocol), a distributed ledger application, or a network of distributed ledger applications.

(13) Related person. The term related person, with respect to an ancillary asset originator or an ancillary asset—

(A) means—

(i) any person that is, or within the preceding 36-month period was—

(I) a founder or person serving in a similar capacity with respect to the ancillary asset originator; and

(II) a beneficial owner of not less than 4 percent of the total amount of outstanding units of an ancillary asset associated with the ancillary asset originator;

(ii) any person that is, or in the preceding 12-month period was, an executive officer, director, trustee, general partner, owner of more than 10 percent of any class of equity shares of the ancillary asset originator, or person serving in a similar capacity with respect to the ancillary asset originator;

(iii) any person, or group of persons under common control, that beneficially owns, or in the preceding 6-month period owned, 10 percent or more of the total amount of outstanding units of the ancillary asset; and

(iv) any person, or group of persons under common control, that beneficially owns, or in the preceding 6-month period owned, covered tokens (as that term is defined in section 104(a)) that equal not less than 2 percent of the total amount of outstanding units of the ancillary asset; and

(B) does not include a decentralized governance system.

(14) Securities laws. The term securities laws has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).

(15) Smart contract. The term smart contract means a self-executing contract or program that—

(A) is stored on a distributed ledger system; and

(B) automatically executes or enforces digital asset transactions upon the occurrence of explicit, pre-determined conditions encoded in the contract or program, without intervention, other than to provide data, by any entity or natural person.