Protecting Consumers from Market Manipulation Act

I 116TH CONGRESS 1ST SESSION H. R. 5180 To amend the Bank Holding Company Act of 1956 to restore the separation between banking and commerce by prohibiting bank holding company ownership of non-financial assets, and for other purposes. IN THE HOUSE OF REPRESENTATIVES NOVEMBER 19, 2019 Mr. GARCI´A of Illinois (for himself, Ms. TLAIB, and Ms. JACKSON LEE) intro- duced the following bill; which was referred to the Committee on Finan- cial Services A BILL To amend the Bank Holding Company Act of 1956 to restore the separation between banking and commerce by prohib- iting bank holding company ownership of non-financial assets, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Protecting Consumers 4 from Market Manipulation Act’’. 5 VerDate Sep 11 2014 21:39 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H5180.IH H5180 kjohnson on DSK79L0C42 with BILLS 2 •HR 5180 IH SEC. 2. LIMITATION ON CERTAIN LARGE NON-FINANCIAL 1 COMPANIES WITH RESPECT TO ACTIVITIES 2 THAT ARE FINANCIAL IN NATURE. 3 (a) IN GENERAL.—A large non-financial company 4 that is not registered as a bank holding company may not 5 (either directly or indirectly, or through a subsidiary) en- 6 gage in activities that are financial in nature if engaging 7 in such activities would result in such activities producing 8 the lower of— 9 (1) 5 percent of the revenue of the large non- 10 financial company; or 11 (2) $1,000,000,000 in revenue. 12 (b) DEFINITIONS.—In this section: 13 (1) ACTIVITIES THAT ARE FINANCIAL IN NA- 14 TURE.—The term ‘‘activities that are financial in 15 nature’’ has the meaning given that term under sec- 16 tion 4(k)(4) of the Bank Holding Company Act of 17 1956. 18 (2) BANK HOLDING COMPANY.—The term 19 ‘‘bank holding company’’ has the meaning given that 20 term under section 2 of the Bank Holding Company 21 Act of 1956. 22 (3) LARGE NON-FINANCIAL COMPANY.—The 23 term ‘‘large non-financial company’’ means a com- 24 pany that— 25 VerDate Sep 11 2014 21:39 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5180.IH H5180 kjohnson on DSK79L0C42 with BILLS 3 •HR 5180 IH (A) has annual revenues of more than 1 $5,000,000,000; and 2 (B) is not predominantly engaged in finan- 3 cial activities (as such term is defined under 4 section 102 of the Financial Stability Act of 5 2010). 6 (4) SUBSIDIARY.—The term ‘‘subsidiary’’ has 7 the meaning given that term under section 2 of the 8 Bank Holding Company Act of 1956. 9 SEC. 3. LIMITATIONS ON COMMODITY OWNERSHIP AND RE- 10 PEAL OF THE MERCHANT BANKING AUTHOR- 11 ITY. 12 (a) IN GENERAL.—Section 4 of the Bank Holding 13 Company Act of 1956 (12 U.S.C. 1843) is amended— 14 (1) in subsection (k)— 15 (A) in paragraph (1), by striking ‘‘(by reg- 16 ulation or order)’’ and inserting ‘‘, by regula- 17 tion’’; 18 (B) in paragraph (2)— 19 (i) in the heading, by inserting ‘‘AND 20 THE FEDERAL DEPOSIT INSURANCE COR- 21 PORATION’’ after ‘‘TREASURY’’; and 22 (ii) by adding at the end the fol- 23 lowing: 24 VerDate Sep 11 2014 21:39 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5180.IH H5180 kjohnson on DSK79L0C42 with BILLS 4 •HR 5180 IH ‘‘(C) JOINT DETERMINATION WITH THE 1 FEDERAL DEPOSIT INSURANCE CORPORA- 2 TION.—For purposes of paragraph (1), the 3 Board may only make a determination that an 4 activity is complementary to a financial activity 5 and does not pose a substantial risk to the safe- 6 ty or soundness of depository institutions or the 7 financial system generally, if such determina- 8 tion is made jointly, by rule, with the Federal 9 Deposit Insurance Corporation.’’; 10 (C) in paragraph (4)— 11 (i) by striking subparagraph (H); and 12 (ii) by redesignating subparagraph (I) 13 as subparagraph (H); and 14 (D) by striking paragraph (7); 15 (2) in subsection (l)— 16 (A) in paragraph (1), by striking ‘‘sub- 17 section (k), (n), or (o)’’ each place such term 18 appears and inserting ‘‘subsection (k) or (n)’’; 19 and 20 (B) in paragraph (2)(B), by striking ‘‘sub- 21 paragraph (H) or (I)’’ and inserting ‘‘subpara- 22 graph (H)’’; 23 VerDate Sep 11 2014 21:39 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5180.IH H5180 kjohnson on DSK79L0C42 with BILLS 5 •HR 5180 IH (3) in subsection (m)(1)(A), by striking ‘‘sub- 1 section (k), (n), or (o)’’ and inserting ‘‘subsection 2 (k) or (n)’’; 3 (4) in subsection (n)(5), by striking ‘‘subpara- 4 graph (H) or (I)’’ each place such term appears and 5 inserting ‘‘subparagraph (H)’’; and 6 (5) by striking subsection (o). 7 (b) CONFORMING AMENDMENT.—Section 8 3(a)(4)(B)(vi) of the Securities Exchange Act of 1934 (15 9 U.S.C. 78c(a)(4)(B)(vi)) is amended by striking ‘‘other 10 than’’ and all that follows through the end and inserting 11 ‘‘other than a registered broker or dealer.’’. 12 (c) RULEMAKING.—The Board of Governors of the 13 Federal Reserve System shall— 14 (1) issue rules to carry out the amendments 15 made by this section; and 16 (2) provide for an appropriate transition period 17 before persons are required to comply with the 18 amendments made by this section, including allowing 19 for the divestment of shares, assets, and ownership 20 interests affected by such amendments. 21 SEC. 4. DIGITAL CURRENCY STUDIES. 22 (a) FSOC STUDY.—The Financial Stability Over- 23 sight Council shall carry out a study, and issue a report 24 to Congress that— 25 VerDate Sep 11 2014 21:39 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5180.IH H5180 kjohnson on DSK79L0C42 with BILLS 6 •HR 5180 IH (1) examines the financial stability implications 1 of digital currency; and 2 (2) determines whether digital currencies should 3 be designated as designated financial market utilities 4 under title VIII of the Payment, Clearing, and Set- 5 tlement Supervision Act of 2010. 6 (b) FEDERAL RESERVE STUDY.—The Board of Gov- 7 ernors of the Federal Reserve System shall carry out a 8 study and issue a report to Congress that— 9 (1) examines the monetary policy and monetary 10 sovereignty implications of digital currency; and 11 (2) proposes a framework for supervising any 12 digital currency that is designated as a designated 13 financial market utility under title VIII of the Pay- 14 ment, Clearing, and Settlement Supervision Act of 15 2010. 16 (c) DIGITAL CURRENCY DEFINED.—In this section, 17 the term ‘‘digital currency’’ means a digital representation 18 of value that— 19 (1) can be digitally traded; 20 (2) functions as— 21 (A) a medium of exchange; 22 (B) a unit of account; or 23 (C) a store of value; 24 VerDate Sep 11 2014 21:39 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5180.IH H5180 kjohnson on DSK79L0C42 with BILLS 7 •HR 5180 IH (3) does not have legal tender status (i.e., when 1 tendered to a creditor, is a valid and legal offer of 2 payment) in any jurisdiction; 3 (4) is not issued nor guaranteed by any juris- 4 diction; 5 (5) fulfils the functions described under para- 6 graph (2) only by agreement within the community 7 of users of the virtual currency; 8 (6) is not sovereign currency (also known as 9 ‘‘real currency’’, ‘‘real money’’, or ‘‘national cur- 10 rency’’), which is the coin and paper money of a 11 country that is designated as its legal tender, cir- 12 culates, and is customarily used and accepted as a 13 medium of exchange in the issuing country; and 14 (7) is not e-money, which is a digital represen- 15 tation of sovereign currency used to electronically 16 transfer value denominated in sovereign currency 17 and is a digital transfer mechanism for sovereign 18 currency (meaning that it electronically transfers 19 value that has legal tender status). 20 Æ VerDate Sep 11 2014 21:39 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\H5180.IH H5180 kjohnson on DSK79L0C42 with BILLS