Digital Asset Market Clarity Act

Protection of Self-Custody Rights: The bill ensures that United States individuals retain the right to maintain hardware or software wallets for lawful custody of digital assets and engage in direct, peer-to-peer transactions (Section 105(c)(1); Section 22(a); Section 605).

Enhanced Investor Protection through Disclosure: Digital commodity issuers and ancillary asset originators must provide detailed information, including source code, transaction history, corporate history, and financial statements, to help investors make informed decisions (Section 202(b)(2); Section 4B(d)).

Incentives and Protections for Blockchain Development: The legislation provides specific protections for non-controlling blockchain developers and software providers, ensuring they are not treated as money transmitters solely for providing infrastructure or performing incidental tasks like maintaining a node (Section 109(a); Section 601; Section 604).

Streamlined Market Entry and Innovation: The bill creates an expedited registration process for digital commodity exchanges, brokers, and dealers (Section 106(a)(2)), as well as a Micro-Innovation Sandbox and AI Innovation Labs to allow firms to test new financial products and services (Section 501; Section 509).

Protection of Customer Assets: Digital commodity exchanges are required to establish policies to ensure the safety of customer money and assets, treating them as belonging to the customer (Section 404(d)(1) and (2)). Brokers and dealers must also hold assets in a manner that minimizes the risk of loss or unreasonable delay in access (Section 4U(j)(1)(A)).

Market Integrity and Fairness: The bill mandates rules to protect market participants from abusive practices, promotes fair and equitable trading, and prohibits the use of manipulative or deceptive devices (Section 404(c)(2)(B)(i); Section 204(e)(1)).

Regulatory Clarity for Digital Assets: Certain network tokens may be treated as non-securities if they meet specific criteria, providing clarity for assets linked to distributed ledger systems (Section 4B(b)(2); Section 105). Additionally, a safe harbor is established for many NFTs, such as collectibles or event tickets (Section 602).

Consumer Fraud Prevention and Financial Literacy: Digital asset kiosk operators must provide clear warnings about common scams and provide detailed receipts (Section 205(b)). The bill also directs studies to improve financial literacy for retail digital commodity holders (Section 506(a)(2); Section 803).

Banking Industry Integration: The law allows national banks, state banks, and credit unions to use digital assets for various financial activities, such as custody and lending (Section 401(g)).

Preservation of Consumer Rights: The bill preserves the right of individuals to bring civil actions for fraud, deceit, or manipulation involving digital assets (Section s 111(a)(1)).

Compliance Burdens and Costs for Entities: Issuers face strict ongoing disclosure requirements, such as semiannual reports on development and finances (Section 202(b)(3)). Exchanges must also designate a chief compliance officer to prepare annual reports (Section 5f) and meet minimum capital requirements (Section 4U(d)(1)).

Restrictions on Asset Sales and Control: Individuals or groups with authority over a blockchain system face limitations on selling related digital commodities (Section 4W(a)). "Related persons" also face significant limitations on how and when they can sell holdings (Section 104(c)), and any profits made from violating these rules can be recovered by asset holders (Section 104(e)).

Strict Obligations for Non-Mature Systems: Issuers whose blockchain systems fail to become "mature" within a specified timeframe face additional disclosure obligations regarding the failure and future plans (Section 202(e)(1)).

Mandatory Disclosures for Unregistered Entities: Anyone acting as an exchange, broker, or dealer must disclose to customers that they are not yet registered with the CFTC (Section 106(d)(1)).

Increased Regulatory and Oversight Burdens: Digital commodity exchanges are subject to extensive requirements regarding financial resources, surveillance, and recordkeeping (Section 404(c)). Furthermore, the Commission can impose additional requirements on the operations of exchanges and their affiliates (Section 404(e)). Participation in the Micro-Innovation Sandbox is also subject to strict individual customer and monetary ceilings (Section 501).

Restrictions on Digital Asset Kiosks and Stablecoins: Kiosk transactions may be subject to a 72-hour holding period for new customers and an aggregate limit of $3,500 within a 24-hour period (Section 205(h)(1) and (l)). Additionally, service providers are prohibited from paying interest or yield on stablecoins that is equivalent to bank deposit interest (Section 404(c)(1)).

Transaction Holds and Bankruptcy Risks: The bill allows for "temporary holds" on digital asset transactions for up to 30 days, with potential extensions (Section 305(a)(5)). In bankruptcy, the treatment of customer property in liquidation will be governed by specific Title 11 provisions (Section 701).

Limitations on Financial Accounts: Under expanded securities portfolio margin account rules, the SIPC is prohibited from making advances to pay net equity claims of customers regarding digital commodities or swaps (Section 405).