Managed Stablecoins are Securities Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 5197 To add establish the treatment of managed stablecoins under the securities laws, and for other purposes. IN THE HOUSE OF REPRESENTATIVES NOVEMBER 20, 2019 Ms. GARCIA of Texas (for herself and Mr. GOODEN) introduced the following bill; which was referred to the Committee on Financial Services A BILL To add establish the treatment of managed stablecoins under the securities laws, 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 ‘‘Managed Stablecoins 4 are Securities Act of 2019’’. 5 SEC. 2. SENSE OF CONGRESS. 6 It is the sense of Congress that— 7 (1) digital assets, known as managed stable- 8 coins, are investment contracts and therefore are se- 9 VerDate Sep 11 2014 23:09 Nov 29, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H5197.IH H5197 kjohnson on DSK79L0C42 with BILLS 2 •HR 5197 IH curities within the meaning given the term in section 1 2(a) of the Securities Act of 1933; and 2 (2) because issuers of managed stablecoins nev- 3 ertheless maintain that managed stablecoins are not 4 securities, it is appropriate for Congress to provide 5 clarity by amending statutory definitions of the term 6 security to include managed stablecoins. 7 SEC. 3. MANAGED STABLECOINS. 8 (a) DEFINITIONS UNDER THE SECURITIES ACT OF 9 1933.—Section 2(a) of the Securities Act of 1933 (15 10 U.S.C. 77b(a)) is amended— 11 (1) in paragraph (1)— 12 (A) by inserting ‘‘, regardless of form’’ 13 after ‘‘any of the foregoing’’; and 14 (B) by inserting ‘‘, managed stablecoin,’’ 15 after ‘‘national securities exchange relating to 16 foreign currency’’; and 17 (2) by adding at the end the following: 18 ‘‘(20) The term ‘managed stablecoin’ means a 19 digital asset that— 20 ‘‘(A) is not a security registered under sec- 21 tion 8(a) of the Investment Company Act of 22 1940; and 23 ‘‘(B) satisfies one or more of the following: 24 VerDate Sep 11 2014 23:09 Nov 29, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5197.IH H5197 kjohnson on DSK79L0C42 with BILLS 3 •HR 5197 IH ‘‘(i) The market value of such digital 1 asset is determined, in whole or in signifi- 2 cant part, directly or indirectly, by ref- 3 erence to the value of a pool or basket of 4 assets, including digital assets, held, des- 5 ignated, or managed by one or more per- 6 sons. 7 ‘‘(ii) One or more holders of such dig- 8 ital asset, directly or indirectly, are entitled 9 to obtain consideration or other assets, in- 10 cluding other digital assets and any sov- 11 ereign currency of a foreign government or 12 the United States, in exchange for the dig- 13 ital asset, the amount of which payment is 14 determined, in whole or in significant part, 15 directly or indirectly, on the basis of the 16 value of a pool or basket of assets, includ- 17 ing digital assets, held, designated, or 18 managed by one or more persons. 19 ‘‘(21) The term ‘digital asset’ means any asset, 20 contract, agreement or transaction, including a rep- 21 resentation of an economic, proprietary, or access 22 right, that is stored in a computer-readable form 23 and has or will have a transaction history that is re- 24 corded in a distributed ledger, digital ledger or other 25 VerDate Sep 11 2014 23:09 Nov 29, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5197.IH H5197 kjohnson on DSK79L0C42 with BILLS 4 •HR 5197 IH digital data structure. A digital asset may be a man- 1 aged stablecoin and a security.’’. 2 (b) DEFINITIONS UNDER THE SECURITIES EX- 3 CHANGE ACT OF 1934.—Section 3(a) of the Securities Ex- 4 change Act of 1934 (15 U.S.C. 78c) is amended— 5 (1) in paragraph (10)— 6 (A) by inserting ‘‘, regardless of form’’ 7 after ‘‘any of the foregoing’’; 8 (B) by inserting ‘‘, managed stablecoin’’ 9 after ‘‘national securities exchange relating to 10 foreign currency’’; and 11 (C) by inserting ‘‘sovereign’’ after ‘‘but 12 shall not include’’; and 13 (2) by adding at the end the following: 14 ‘‘(81) The term ‘managed stablecoin’ has the 15 meaning given the term in section 2(a) of the Secu- 16 rities Act of 1933. 17 ‘‘(82) The term ‘digital asset’ has the meaning 18 given the term in section 2(a) of the Securities Act 19 of 1933.’’. 20 (c) DEFINITIONS UNDER THE INVESTMENT COM- 21 PANY ACT OF 1940.—Section 2(a) of the Investment 22 Company Act of 1940 (15 U.S.C. 80a–1 et seq.) is amend- 23 ed— 24 (1) in paragraph (36)— 25 VerDate Sep 11 2014 23:09 Nov 29, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5197.IH H5197 kjohnson on DSK79L0C42 with BILLS 5 •HR 5197 IH (A) by inserting ‘‘, regardless of form’’ 1 after ‘‘any of the foregoing’’; and 2 (B) by inserting ‘‘, managed stablecoin’’ 3 after ‘‘national securities exchange relating to 4 foreign currency’’; and 5 (2) by adding at the end the following: 6 ‘‘(55) The term ‘managed stablecoin’ has the 7 meaning given the term in section 2(a) of the Secu- 8 rities Act of 1933. 9 ‘‘(56) The term ‘digital asset’ has the meaning 10 given the term in section 2(a) of the Securities Act 11 of 1933.’’. 12 (d) DEFINITIONS UNDER THE INVESTMENT ADVIS- 13 ERS ACT OF 1940.—Section 202(a) of the Investment Ad- 14 visers Act of 1940 (15 U.S.C. 80b–1 et seq.) is amended— 15 (1) in paragraph (18)— 16 (A) by inserting ‘‘, regardless of form’’ 17 after ‘‘any of the foregoing’’; and 18 (B) by inserting ‘‘, managed stablecoin’’ 19 after ‘‘national securities exchange relating to 20 foreign currency’’; and 21 (2) by adding at the end the following: 22 ‘‘(31) The term ‘managed stablecoin’ has the 23 meaning given the term in section 2(a) of the Secu- 24 rities Act of 1933. 25 VerDate Sep 11 2014 23:09 Nov 29, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5197.IH H5197 kjohnson on DSK79L0C42 with BILLS 6 •HR 5197 IH ‘‘(32) The term ‘digital asset’ has the meaning 1 given the term in section 2(a) of the Securities Act 2 of 1933.’’. 3 (e) SEC RULEMAKING.—The Securities and Ex- 4 change Commission may issue rules and regulations to 5 further define the terms ‘‘managed stablecoin’’ and ‘‘dig- 6 ital asset’’ as such terms are defined in section 2(a) of 7 the Securities Act of 1933. 8 Æ VerDate Sep 11 2014 23:09 Nov 29, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H5197.IH H5197 kjohnson on DSK79L0C42 with BILLS